The Financial Crimes Enforcement Network (FinCEN) has recently announced an interim final rule that significantly alters the Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act. This development is particularly relevant for domestic businesses operating within the United States.
Key Changes to BOI Reporting Requirements
Under the new interim final rule, the definition of a “reporting company” has been changed. Previously, both domestic and foreign entities were required to report their beneficial ownership information to FinCEN. However, with this update, only entities formed under the laws of a foreign country and registered to do business in any U.S. State or Tribal jurisdiction are classified as reporting companies. As a result, all entities created within the United States, formerly known as “domestic reporting companies,” are now exempt from BOI reporting requirements.
Implications for Domestic Businesses
This change means that U.S.-based companies are no longer obligated to submit beneficial ownership information to FinCEN. This change aims to reduce the regulatory burden on domestic businesses, allowing them to focus more on their operations without the additional compliance requirements previously mandated.
Requirements for Foreign Entities
Foreign entities that meet the new definition of a reporting company and do not qualify for an exemption must adhere to the following deadlines:
- Entities registered before the publication of the interim final rule must file their BOI reports within 30 days from the publication date.
- Entities registered on or after the publication date have 30 calendar days from receiving notice of their effective registration to file an initial BOI report.
It’s important to note that these foreign entities are not required to report any U.S. persons as beneficial owners. Similarly, U.S. persons are not obligated to report BOI concerning any such foreign entity for which they are a beneficial owner. FinCEN is currently accepting comments on this interim final rule and plans to finalize the regulation later this year.
If you have questions about the legal implications of these recent court or legislative proceedings, or need a legal determination on whether an exemption applies to your entity or whether legal relationships constitute beneficial ownership, we strongly encourage you to consult legal counsel with expertise in this area to assist your organization.
