On February 27, 2025, FinCEN announced that, with respect to the Corporate Transparency Act (CTA), it will not issue any fines or penalties, and no enforcement actions will be taken, until a forthcoming interim final rule is issued by FinCEN. According to FinCEN’s announcement, FinCEN intends to (i) issue no later than March 21, 2025, an “interim” final rule that extends Beneficial Ownership Information (BOI) reporting deadlines, and (ii) solicit public comment on potential revisions to existing BOI reporting requirements and will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year. The U.S. Treasury Department (which oversees FinCEN) subsequently issued a press release on March 2 announcing that, with respect to the CTA, it will “not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.” Later that day, in a post on Truth Social, President Trump celebrated the Treasury Department’s announcement and noted “Treasury is now finalizing an emergency regulation to formally suspend this rule for American businesses.” Although none of these announcements or pronouncements can amend the statutory language of the CTA, they are an indication of how FinCEN and Treasury intend to approach enforcement of the CTA. Notwithstanding the fluctuating state of the CTA, companies that still desire to file a BOI report with FinCEN during this interim period may do so.
Given the impending issuance of a new interim final rule by FinCEN no later than March 21 with extended BOI report filing deadlines, the March 2 announcement by the Treasury Department and the continued debate in the courts and Congress regarding the constitutionality of the CTA, reporting companies would be well-advised to continue to closely monitor CTA developments. To receive future Duane Morris Alerts on the CTA, please register for our CTA mailing list.
The Corporate Transparency Act of 2021 (CTA), effective January 1, 2024, introduced new compliance burdens and potential hefty penalties.
This law is a product of the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The CTA requires Reporting Companies – i.e., most every corporation, partnership, limited liability company or statutory trust formed or created by the filing of documentation with a U.S. state or territorial government and any foreign entity registered with a state or territorial government to do business in that state or territory – to make certain filings about individuals who are “Beneficial Owners” of those entities.
The CTA imposes compliance burdens on Reporting Companies, together with hefty penalties for non-compliance. There are a number of exemptions, but companies need to determine if one of the CTA’s 23 precisely drawn exemptions applies. A failure to comply that is determined to be “willful” might give rise to a criminal fine of as much as $10,000 and imprisonment for up to two years. Even if a criminal charge is avoided, a failure to file may result in a $500 per day civil penalty (as indexed for inflation).
These penalties are the sharp teeth in the CTA’s effort to ferret out persons involved in money laundering and similar activities through the use of shell companies in the U.S. However, the wide net of the CTA can impact a range of companies – from the smallest of entities used for valid business or investment purposes to the largest of companies. Even inactive entities can be required to report.
The CTA requires each Reporting Company (namely, every kind and size of entity that exists on December 31, 2023, which cannot conclude that it qualifies for an exemption) to file with FinCEN information regarding itself and its beneficial owners not later than January 1, 2025. Entities created or first registered on or after January 1, 2024 must file within 90 days following their creation or first registration (the 90-day period is reduced to 30 days for entities formed or first registered in 2025 or beyond). If the information in a filing changes, the affected entity has only 30 days to update its filing. For current updates to these FinCEN filing deadlines, see headline box above.
Duane Morris’ CTA Strategy Team
Duane Morris is actively monitoring developments regarding the CTA and issuing Alerts on the topic. To receive future Duane Morris Alerts on the CTA, please register for our CTA mailing list. Duane Morris will provide advice to clients regarding CTA compliance only when explicitly engaged to do so in writing.
For More Information
For more information, please contact Thomas R. Schmuhl or any of the CTA Strategy Team members referenced in the Attorney Listing.