The Financial Crimes Enforcement Network (FinCEN) announced that it is again going to enforce the beneficial ownership interest (BOI) rule that was enacted as part of the Corporate Transparency Act (CTA). But, FinCEN said on February 27 that it will not impose fines or penalties until after it finalizes new reporting rules that would narrow the BOI reporting rule to foreign reporting companies. The new reporting deadline is March 21, 2025.

The BOI reporting rule had been stayed by court order. However, the U.S. District Court for the Eastern District of Texas stayed the nationwide injunction against enforcing the BOI rule. That led to the FinCEN announcement on February 19 that it would be enforcing the reporting requirement. The BOI rule requires most companies to report to FinCEN the names and other identifying information of its owners. But, there are some exceptions, including those applicable to most insurance and financial advisors, although not to many of their clients.

In making the February 19 announcement FinCEN said, “in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period (from Feb. 19 to March 21) FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.”

On February 27, FinCEN said it would not fine companies that miss the March 21 deadline, and that it would not enforce fines or penalties until after an interim final rule comes out. Then on March 2 FinCEN said it will initiate a rulemaking that would narrow the scope of the BOI reporting rule to “foreign reporting companies only.”

Prospects: There is legislation pending to delay the BOI reporting deadline for a year. However, chances are slim of that legislation being enacted into law prior to the new reporting deadline. FinCEN’s announced intention to limit the BOI reporting rule to “foreign reporting companies only” also significantly lessens the threat of the BOI rule to domestic companies. Initial Congressional reaction was to applaud FinCEN’s announcement, but many lawmakers are adopting a wait and see attitude pending release of FinCEN’s proposed new rules. But on March 10, Senators Grassley (R-IA) and Whitehouse (D-RI) sent a letter to Treasury questioning its authority to narrow the rule to only foreign reporting entities. This is the first Republican and bipartisan pushback on FinCEN’s announcement.

 NAIFA Staff Contacts: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org.