US Treasury Issues Interim Final Rule That Removes the Requirement for US Companies and US Persons To Report Beneficial Ownership Information to Fincen Under the Corporate Transparency Act
The Financial Crimes Enforcement Network (FinCEN) announced on March 21, 2025, that FinCEN had issued its Interim Final Rule that provides that FinCEN will not require US companies and US persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (CTA).
In the Interim Final Rule, FinCEN revised the definition of “reporting company” in its implementing regulations to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any US State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”). FinCEN also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.
Thus, through this Interim Final Rule, all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN. Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines, to be determined following receipt of comments from the public and publication in the Federal Register. These foreign entities, however, will not be required to report any US persons as beneficial owners, and US persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.
The Interim Final Rule will be effective immediately. In accordance with the Congressional Review Act, FinCEN has determined that “FinCEN for good cause finds that providing public notice or allowing for public comment before this Interim Final Rule takes effect is impracticable, unnecessary, and contrary to the public interest.”
The Interim Final Rule may be reviewed here.
While the March 21st, 2025, Interim Final Rule eliminates the CTA’s reporting requirements for “domestic reporting companies” and US persons, FinCEN could conceivably reverse or further revise such modifications with limited or no prior notice or comment. While this is not anticipated at this time under the current administration, companies and practitioners should continue to monitor CTA developments. The CTA also remains subject to various legal challenges.
For more information, click here.
Alexander Lovrine contributed to this post.
Global Focus on Anti-Corruption Increases
While the United States has announced a pause on Foreign Corrupt Practices Act enforcement, the rest of the world is increasing its focus on prosecuting corrupt activities. This is a reminder to companies with a global footprint, including those headquartered in the U.S. that may not have physical operations overseas, that foreign activities likely fall under jurisdictions where foreign bribery and corruption are still enforcement priorities with sizeable penalties.
On March 20, 2025, the United Kingdom’s Serious Fraud Office, France’s Parquet National Financier and the Office of the Attorney General of Switzerland announced a new anti-corruption alliance, the International Anti-Corruption Prosecutorial Taskforce, affirming their shared commitment to addressing international bribery and corruption and strengthen cross-border collaboration. The announcement noted that all three countries have wide-reaching anti-bribery legislation with jurisdiction to prosecute criminal conduct, even if that activity occurs overseas, provided there is a link to the prosecuting country. The Taskforce’s founding statement may be found here.
What Every Multinational Company Needs to Know About … Criminal Enforcement of Trade, Import, and Tariff Rules: A Growing Risk for Businesses
In less than 100 days, the Trump administration has implemented a dizzying array of new tariffs, significantly increasing costs and complexity for U.S. importers. The administration is keenly aware that companies operating in this high-tariff environment may attempt creative, or even fraudulent, strategies to minimize tariff payments. Consequently, enforcement agencies have been directed to closely monitor and vigorously prosecute efforts at improper tariff engineering and duty evasion.
Historically, U.S. Customs and Border Protection (CBP) has relied heavily on its administrative remedies to enforce the customs and tariff laws. The Department of Justice (DOJ), however, has been steadily escalating enforcement intensity, notably through the False Claims Act (FCA), leveraging its treble damages and civil penalties to pursue false statements about imports. For a more detailed explanation of how the FCA has been used in this area, please see our recent blog post, “What Every Multinational Company Should Know About … The Rising Risk of Customs False Claims Act Actions in the Trump Administration.”
DOJ also has demonstrated a growing willingness to pursue criminal charges against companies and individuals involved in customs fraud schemes such as the purposeful misclassification of goods, falsifying country-of-origin declarations, and intentionally shipping goods through low-tariff countries. Importers of goods into the U.S. should expect criminal enforcement to accelerate in the coming months and years.
Potential Criminal Charges for Violating Customs Rules
DOJ has several available charging options in pursuing criminal cases against companies and individuals who violate customs rules by making false statements about customs requirements such as classification, country of origin, valuation, assists, and free trade preferences. Commonly used federal criminal statutes that could apply to tariff underpayments include:
Smuggling (18 U.S.C. § 545), which criminalizes knowingly and willfully importing merchandise into the U.S., contrary to law (e.g., misclassification or mislabeling to evade duties), and is typically used when importers intentionally misrepresent goods’ classification or origin to avoid or lower tariffs, often proven through seized documents or intercepted communications. This provision already has been applied in United States v. Esquijerosa, where an importer was charged with routing Chinese-origin goods through third countries to avoid tariffs, resulting in a December 6, 2024, guilty plea under the general conspiracy statute.
False Claims (18 U.S.C. § 287), which criminalizes knowingly making false, fictitious, or fraudulent claims to federal authorities and is used where importers knowingly provide false documentation or declarations to CBP concerning country-of-origin, valuation, related parties, or classification while paying improperly low customs or anti-dumping duties.
False Statements (18 U.S.C. § 1001), which criminalizes knowingly making materially false, fictitious, or fraudulent statements or representations to federal authorities and is frequently applied where importers intentionally provide false documentation or declarations to CBP concerning country-of-origin, valuation, related parties, or classification.
Wire Fraud (18 U.S.C. §§ 1343 & 1349), which criminalizes schemes to defraud involving interstate or foreign wire communications (such as emails or wire transfers) and can be applied to customs violations due to the prevalent use of electronic communications and financial transfers in import transactions, providing prosecutors leverage in complex schemes.
International Emergency Economic Powers Act (IEEPA) (50 U.S.C. § 1701), which criminalizes the willful evasion or violation of regulations issued under national emergency declarations concerning international commerce and could apply where importers deliberately evade tariffs or restrictions enacted under presidential authority during declared emergencies, such as recent trade actions involving China.
Conspiracy (18 U.S.C. § 371), which criminalizes any agreement between two or more persons to commit any of the above crimes.
Examples of Past Customs-Related Criminal Cases Brought by DOJ
Criminal prosecutions based on violations of customs rules do not require DOJ to break new ground. Here are a few significant criminal trade cases:
Plywood Tariff Evasion Case (2024): A Florida couple was charged under the Lacey Act and received 57-month prison sentences for evading approximately $42.4 million in customs duties. They fraudulently declared Chinese plywood as originating from Malaysia or Sri Lanka, avoiding anti-dumping duties exceeding 200%.[1]
Stargate Apparel (2019): DOJ filed criminal and civil charges against the CEO of a children’s apparel company, Stargate Apparel, Inc. The CEO was charged with participating in a years-long scheme to defraud CBP by submitting invoices that falsely understated the true value of the goods imported by his company into the United States.[2]
Food Importation Fraud (2013): Several individuals and two food processing companies were criminally charged for illegally importing a Chinese-origin food product by intentionally mis-declaring its origin and classification as Vietnamese. Through complex transshipment methods, the defendants sought to evade over $180 million in anti-dumping duties.
Fentanyl Precursors (2025): Indian chemical firms Raxuter Chemicals and Athos Chemicals faced criminal charges for smuggling precursor chemicals used in fentanyl production into the U.S. and Mexico, employing extensive false declarations to evade detection.[3]
How Customs Violations or Underpayments Come to DOJ’s Attention
Customs violations can come to DOJ’s attention through several channels:
CBP Referrals: CBP’s Automated Commercial Environment (ACE) uses sophisticated algorithms capable of identifying anomalies, suspicious patterns, or misrepresentations in import data. Fraudulent conduct will result in a referral by CBP to DOJ — similar to Health and Human Services’ very successful data mining tools, which have led to numerous civil and criminal fraud cases.
Voluntary Disclosures: Although CBP encourages self-reporting, prior voluntary disclosures can expose intentional misconduct, triggering criminal investigations.
Whistleblower Reports: Claims filed by employees or competitors under the FCA or reports submitted via CBP’s e-Allegations Program or the Enforce and Protect Act (EAPA) portal often reveal duty evasion schemes, prompting DOJ intervention. Several plaintiff-side FCA law firms are touting their experience in customs and trade cases, and we anticipate referral activity in this space to increase.
Navigating Increased Enforcement and Mitigating Risk
Criminal enforcement of CBP regulations presents significant risk for companies that serve as importers of record, who are responsible under CBP regulations for ensuring the complete and accurate submission of import data. In this new trade environment, there will be an increasing emphasis by CBP to detect importers attempting to make end-runs around higher tariffs, particularly from China.
Risk mitigation involves a thorough review of the company’s ACE data to assess the company’s importing patterns, focusing particularly on imports targeted for increased tariffs by the Trump administration. Companies also should evaluate the current state of their customs compliance to confirm consistent and robust procedures for classification, origin determination, valuation, and recordkeeping, to ensure that reasonable care in being used in import operations, and should consider preparing “reasonable care” memoranda to memorialize their treatment of how they are handling tariff-related obligations. Finally, importers should establish post-entry checks and reviews to ensure that they can correct any entry-related information submitted to Customs before it becomes final at liquidation. This is especially important in the context of a high-tariff environment, where potential penalties for underpayment of tariffs are vastly greater. Foley’s international trade team has developed a six-step tariff risk management plan, accessible here: “Managing Import and Tariff Risks During a Trade War.”
[1] U.S. Department of Justice (DOJ), Florida Conspirators Sentenced to Nearly Five Years in Prison Each for Evading Over $42 million in Duties when Illegally Importing and Selling Plywood, (Feb. 15, 2024), https://www.justice.gov/usao-sdfl/pr/florida-conspirators-sentenced-nearly-five-years-prison-each-evading-over-42-million
[2] U.S. Department of Justice (DOJ), Manhattan U.S. Attorney Announces Criminal And Civil Charges Against CEO Of Clothing Company For Million-Dollar Customs Fraud (June 6, 2019), https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-criminal-and-civil-charges-against-ceo-clothing-company.
[3] U.S. Department of Justice (DOJ), Two Indian Chemical Companies and a Senior Executive Indicted for Distributing Fentanyl Precursor Chemicals (Jan. 6, 2025), https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-criminal-and-civil-charges-against-ceo-clothing-company; see also Associated Press, 2 Indian Companies Charged with Smuggling Chemicals Used in Making Fentanyl (Jan. 6, 2025), https://apnews.com/article/indian-chemical-companies-charged-fentanyl-opioid-smuggling-d2cfbc05f0742953e35a05cd0c889dc3
FinCen Issues a Huge Reprieve Form Domestic Reporting Companies
O frabjous day! the Financial Crimes Enforcement Network (FinCEN) late last Friday issued an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (CTA). Here is the FinCEN’s summary:
In that interim final rule, FinCEN revises the definition of “reporting company” in its implementing regulations to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”). FinCEN also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.
Thus, through this interim final rule, all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN. Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines, detailed below. These foreign entities, however, will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.
Upon the publication of the interim final rule, the following deadlines apply for foreign entities that are reporting companies:
Reporting companies registered to do business in the United States before the date of publication of the IFR must file BOI reports no later than 30 days from that date.
Reporting companies registered to do business in the United States on or after the date of publication of the IFR have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.
The CTA has been proven to be a costly disaster that has imposed unnecessary costs on small businesses that are no doubt cheering Friday’s announcement.
FinCEN Removes Beneficial Ownership Reporting Requirements for U.S. Companies and U.S. Persons, Sets New Deadlines for Foreign Companies
On March 21, 2025 the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (CTA).
Going forward, only foreign companies (not U.S. companies owned by non-U.S. persons) that have registered to do business in the U.S. will be required to comply with the CTA.
Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines, detailed below. These foreign entities, however, will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.
The following deadlines apply for foreign entities that are reporting companies:
Reporting companies registered to do business in the United States before March 21, 2025, must file BOI reports no later than 30 days from that date.
Reporting companies registered to do business in the United States on or after March 21, 2025, have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.
CTA 2.0 – FinCEN Limits CTA’s Reporting Requirements to Certain Non-U.S. Entities and Non-U.S. Individuals
The Financial Crimes Enforcement Network (FinCEN) issued an interim final rule on March 21, 2025, that eliminates the Corporate Transparency Act (CTA) reporting requirements for U.S. entities and U.S. individuals. The rule is effective upon its publication in the federal register; however, the interim final rule may be updated following a sixty-day comment period.
FinCEN’s press release provided the following summary of the impact of the interim final rule:
“Thus, through this interim final rule, all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN. Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines, detailed below. These foreign entities, however, will not be required to report any U.S. persons as beneficial owners and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.”
Non-U.S. entities that meet the definition of “reporting company” are generally (1) formed in a non-U.S. jurisdiction and (2) registered with a U.S. jurisdiction to do business in such jurisdiction. These non-U.S. entities will have thirty days from the later of (i) the date of publication of the interim final rule in the federal register and (ii) the date of becoming registered to do business in a U.S. jurisdiction.
Removing the reporting obligations of U.S. entities and U.S. individuals substantially limits the number of required filings. By FinCEN’s own estimate in the interim final rule, it anticipates roughly 12,000 filings annually (over each of the first three years). In the final reporting rule in effect prior to the interim final rule, FinCEN estimated roughly 10,510,000 filings annually (over each of the first five years).
UK, France, and Switzerland Form International Anti-Corruption Prosecutorial Task Force to Combat Anti-Corruption
On February 5, 2025, Attorney General Pamela Bondi issued a memo requiring DOJ’s Foreign Corrupt Practice Act (“FCPA”) Unit to “prioritize investigations related to foreign bribery that facilitates the criminal operations of cartels and Transnational Criminal Organizations (TCOs),” and to “shift focus away from investigations and cases that do not involve such a connection.” On February 10, 2025, the Trump administration issued an executive order directing a pause on initiation of new FCPA enforcement, a review of all existing FCPA investigations or enforcement, and updated guidelines or policies on new FCPA matters going forward.
On February 21, when we discussed the implications of these policy changes, we predicted that foreign regulators may step up enforcement to fill the perceived vacuum in domestic anti-corruption enforcement. On March 20, 2025, the UK’s Serious Fraud Office (SFO), France’s Parquet National Financier (PNF) and the Office of the Attorney General of Switzerland (OAG) formed the “International Anti-Corruption Prosecutorial Task Force” (the “Task Force”) to pool resources on strategic priorities, cooperation, and “operational collaboration.” The Task Force also stated that it would “invite other like-minded agencies” to join. Equipped with a Leaders’ Group, facilitating “the regular exchange of insight and strategy,” and a Working Group, for “devising proposals for co-operation on cases,” SFO Director Nick Ephgrave reported that the Task Force should help ensure “there is no daylight between our agencies,” preventing criminals from taking advantage of any potential gaps between partner enforcement authorities. While not in direct response to the administration’s recent shift in FCPA enforcement priorities as planning for the Task Force was already underway, the message is clear that the SFO, PNF, and OAG are seeking collaboration and partnership to most effectively and efficiently combat cross-border corruption, leaving the door open for other agencies to join.
The Task Force demonstrates a renewed commitment to tackling international bribery and corruption. Many of these foreign agencies, such as the French Anti-Corruption Agency (Agence française anticorruption or AFA), publish Guidelines in English that detail compliance policies, enforcement priorities, and objectives. Other countries also have enforceable anti-bribery and anti-corruption regulations. As we reported, compliance still matters and the Task Force is the latest demonstration of that fact. Companies operating in relevant jurisdictions should be mindful of these latest enforcement activities, their impact on cross-border investigations, and continue to evaluate and enhance their corporate compliance programs.
Corporate Transparency Act 2.0 – Narrowing Reporting Requirements
On March 21, 2025, the Financial Crimes Enforcement Network (“FinCEN”) issued an interim final rule that significantly changes the reporting requirements under the Corporate Transparency Act (“CTA”). This alert summarizes the key changes to the reporting requirements and what they mean for your business.
Key Takeaways
Domestic companies1 are now exempt from all reporting requirements.
Foreign companies and foreign pooled investment vehicles no longer need to report U.S. person beneficial owners2 (but will need to report any non-U.S. person beneficial owners).
Compliance is still effectively voluntary as FinCEN has announced it will not be enforcing penalties and this rule is not yet effective.
Exemption for Domestic Companies
All domestic reporting companies are now completely exempt from the requirement to:
File initial beneficial ownership information (“BOI”) reports.
Update previously filed BOI reports.
Correct previously filed BOI reports.
FinCEN states that this reduction of requirements will eliminate the substantial compliance burdens for millions of U.S. businesses whose information would not be “highly useful” in the efforts to “detect, prevent, or prosecute money laundering, the financing of terrorism of terrorism, proliferation finance, serious tax fraud, or other crimes.”3
Changes for Foreign Companies
Foreign companies still must report beneficial ownership information, but with two important exemptions:
Foreign companies are exempt from reporting beneficial ownership information for any U.S. persons who are beneficial owners.
U.S. persons are exempt from providing their beneficial ownership information to foreign companies.
Foreign companies with only U.S. beneficial owners will not need to report any beneficial owners.
Changes for Foreign Pooled Investment Vehicles
Foreign pooled investment vehicles now only need to report:
Non-U.S. individuals who exercise substantial control over the entity (not an individual who has the greatest authority over the strategic management of the entity).
If multiple non-U.S. individuals exercise control, only the non-U.S. person with the greatest authority must be reported.
Foreign pooled investment vehicles with only U.S. beneficial owners will not need to report any beneficial owners.
Extended Deadline
Foreign reporting companies and pooled investment vehicles will have until the later of 30 days after this rule is published in the federal register, or 30 days after their registration to do business in the United States.
Next Steps
FinCEN is accepting comments on this interim final rule. The agency will assess these exemptions based on public comments and plans on issuing a final rule later this year.
1 See our prior advisories on the general application of the CTA and its specific application for those with entities for estate planning purposes for information on what is a domestic reporting company, a foreign reporting company, and beneficial owner information.
2 As a reminder, generally a beneficial owner is any individual who (directly or indirectly) (a) exercises substantial control over the company or (b) owns or controls at least 25% of the company’s ownership interests.
3 Please see full rule and explanation from FinCEN here.
FinCEN’s New Interim Final Rule (1) Exempts Domestic Companies from Corporate Transparency Act Reporting and (2) Sets New Deadlines for Reporting by Foreign Companies
On March 21, 2025, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury (Treasury) significantly limited the scope of reporting required under the Corporate Transparency Act (CTA).[1] “Domestic reporting companies” (now referred to as “domestic entities”) are exempt from reporting beneficial ownership information. Instead, “reporting companies” are limited to those entities previously defined as “foreign reporting companies.” Even as to foreign reporting companies, beneficial ownership information as to any U.S. person[2] need not be reported.
FinCEN will also apply the exemption and deadline extension as of March 21, 2025, in advance of publication in the Federal Register.
This approach is consistent with the announcements from FinCEN on February 27, 2025, and from Treasury on March 2, 2025. See our alerts dated March 4, 2025, Treasury May Be Shifting CTA Reporting Rule Away from Domestic and Toward Foreign Reporting Companies: Miller Canfield, and February 28, 2025, FinCEN Again Delays CTA Reporting Deadlines and Suspends Enforcement: Miller Canfield.
Here is a summary of the most significant amendments to the Reporting Rule:
Changes the definition of “reporting company” to include only a foreign entity (previously a “foreign reporting company”).[3]
Adds a new exemption from the definition of “reporting company” for any “domestic entity” (previously a “domestic reporting company”), thereby removing all domestic entities and their beneficial owners from the scope of any CTA initial reporting, correction, or update requirements.[4]
Exempts (foreign) reporting companies from reporting beneficial ownership information with respect to any U.S. person beneficial owners. Thus, a foreign reporting company that has only U.S. person beneficial owners will be exempt from reporting any beneficial owners.
Exempts U.S. persons from having to provide beneficial ownership information to any foreign reporting company as to which they are beneficial owners.
Revises a special rule applicable to “foreign pooled investment vehicles” to exempt such investment vehicles from having to report beneficial ownership information of U.S. persons who exercise substantial control over the entity.
Sets new reporting deadlines for foreign entities that are reporting companies as follows:
Initial reports:
Reporting companies that that were registered to do business in the U.S. before March 21, 2025 must file beneficial ownership information reports no later than April 20, 2025.
Reporting companies that that were registered to do business in the U.S. on or after March 21, 2025 must file beneficial ownership information reports no later than 30 calendar days of the earlier of (i) the date the reporting company receives actual notice that its registration is effective, or (ii) the date on which a secretary of state or similar office provides public notice that the reporting company has been registered to do business.
Updated reports: The deadline for reporting any change to required information previously submitted, is the later of (i) April 20, 2025, or (ii) 30 calendar days after the change occurs.
Corrected reposts: The deadline for reporting any change to required information previously submitted, is the later of (i) April 20, 2025, or (ii) 30 calendar days after the reporting company becomes aware or has reason to know change occurs.
[1] New interim final rule (“IFR”) available at: Beneficial Ownership Information Reporting Requirement Revision and Deadline | FinCEN.gov. The Reporting Rule, as amended, is available at: https://www.federalregister.gov/documents/2022/09/30/2022-21020/beneficial-ownership-information-reporting-requirements
[2] The CTA refers to the definition of United States person as set forth in Section 7701(a)(30) of the Internal Revenue Code of 1986) which includes U.S. citizens and lawful permanent residents, among others. 26 U.S. Code § 7701 – Definitions | U.S. Code | US Law | LII / Legal Information Institute.
[3] The new “reporting company” definition in the IFR is “[a]ny entity that is: (A) a corporation, limited liability or other entity; (B) formed under the law of a foreign country; and (C) registered to do business in any State or tribal jurisdiction by the filing of a document with the secretary of state or any similar office under the law of that state or Indian tribe.”
[4] The new “domestic entity” definition in the IFR is “[a]ny entity that is: (A) corporation, limited liability company or other entity; and (B) created by the filing of a document with a secretary of state or any similar office under the law of a State of Indian Tribe.”
New York AG Settles with School App
The New York Attorney General recently entered into an assurance of discontinuance with Saturn Technologies, operator of an app used by high school and college students. The app was designed to be a social media platform that assists students with tracking their calendars and events. It also includes connection and social networking features and displayed students’ information to others. This included students’ location and club participation, among other things. According to the NYAG, the company had engaged in a series of acts that violated the state’s unfair and deceptive trade practice laws.
In particular, according to the attorney general, although the app said that it verified users before allowing them into these school communities, in fact anyone could join them. Based on the investigation done by the AG, the majority of users appeared not to have been verified or screened to block fraudulent accounts. In other words, accounts that were not those of students at the school. This was a concern, stressed the AG, as the unverified users had access to personal information of students. The AG argued that these actions constituted unfair and deceptive trade practices.
Finally, the AG alleged that the company did not make it clear that “student ambassadors” (who promoted the program) received rewards for marketing the program. As part of the settlement, the app maker has agreed to create and train employees and ambassadors on how to comply with the FTC’s Endorsements Guides by, among other things, disclosing their connection to the app maker when discussing their use of the app.
Putting It Into Practice: This case is a reminder to review apps directed to older minors not only from a COPPA perspective (which applies to those under 13). Here, the NYAG has alleged violations stemming from representations that the company made about the steps it would take to verify users. It also signals expectations in New York for protecting minors if offering a social media platform intended only for that market.
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CMS’s ACA Marketplace Integrity and Affordability Proposed Rule – What it may mean for Health Plans
Earlier this month, the Centers for Medicare & Medicaid Services (CMS) released its 2025 Marketplace Integrity and Affordability Proposed Rule (Proposed Rule), proposing a number of enrollment and eligibility policies impacting both Federal and State Exchanges. While CMS frames these policies as necessary to combat fraud and abuse, the impact will be a reduction in enrollment in the ACA Marketplace – with the Proposed Rule estimating that between 750,000 and 2 million fewer individuals enroll in health insurance plans on the Exchanges in 2026.
The effective date of most of these provisions also coincides with the expiration of the enhanced premium subsidies, which the Biden administration extended through December 31, 2025 through the Inflation Reduction Act (IRA). These enhanced subsidiaries increased the amount of financial assistance individuals received and expanded eligibility for assistance. On December 5, 2024, the Congressional Budget Office wrote a letter to Congress indicating that the failure to extend these subsidies would result in 2.2 million individuals losing coverage in 2026 and an increase in premiums by 4.3%.
This article outlines the major provisions of the Proposed Rule, followed by a discussion of their potential impact on plans participating in the ACA Marketplace.
Key Provisions of the Proposed Rule
Income Verification Policies. In its Proposed Rule, CMS proposes several changes to the income verification process for applicants to apply through the Exchanges. Although CMS stated that these policies are necessary to combat fraud, CMS provided limited examples and evidence of fraud. Such policies include:
Removing the exception allowing Exchanges to rely on an applicant’s self-attestation of projected income, if the Internal Revenue Service (IRS) does not have tax return data to verify household income and family size. Exchanges would need to verify individuals’ enrollment, requiring enrollees to provide additional documentation.
Requiring additional income verification in instances where an applicant’s self-reported projected household income is between 100% and 400% of the Federal poverty level (FPL) but federal tax or other data shows that an applicant’s prior year’s income was below 100%. Individuals would have to prove that their income for the upcoming year is between 100% to 400% of the FPL or be unable to enroll in a plan on an Exchange. This change intends to attempt to identify individuals who may “overinflate” their income to be eligible for coverage. Currently, no income verification is required if the applicant projects a higher income than in their tax return.
Eliminating an automatic 60-day extension (in addition to the general 90-day deadline) when documentation is needed to verify household income in instances of income inconsistency.
Allowing Insurers to Deny Coverage for Past Due Premiums. CMS proposes to repeal a provision which currently prohibits insurers from requiring enrollees to pay past-due premium amounts in order to receive coverage under a new insurance policy or contract term. CMS consequently proposes, subject to state law, to allow insurers to add an enrollee’s past-due premium amount to the initial premium amount the enrollee must pay to effectuate coverage under a new policy or contract term and allow insurers to deny coverage to individuals if the total of past-due premiums and the initial premium amount are not paid in full. The stated purpose of this policy is (i) to curtail individuals from taking advantage of guaranteed coverage and seeking coverage when they need health care services, and (ii) to strengthen the risk pool and lower gross premiums.
Revision of Premium Payment Thresholds. CMS proposes to remove flexibilities that currently allow insurers to implement a fixed dollar and/or gross percentage-based premium payment threshold. Under current rules, insurers may consider enrollees to have fully paid their premiums if (i) under the fixed-dollar premium payment threshold, the enrollee has paid a total premium amount such that the unpaid remainder is $10 or less (adjusted for inflation), or (ii) under the gross percentage-based premium payment threshold, the enrollee has paid a total premium amount sufficient to achieve 98% or greater of the total gross monthly premium of the policy before the application of the advance premium tax credit (APTC). Under the Proposed Rule, insurers would only be allowed to implement a net premium percentage-based payment method where enrollees can meet the threshold by paying a total premium amount sufficient to achieve 95% or greater of the total net monthly premium amount owed.
Ineligibility for APTCs after one Year of Failing to Reconcile. CMS proposes to revise the “failure to file and reconcile process” by reinstating a 2015 policy that requires Exchanges to determine whether an individual is ineligible for the APTC if he or she did not file a Federal income tax return and reconcile their APTC amount in any given year. Currently, individuals will be deemed ineligible for failure to file and reconcile for a two-year span.
Changes to Open and Special Enrollment Periods. Under the Proposed Rule, CMS also seeks to shorten the Open Enrollment Period (OEP) and make several changes to Special Enrollment Periods (SEPs), including:
Shortening the OEP for all individual market Exchanges and off-Exchange individual health insurance (that are non-grandfathered) from November 1st to January 15th to November 1st to December 15th.
Removing the “low-income SEP” from both the Federal and State Exchanges. Currently, individuals whose projected household income is at or below 150% of the FPL have a SEP under the Federal and most State-based Exchanges whereby they can enroll or change plans on a monthly basis. CMS is proposing to remove this SEP. The stated purpose of this action is to reduce adverse selection (i.e., reduce the number of enrollees who sign up for health insurance only when they need coverage).
Requiring pre-enrollment verifications for applicants seeking coverage through a SEP. Currently, the Exchanges allow applicants to self-attest that, due to a change of circumstance, they qualify for a SEP (e.g., loss of employer coverage, marriage). The Proposed Rule would change the ability to self-attest and require applicants to submit documentation to the Exchanges.
Requiring Active Re-Enrollment. CMS also seeks to eliminate automatic re-enrollment for fully subsidized enrollees by proposing to require that enrollees whose premium payment amount would be $0 after application of the APTC, would be required to pay a $5 monthly premium until they update their Exchange application with an eligibility redetermination confirming their eligibility for the APTC.
Repeal of Bronze to Silver Plan Cross-Walking. CMS proposes to repeal regulations that currently allow Exchanges to move enrollees eligible for cost sharing reduction, which covers the cost of out-of-pocket healthcare costs and deductibles, from a bronze Qualified Health Plan (QHP) to a silver QHP for an upcoming plan year if a silver QHP is available (i) in the same product, (ii) with the same provider network, and (iii) with a lower or equivalent net premium post APTC-application.
Ineligibility of DACA Recipients. CMS proposes to remove Deferred Action for Childhood Arrivals (DACA) recipients from the definition of “lawfully present,” which in effect renders DACA recipients ineligible for enrollment in a QHP through the Exchange.
Prohibition of Coverage of Gender Affirming Care. CMS proposes to prohibit health insurance plans subject to the ACA’s essential health benefits (EHBs) from providing sex-trait modification, also commonly known as gender-affirming care, beginning Plan Year 2026. EHBs are ACA required minimum coverage categories that plans subject to the ACA must cover; EHBs are state or region specific and are determined based upon comparison to an EHB-benchmark plan that all other plans must mirror. This prohibition would in effect restrict all non-grandfathered insurance plans in the individual and small group markets, on- and off- Exchange, from covering sex-trait modification services.
Updates to the Premium Adjustment Methodology. CMS further seeks to update the premium adjustment methodology, which is used to set several different coverage parameters, including maximum out-of-pocket cost-sharing (MOOP), premiums, and tax credits. By way of background, the current premium adjustment methodology took a more stable approach given the uncertainty of premiums during the end of the COVID-19 Public Health Emergency. Under the Proposed Rule, beginning in 2026, CMS is proposing using an adjusted private individual and group market health insurance premium measure. Such a change will likely cause an increase of MOOP and an increase in premiums.
Updating De Minimis Thresholds. Plans on the Exchange are considered bronze, silver, gold, and platinum based on their actuarial value – whereby bronze plans must cover 60% of an average enrollee’s costs, silver plans cover 70%, gold plans cover 80%, and platinum plans cover 90%. Insurers may offer a specific plan if it is within a “de minis range” of this target value – for example, insurers may offer bronze plans so long as the actuarial value is within +5% and -2% of 60%. Similarly, insurers can offer a silver, gold, and platinum plan, if its value is within +2/-2 percentage points. CMS proposes to change the de minimis ranges to +2/-4 percentage points for all individual and small group market plans subject to the actuarial value, except expanded bronze plans. Further, CMS seeks to include a de minims range of +1/-1 percentage points for income-based silver cost-share reduction plan variations (which was previously −0/+1 percentage points). In the Proposed Rule, CMS estimates that this proposal would decrease premiums by one percent; however, it is likely to reduce the APTCs available.
Evidentiary Standard for Terminating Agents and Brokers. The Proposed Rule seeks to revise the standard for the Department of Health and Human Services (HHS) to terminate for-cause agents, brokers, and web-brokers from the Federally-facilitated Exchange by adding a “preponderance of the evidence” standard of proof regarding issues of fact. HHS may terminate its agreements with agents, brokers, and web-brokers for-cause for instances of non-compliance, fraud, and abusive conduct. Currently, regulations do not indicate an evidentiary standard HHS must apply; instead, the regulation states that HHS may terminate “in HHS’s determination.” CMS states that this change would “improve transparency in the process of holding agents, brokers, and web-brokers accountable for compliance.”
Potential Impacts to Plans
This Proposed Rule will have a direct impact on enrollment in the Exchanges. By adding measures that will increase premiums, reduce APTCs, and increase the administrative burden of applying and verifying enrollment, CMS will in effect discourage enrollment and decrease the number of individuals eligible for enrollment. Further, the changing rules may specifically discourage younger and/or healthier individuals from enrolling. This decrease in enrollment, coupled with the expected decrease in enrollment due to the expiration of the enhanced subsidies, could threaten the stability of the ACA Marketplace in the long run.
FinCEN Issues Interim CTA Rule, U.S. Entities and Individuals Exempted From Reporting
Highlights
The Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that changes requirements for reporting beneficial ownership information (BOI) under the Corporate Transparency Act
The rule narrows existing reporting requirements and requires only entities previously defined as “foreign reporting companies” to report BOI
FinCEN defines new exemptions from reporting for domestic entities and U.S. persons
The Financial Crimes Enforcement Network (FinCEN) recently issued a press release concerning the issuance of a new interim final rule that removes requirements for U.S. companies and persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (CTA).
Consistent with the U.S. Department of the Treasury’s March 2, 2025, announcement, FinCEN is adopting the interim final rule to narrow BOI reporting requirements under the CTA to apply only to entities previously defined as “foreign reporting companies.”
In the new interim final rule, FinCEN revises the definition of “reporting company” to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. state or tribal jurisdiction by filing a document with a secretary of state or similar office (such entities, previously defined as “foreign reporting companies”).
Additionally, FinCEN adds a new exemption available to entities formed in the U.S., previously defined as “domestic reporting companies.” Such entities are exempt from BOI reporting and do not have to report BOI to FinCEN, or update or correct BOI previously reported to FinCEN.
Thus, through the interim final rule, entities created in the United States – along with their beneficial owners – are exempted from requirements to report BOI to FinCEN.
Two Changes for Foreign Reporting Companies
With limited exceptions, the interim final rule does not change existing requirements for foreign reporting companies. However, the new interim rule does make two significant modifications to such requirements:
The interim rule extends the deadline to file initial BOI reports, and to update or correct previously filed BOI reports, to 30 calendar days from the date of its publication to give foreign reporting companies additional time to comply.
The interim final rule exempts foreign reporting companies from having to report the BOI of any U.S. persons who are beneficial owners of the foreign reporting company and exempts U.S. persons from having to provide such information to any foreign reporting company of which they are a beneficial owner.
Foreign entities that meet the new definition of a “reporting company” and do not qualify for an available exemption must report their BOI to FinCEN in compliance with these new deadlines.
Under the new interim rule, a reporting company is any entity that is:
a corporation, limited liability company, or other entity
formed under the law of a foreign country
registered to do business in any state or tribal jurisdiction by the filing of a document with a secretary of state or any similar office under the law of that state or Indian tribe
Reporting companies that registered to do business in the United States before the date of publication of the interim final rule must file BOI reports no later than 30 calendar days from the date of the new interim rule’s publication in the Federal Register. Reporting companies that register to do business in the United States on or after the date of publication of the interim final rule have 30 calendar days to file an initial BOI report after receiving notice their registration is effective.
FinCEN is accepting comments on this interim final rule until 60 days after it is published in the Federal Register and notes that it will assess the exemptions included in the subsequent final rule, as appropriate, in light of those comments. It intends to issue a final rule this year.