For the last two years there has been an ongoing imperative for estate planning and other professionals to get their clients who have an interest in a small corporation, limited liability company or limited partnership to report their personal information in compliance with the Corporate Transparency Act. Now, in a dramatic regulatory shift, the Financial Crimes Enforcement Network has issued an interim final rule that rewrites major portions of the CTA, that domestic companies—and U.S. citizens who are beneficial owners of foreign entities—are now exempt from the beneficial ownership reporting requirements originally mandated under the CTA.
This development significantly narrows the scope of the CTA, aligning with the Trump administration’s broader policy to reduce regulatory burdens on American businesses.
Background: From Compliance To Controversy
The CTA was enacted on Jan. 1, 2021, as part of the broader Anti-Money Laundering Act of 2020. The law sought to crack down on anonymous shell companies by requiring corporations, LLCs, and similar entities to report their “beneficial owners”—those individuals who ultimately own or control them—to FinCEN. The regulations aimed to increase transparency, aid law enforcement, and combat illicit financial flows.
By January 2024, FinCEN’s final rule went into effect, requiring both domestic and foreign entities to begin reporting. But legal challenges and mounting concerns about cost burdens soon derailed the initial rollout. Federal courts issued injunctions halting enforcement, and by early 2025, the Supreme Court and lower courts had lifted those stays—leaving businesses uncertain about looming compliance deadlines.
What The Interim Final Rule Changes
FinCEN’s new interim rule, effective immediately upon publication in the Federal Register, makes three major changes:
Domestic Companies No Longer Need To Report
Entities formed in the U.S.—corporations, LLCs, and others—are exempt from BOI (Beneficial Ownership Information) reporting requirements. This exemption also extends to any updates or corrections to previously submitted reports.
U.S. Citizens Exempt From Reporting
Even if a U.S. person is a Beneficial Owner of a foreign company doing business in the U.S., they are not required to report their ownership information. Foreign reporting companies are similarly exempt from reporting the BOI of their U.S. owners.
Foreign Companies Still Have To Report—But With Limits
Foreign reporting companies must continue filing BOI—but only for non-U.S. persons. If all beneficial owners are U.S. persons, no reporting is required.
Additionally, deadlines have been adjusted: Foreign entities now have 30 days from registration (or the rule’s publication date) to file initial BOI reports.
Why The Shift? Deregulation And Executive Priorities
This rule comes amid a broader reassessment of regulatory policy following the January 2025 change in presidential administrations. President Donald Trump’s Executive Order 14192—“Unleashing Prosperity Through Deregulation”—signaled a clear mandate to reduce regulatory burdens on American enterprises.
FinCEN cited this executive order, along with the CTA’s own language instructing regulators to “minimize burdens,” as justification for the move. The Departments of Justice and Homeland Security concurred that BOI reporting from domestic companies was not “highly useful” for national security or law enforcement purposes.
The Numbers Behind The Decision
FinCEN previously estimated that the CTA would cost businesses:
- $21.7 billion in labor costs for initial reports in year one,
- $3.3 billion annually thereafter for new companies, and
- $2.3 billion annually for report updates.
By exempting domestic entities and U.S. citizens, the new rule slashes compliance costs by an estimated $9 billion annually and cuts over 91 million hours in annual paperwork burden.
Risks And Rebalancing
Of course, the rollback is not without trade-offs. Treasury has acknowledged the potential for illicit finance risks, noting that the lack of timely access to BOI has historically hindered anti-money laundering enforcement. However, officials argue that:
- Financial institutions must still collect BOI at account opening under other rules.
- Most domestic small businesses are low-risk and legitimate.
- Foreign entities pose a higher risk, especially considering ongoing geopolitical concerns such as Iran sanctions.
Notably, a National Security Presidential Memorandum issued in February 2025 specifically directed enhanced scrutiny of foreign-owned entities, a key factor behind maintaining the reporting requirements for foreign companies.
What Comes Next?
FinCEN is accepting public comments on the interim rule for 60 days and intends to finalize the regulation later this year. The rule is effective immediately and is legally justified under the “good cause” exemption of the Administrative Procedure Act, allowing agencies to bypass public comment when necessary.
With compliance costs dropping and regulatory clarity emerging, American business owners—particularly small enterprises—can breathe a sigh of relief. However, for foreign entities operating in the U.S., scrutiny is only increasing.
Final Thoughts
This shift marks a defining moment in the evolution of U.S. financial regulations under the CTA. It’s a case study of how quickly executive priorities, legal challenges, and cost-benefit analysis can reshape federal policy. Businesses would be wise to stay nimble, monitor the final rule later this year, and assess their exposure accordingly, especially if operating internationally.
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