FinCEN Reinforces Beneficial Ownership Information Reporting for a Narrow Scope of Foreign Companies Registered to Do Business in the U.S. by Joel G. Young, JD, LLM
Posted on April 01, 2025
by
Joel Young
On March 26, 2025, the Financial Crimes Enforcement Network (FinCEN) published an interim final ruling lifting a previous requirement for U.S. companies to report beneficial ownership information (BOI) under the Corporate Transparency Act (CTA). At the same time, however, the ruling reinforces a reporting requirement for a narrower scope of foreign companies.
Domestic entities and all their foreign and U.S. beneficial owners are now exempt from filing initial BOI reports and/or updating or correcting reports already filed. This includes corporations, limited liability companies (LLCs) and other entities created by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe. By contrast, a reporting requirement remains in place for foreign companies registered to do business in the U.S. However, the law carves out an exception to this rule, which exempts foreign reporting companies from the requirement to share beneficial ownership information of any U.S. persons who are beneficial owners of that foreign reporting company. Similarly, U.S. persons are exempt from having to provide such information to any foreign reporting companies for which they are beneficial owners. This means that when all the beneficial owners of a foreign reporting company are U.S. persons (i.e., U.S. citizens or residents), the company is exempt from a BOI reporting requirement.
In exempting domestic companies from BOI reports, the interim final rule rationalizes that such regulatory requirements are an unnecessary burden to U.S. businesses that “would not be highly useful in national security, intelligence, and law enforcement agency efforts to detect, prevent, or prosecute money laundering, the financing of terrorism, proliferation finance, serious tax fraud, or other crimes.” Conversely, the rule explains that foreign reporting companies “present heightened national security and illicit finance risks” in their ability to access the U.S. financial system using legal entities created in foreign jurisdictions but registered to do business in the United States, often through the use of shell companies.
Under the final interim rules, foreign reporting companies already registered to do business in the U.S. have 30 days from the March 26, 2025, publication date to file BOI reports. Foreign companies registered to do business in the U.S. after that date have 30 calendar days to file an initial BOI report after receiving notice that their registration to do business in the U.S. is effective. March 26, 2025, also marks the beginning of a 60-day period during which the public may comment on the interim final rule. At the end of that period, FinCEN will make further adjustments to the law before publishing the final regulations later this year.
About the Author: Joel G. Young, JD, LLM, is an associate director of Tax Services with Berkowitz Pollack Brant, where he provides tax, income and estate tax planning and compliance services for high-net-worth families and closely held businesses with international operations. He can be reached at the firm’s Boca Raton, Fla., office at (561) 361-2000 or info@bpbcpa.com.
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