US Businesses Exempted from Corporate Transparency Act Reporting Requirements

The Financial Crimes Enforcement Network (FinCEN), an agency of the U.S. Department of the Treasury, has issued a final rule that permanently removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) under the Corporate Transparency Act (CTA). This significant development solidifies the exemptions initially outlined in an interim final rule issued in March 2025, aiming to alleviate the administrative burden on millions of American businesses.

The new regulation completely eliminates the obligation for U.S.-based companies to submit beneficial ownership information to FinCEN. Furthermore, any previously reported BOI from U.S. persons will be deleted from the FinCEN database. Under the final rule, foreign entities registered to do business in the U.S. will still be required to report beneficial ownership information for foreign individuals. However, the requirement for these foreign companies to report U.S. person “company applicants” or U.S. persons in control of foreign pooled investment vehicles registered in the U.S. has also been eliminated.

Enacted by Congress in 2021 and becoming effective in January 2024, the Corporate Transparency Act sought to enhance transparency in corporate ownership structures to combat illicit activities such as money laundering, terrorist financing, and tax fraud. The Act mandated that companies report information about their beneficial owners—individuals who exercise substantial control or own at least 25% of the company—and company applicants. However, the law faced considerable criticism from groups like the National Small Business Association (NSBA), which argued it imposed an undue burden on small businesses.

This decision follows a pivotal ruling in March 2024 by a U.S. District Court in Alabama, which declared the Corporate Transparency Act unconstitutional. The court found that the Act exceeded the constitutional limits on Congress's legislative authority, though this initial ruling was limited to the plaintiffs, members of the National Small Business Association. In response to these legal challenges, the Treasury Department had previously issued an interim rule suspending reporting requirements for U.S. businesses, and these exemptions have now been made permanent.

Treasury Secretary Scott Bessent hailed the move as “a victory for common sense and American small businesses,” stating that the Trump administration had delivered on its promise to cut red tape and eliminate a burdensome reporting requirement for millions of law-abiding business owners without compromising national security. While U.S. Republicans praised the decision as supporting “job creators,” Democrats and some national security experts expressed concerns that it could make it easier for drug cartels, human traffickers, and money launderers to utilize anonymous shell companies to evade detection. Approximately 32 million U.S. businesses are directly impacted by this decision, now being exempt from the reporting obligations.