Corporate Transparency Act March 21 Interim Rule: Mandatory for Non-U.S. businesses

Keeping its promise made on February 27th, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) released a statement on March 21st that provides sweeping updates to the Corporate Transparency Act (CTA) and the Beneficial Ownership Information (BOI) reporting requirements, definitions, and exemptions.

Per this interim rule, FinCEN has narrowed the scope of companies required to file BOI Reports to only include foreign or international non-U.S. formed businesses. FinCEN has stated that it will finalize this rule later this year in May. Still, if past updates are any indication, modifications could occur before then.

Timeline of events and rulings around the CTA and BOI Report:

• February 27th penalty suspension
• February 18th stay on the injunction
• January 23rd stay on the injunction
• December 26th injunction reinstatement
• December 23rd stay on the injunction
• December 3rd Texas injunction

What does FinCEN’s March 21 interim rule change?

With this seemingly final update, FinCEN has redefined who is required to file the BOI Report and which businesses are considered reporting companies. Previously, most foreign and domestic businesses registered to do business in the U.S. were required to file, with a select few exempt businesses. Now, this requirement only applies to non-U.S.-originated companies that then register to do business in the U.S.

New BOI Report requirements and due dates

While FinCEN’s March 21st statement specifically defines non-U.S. businesses as “entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction” they went a step further in their interim rule and Federal Register publication on March 26th to explain what else the new ruling changes for reporting companies.

Here is what the interim rule updated:

U.S. businesses that have already filed their BOI Reports do not need to submit updates on their BOI Report.

LLC and corporation filings are where Northwest shines, and we can help you start your business as soon as you’re ready to.

Is the BOI Report still suspended?

No. International businesses are required to file their BOI Report with FinCEN by April 25th, while U.S.-originated businesses are exempt from filing. But there have been a lot of court cases, updates, suspensions, and rulings that can make tracking the BOI Report’s requirements hard. So, let’s take a look back at what’s been going on and why.

The Corporate Transparency Act, a law introduced in 2021, mandated the BOI Report to safeguard against financial crimes and money laundering. Court cases in several different jurisdictions gave push back, causing FinCEN to rethink the BOI Report and, at times, even halting the department from enforcing filings over the past few months.

Legal opposition to the CTA

Smith, et al. v. U.S. Department of the Treasury, et al. and Texas Top Cop Shop, Inc. v. McHenry were two key lawsuits that posited the argument that the CTA and its mandated BOI Report were an undue burden on U.S. businesses, as well as a breach of business owners’ rights. Both aimed to halt or abolish BOI Reporting requirements, and they collectively succeeded in landing injunctions to suspend these requirements multiple times.

It’s safe to say that opposition like this influenced FinCEN’s decision to soften reporting requirements and focus on businesses that pose the highest risk of fraudulent activity. U.S. citizens looking to register an LLC or corporation can rest easy knowing that, for now, their future filing burdens have been lightened.

Is this the end of the BOI Report?

FinCEN’s March 21 interim rule is just that: a rule to serve in an interim period while FinCEN takes comments or notes from businesses and legal professionals for the next 60 days. So, it’s difficult to say whether this most recent update from FinCEN will serve as the BOI Report’s epitaph.

Reporting beneficial ownership information is still a requirement for non-U.S. businesses. Domestic U.S. businesses can ditch the report as of now but should remain vigilant should this rule be modified in the future.