Key Points

• FinCEN’s final rule permanently exempts all domestic reporting companies and U.S. persons from beneficial ownership information (BOI) reporting under the Corporate Transparency Act.
• Only foreign companies formed under foreign law and registered to do business in the United States remain subject to BOI reporting.
• FinCEN will conduct a one-time deletion of previously reported U.S. person data from its Beneficial Ownership IT System, coordinating with the National Archives and Records Administration (NARA).

The Financial Crimes Enforcement Network (FinCEN) has issued a final rule permanently exempting all domestic reporting companies and U.S. persons from beneficial ownership information (BOI) reporting obligations under the Corporate Transparency Act (CTA).

Going forward, only foreign companies formed under foreign law and registered to do business in the United States remain subject to BOI reporting, and even they are no longer required to report information about U.S. person beneficial owners or U.S. person company applicants.

For the estimated 33 million domestic small businesses that faced first-year compliance costs of $21.7 billion under the original rule, this is a decisive — and permanent — regulatory reprieve.

CTA’s Rise and Turbulent Rollout

Congress enacted the CTA on January 1, 2021, as part of the Anti-Money Laundering Act of 2020 (itself part of the National Defense Authorization Act for Fiscal Year 2021). The statute directed FinCEN to establish a national registry of beneficial ownership information for certain companies, aiming to close a perceived gap that allowed illicit actors to hide behind anonymous shell entities.

FinCEN finalized its Reporting Rule on September 30, 2022, with an effective date of January 1, 2024. The rule was breathtaking in scope: approximately 33 million small businesses would have been required to report BOI, at an estimated first-year compliance cost of $21.7 billion and roughly $3.3 billion annually thereafter. Almost immediately, the CTA faced a flurry of legal challenges.

On January 31, 2025, the new administration issued Executive Order 14192, directing agencies to “alleviate unnecessary regulatory burdens.” Treasury suspended enforcement of the CTA on March 2, 2025, and FinCEN issued an interim final rule (IFR) on March 26, 2025, which temporarily exempted domestic reporting companies, exempted foreign companies from reporting U.S. person beneficial owners, and extended reporting deadlines. The final rule now makes those interim measures permanent — and goes further.

What the Final Rule Does

The final rule amends 31 C.F.R. § 1010.380 by adding new paragraph (b)(5). It makes four key changes:

• Permanently exempts all domestic reporting companies from BOI reporting. No domestic company—regardless of size or structure—is required to file beneficial ownership reports with FinCEN.
• Exempts foreign reporting companies from reporting BOI of U.S. person beneficial owners and U.S. person company applicants. The company applicant exemption is new in the final rule—it was not included in the March 2025 IFR.
• Exempts foreign pooled investment vehicles from reporting BOI of U.S. persons exercising substantial control. If no non-U.S. person exercises substantial control, no beneficial owner reporting is required at all.
• Eliminates the requirement for U.S. persons to update or correct FinCEN ID information. Approximately 760,000 U.S. persons who obtained FinCEN IDs are relieved of ongoing maintenance obligations.

The rule is effective immediately upon Federal Register publication. FinCEN determined that no transition period is needed because the rule “grants an exemption or relieves a restriction” under 5 U.S.C. § 553(d)(1).

Who Still Has to Report — and What

The term “reporting company” now applies exclusively to entities formed under the law of a foreign country and registered to do business in any U.S. state or tribal jurisdiction. FinCEN estimates approximately 28,000 such entities exist, of which roughly 13,000 had already filed as of the end of 2025, with approximately 15,000 still needing to file initial reports and roughly 1,800 new registrations expected annually.

Foreign reporting companies must report:

• Entity information: legal name, any trade names or DBAs, principal U.S. address, jurisdiction of formation under foreign law, U.S. state of first registration, and taxpayer identification number (TIN) or employer identification number (EIN).
• Beneficial owner information: only for non-U.S. person beneficial owners (i.e., individuals who exercise substantial control or own/control 25% or more of ownership interests).
• Company applicant information: only for non-U.S. person company applicants (up to two individuals—the direct filer and any person directing or controlling the filing).

Important nuances:

• A foreign reporting company whose beneficial owners are all U.S. persons must still file an initial BOI report containing the entity’s information—but it will not include any beneficial owner information.
• Non-U.S. persons who have obtained FinCEN IDs remain obligated to update or correct their information within 30 days of any change or discovery of an inaccuracy.
• Reporting companies that have obtained FinCEN IDs must still update or correct company information via a BOI report.

Risk-Based and Burden-Conscious

Treasury’s decision rests on a straightforward cost-benefit determination. The Secretary concluded that requiring domestic companies to report BOI “would not serve the public interest” and “would not be highly useful in national security, intelligence, and law enforcement efforts.” Both the Attorney General and the Secretary of Homeland Security concurred in writing.

Key elements of the rationale:

• Most domestic small businesses are legitimate. The overwhelming majority of the 33 million affected entities are not vehicles for illicit finance.
• Alternative tools exist. Law enforcement can access beneficial ownership information through the CDD Rule (which requires financial institutions to collect BOI from legal entity customers), subpoenas, and other investigative mechanisms.
• Foreign entities present heightened risks. Treasury has long emphasized the risks posed by foreign illicit actors using U.S.-registered foreign entities, justifying the continued (but narrowed) reporting obligation for foreign companies.
• Deregulatory mandate. Executive Order 14192 directed agencies to reduce regulatory burdens. Treasury Secretary Bessent characterized the rule as a “victory for common sense and American small businesses.”

FinCEN received 118 comment letters during the rulemaking process: 40 were supportive of the exemptions, 28 were opposed, and 50 took a neutral position.

What Happens to Previously Reported Data

FinCEN has committed to deleting U.S. person data that was previously reported to its Beneficial Ownership IT System. Key details:

• Identification method: FinCEN will use identifying documents submitted with BOI reports (e.g., U.S. passports, state-issued driver’s licenses) to identify records attributable to U.S. persons.
• One-time sweep: The deletion will be a single operation, not a periodic or ongoing process.
• NARA coordination: FinCEN will coordinate with the National Archives and Records Administration regarding records management requirements.
• No individual action required: FinCEN does not plan to require individuals to request deletion or provide confirmation of deletion. Instead, FinCEN will post a public notice on its website when the deletion is complete.
• 180-day caveat: If U.S. person BOI is included in a filing made after 180 days following Federal Register publication, FinCEN does not anticipate deleting that information.

Criticism and Open Questions

The final rule has drawn sharp criticism from transparency advocates, certain members of Congress, and law enforcement groups. And open questions remain:

• Legislative response: The rule could face future legislative or judicial challenges. Congressional opponents may seek to restore broader reporting requirements.
• Evasion risk: Commenters highlighted the concern that foreign persons could circumvent the rule simply by forming a domestic LLC—which would now be permanently exempt from BOI reporting.
• CDD Rule interplay: Financial institutions must still collect BOI from legal entity customers under the 2016 CDD Rule. FinCEN has signaled plans to revise the CDD Rule as mandated by the CTA—those revisions have not yet been proposed.

Practical Guidance: What Should You Do Now?

Domestic Companies

• You have no BOI filing obligations under the CTA—now or in the future (absent new legislation).
• If you already filed a BOI report, no action is required on your part. FinCEN will handle deletion of your data.
• State-level beneficial ownership or annual reporting requirements may still apply. Check with counsel regarding your specific jurisdiction.

Foreign Companies Registered in the U.S.

• Carefully review whether your entity qualifies as a “reporting company” under the narrowed definition (formed under foreign law, registered to do business in a U.S. state or tribal jurisdiction).
• If you are a reporting company, ensure compliance with current filing deadlines.
• Do not report information about U.S. person beneficial owners or U.S. person company applicants.
• Review whether any of the 23 existing exemptions (e.g., large operating companies, regulated entities) apply to your entity.

Financial Institutions

• The CDD Rule (31 C.F.R. § 1010.230) remains fully in effect. Continue collecting BOI from legal entity customers as part of your AML/KYC programs.
• Watch for FinCEN’s planned revisions to the CDD Rule, which the CTA mandated. Those revisions may change your collection obligations.
• Do not rely on the FinCEN BOI database for CDD compliance—it now contains a substantially narrower universe of data.

U.S. Persons With FinCEN IDs

• You are no longer required to update or correct your FinCEN ID information.
• Consider whether to retain your FinCEN ID for potential future use (e.g., if Congress restores broader requirements, or for voluntary use in other contexts).

For more information on this topic, contact Stephen A. Aschettino at saschettino@foxrothschild.com.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the authors and not necessarily this law firm or its clients.