Beneficial Ownership Interest Reporting To Be Limited to Foreign Reporting Companies
By Paul Goeringer, Principal Faculty Specialist.
Those keeping track of Beneficial Ownership Interest (BOI) reporting may have noticed a back and forth between federal courts in enjoining the Financial Crimes Enforcement Network (FinCEN). The U.S. District Court for the Eastern District of Texas issued a stay in its early decision, allowing reporting to continue on February 18, 2025. This decision is in the Smith v. U.S. Department of the Treasury, No. 6:24-CV-336-JDK, 2025 WL 41924 (E.D. Tex. Jan. 7, 2025). On February 19, 2025, FinCEN issued guidance that most reporting will be due by March 21, 2025.
On February 27, FinCEN issued additional guidance that by March 21, 2025, they would be issuing an interim rule that extends that deadline. At the same time, the Department of Treasury will work to reduce the regulatory burden imposed by the Corporate Transparency Act and focus on reporting that is highly useful to crucial national security, intelligence, and law enforcement activities. To follow up on the guidance issued on February 27, the Department of Treasury issued additional guidance on March 2, 2025, stating that the Treasury would suspend penalties against all domestic citizens and reporting companies and would narrow the scope to foreign reporting companies only.
The Corporate Transparency Act was created intending to prevent money laundering, illicit financial transactions, and financial terrorism. As a part of the law, FinCEN was created in the Department of the Treasury to create a national database of business entities and owners of those business entities that are not subject to regular public disclosure laws. This database required beneficial owners of businesses to disclose certain information. As mentioned earlier, the Department of Treasury is working to issue interim rules that limit the impact of reporting to only foreign-owned companies. To understand more about the type of entities that would have to report, you can look at this helpful publication by my colleagues at the Ohio State University.