The Financial Crimes Enforcement Network (FinCEN) has issued an interim final rule that modifies the existing beneficial ownership information (BOI) reporting obligations under the Corporate Transparency Act (CTA). This rule narrows the scope of reporting to only include foreign reporting companies, exempting domestic reporting companies from the requirement to file initial BOI reports or update previously filed information. As a result, domestic entities no longer fall within the definition of "reporting companies." They are excluded from the reporting requirements, allowing them to avoid submitting or correcting BOI going forward. Under the previous interpretation of the law, nearly 33 million small businesses across the United States were considered reporting companies, the new interim final rule from FinCEN significantly reduces the number of companies required to remain in compliance.

In its official notice, FinCEN writes the new rulemaking is part of a larger undertaking that the federal government is pursuing consistent with an Executive Order President Trump issued on January 31^st, EO14192, Unleashing Prosperity Through Deregulation. “Consistent with the exemptive authority provided in the CTA and the direction of the President, the Secretary has reassessed the balance between the usefulness of collecting BOI and the regulatory burdens imposed by the scope of the Reporting Rule,” FinCEN stated.

NLBMDA joined over 100 trade associations in a trades letter to the Treasury Department applauding the new rulemaking. “We believe these revisions will allow the Department to focus its resources on entities that pose genuine risks of money laundering and other illicit activities, thereby enhancing the effectiveness of our nation's financial crime prevention efforts without imposing undue burdens on legitimate businesses,” the letter writes.

“NLBMDA applauds the actions the White House has taken to halt the implementation of overly burdensome and harmful federal regulations that specifically hurt small business,” said NLBMDA President & CEO Jonathan Paine. “NLBMDA will continue to work closely with the Administration and Federal Agencies to continue the mutual objective to rescind harmful regulations and provide relief to our members.”

NLBMDA has kept its members informed over the last few months as the legal status of the law remained in limbo with various legal challenges in courts across the country. Those cases remain ongoing as the plaintiffs in those cases continue to assert that Congress went beyond its statutory authority in passing the law.

FinCEN is accepting public comments on the new regulation for a 60-day period. After, the interim final rule is anticipated to be adopted as currently written.