Beneficial Ownership Information Reporting (BOIR) Suspended by FinCen in Interim Final Rule

1. What is Beneficial Ownership Information Reporting ?

The Corporate Transparency Act (CTA), enacted as part of the Anti-Money Laundering Act of 2020, requires most U.S. corporations, LLCs, and similar entities to report their beneficial ownership information (BOI) to FinCEN. These requirements aimed to help law enforcement detect financial crimes like money laundering and tax fraud by increasing corporate transparency.

FinCEN issued a final rule in 2022, which became effective on January 1, 2024, requiring both domestic and foreign reporting companies to file BOI reports. Initial deadlines ranged from 90 days after formation (for new companies in 2024) to January 1, 2025 (for existing companies).

However, legal challenges in late 2024 and early 2025 resulted in court-ordered injunctions, temporarily halting enforcement of the rule.

2. Interim Final Rule Overview (March 2025) - BOIR Suspended and to Be Revised by FinCen

This interim final rule significantly revises the original reporting framework. Key provisions include:

A. Exemption for Domestic Reporting Companies

All U.S.-formed entities (domestic reporting companies) are now exempt from BOI reporting.
These entities no longer need to:
- File initial BOI reports.
- Update or correct previously submitted reports.

B. Foreign Reporting Companies: Narrowed Scope

Foreign entities registered to do business in the U.S. must still file beneficial ownership information reports, but:

They are exempt from reporting information about U.S. beneficial owners.
U.S. persons are exempt from providing their BOI to foreign companies.

C. Deadline Extension

For foreign reporting companies, the deadline to file or update BOI reports is extended to 30 days from the date of publication of the interim rule (or 30 days after registration, whichever is later).

3. Legal and Policy Justifications for Suspension of BOIR Reporting

A. Statutory Authority

The CTA allows the Secretary of the Treasury, with concurrence from the Attorney General and Secretary of Homeland Security, to exempt certain entities if reporting is not in the public interest or would not be highly useful for law enforcement.

B. Regulatory Reassessment Under Executive Order

Following the change in administration in January 2025, President Trump’s Executive Order 14192 (“Unleashing Prosperity Through Deregulation”) prompted a reassessment.
The administration prioritized reducing regulatory burdens on small businesses.

C. Litigation Impacts

Multiple district court cases challenged the constitutionality of the CTA.
Although some injunctions were lifted or stayed, the uncertainty and delays prompted FinCEN to act quickly to revise rules and avoid imposing unnecessary costs.

4. Rationale for Domestic Company Exemption from BOIR Reporting

Cost and Burden: The original BOI rule was estimated to cost $21.7 billion in its first year, with significant burdens on small businesses.
Public Interest: The majority of U.S. small businesses are legitimate and not involved in illicit finance.
Effectiveness: The usefulness of collecting BOI from these businesses was deemed not proportional to the cost.
Alternative Safeguards: Other requirements, such as the 2016 Customer Due Diligence rule, still require financial institutions to collect BOI at account opening.

5. Continued Requirements for Foreign Reporting Companies

Justification for Narrowed Focus:

Foreign-owned entities present greater national security and illicit finance risks, such as:
- Sanctions evasion
- Terrorism financing
- Use of complex foreign shell structures
Specific threats from jurisdictions like Iran were cited as justification.
U.S. persons' BOI was excluded to align with the deregulatory policy while preserving oversight of higher-risk foreign entities.

6. Reporting for Foreign Pooled Investment Vehicles

A revised special rule applies to foreign pooled investment vehicles:

They must report BOI only if the individual exercising substantial control is not a U.S. person.
If no such non-U.S. individual exists, no reporting is required.

7. Compliance, Costs, and Economic Impact

Projected Reductions in Cost and Time Burden

Estimated annual cost savings: ~$9 billion
Estimated time burden reduction: Over 91 million hours annually
Exemptions remove BOI filing obligations for:
- ~40% of companies expected to file in 2024
- Most domestic small businesses

Remaining Requirements

Only foreign companies doing business in the U.S. are still required to report BOI — and even then, not for U.S. beneficial owners.

8. Regulatory Process and Public Comment

FinCEN used the “good cause” exception under the Administrative Procedure Act to issue this interim rule without prior notice or comment, citing urgency.
However, the rule is open for public comment for 60 days, and FinCEN intends to issue a final rule later in 2025.

9. Immediate Effective Date and CRA Status

The rule is effective immediately upon publication.
Although it qualifies as a “major rule” under the Congressional Review Act, FinCEN invoked exceptions to avoid delaying implementation.

Conclusion

The March 2025 interim final rule marks a sweeping rollback of the Corporate Transparency Act’s BOI reporting regime. U.S. businesses are no longer required to report ownership information, reflecting a shift toward deregulation and cost reduction, especially for small businesses. However, foreign entities remain under scrutiny, particularly in the context of national security and sanctions enforcement.

FinCEN is actively seeking public input, and the final rule expected later in 2025 may either affirm or adjust the exemptions outlined in this interim measure.