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.
How the Trump Administration’s War on Cartels Will Reshape the Financial Sector
On March 11, 2025, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a Geographic Targeting Order (GTO) aimed at disrupting drug trafficking and money laundering along the southwestern border. The GTO significantly lowers the Currency Transaction Reports (CTR) threshold from $10,000 to $200 for money service businesses (MSBs) operating in 30 zip codes across California and Texas. Treasury Secretary Scott Bessent emphasized the move as part of a broader effort to curb cartel influence, underscoring “deep concern with the significant risk to the U.S. financial system [from] the cartels, drug traffickers, and other criminal actors along the Southwest border.”
Despite its broader deregulatory agenda, the Trump administration has made clear that financial crime regulations — particularly those targeting money laundering, sanctions compliance, and illicit financing — are exceptions to its broader policy shift. The administration’s intensified crackdown on drug cartels underscores the financial sector’s growing role in national security and foreign policy enforcement. Banks and regulated institutions operating along the U.S.-Mexico border, or with substantial exposure to Mexico and Central America, must prepare for heightened compliance and due diligence expectations.
The Southwest Border GTO: A Glimpse into FinCEN’s Enforcement Priorities
GTOs compel financial institutions to implement heightened monitoring and reporting measures within specific high-risk regions. These orders, typically in effect for 180 days with the possibility of renewal, serve as a key intelligence-gathering and enforcement tool to disrupt illicit financial flows.
The March 11 GTO affects MSBs — including foreign exchange dealers, check cashers, issuers of traveler’s checks, and money transmitters — rather than banks. However, its implications extend far beyond these institutions. The drastic reduction of the CTR threshold to $200 reflects the cartels’ ability to efficiently launder drug proceeds through small, frequent transactions that evade traditional detection mechanisms.
Should the data gathered from this GTO indicate widespread illicit activity, regulators may extend its reach to regional and community banks, imposing even greater compliance burdens. More critically, the order signals heightened regulatory scrutiny on financial institutions’ roles in detecting and preventing cartel-related transactions. Banks with exposure to high-risk sectors must proactively enhance monitoring systems, train staff on emerging threats, and prepare to demonstrate robust compliance measures during regulatory examinations.
Drug Cartels as Terrorist Organizations: A Paradigm Shift for Financial Institutions
On his first day in office, President Trump signed an executive order initiating the designation of certain drug cartels as Foreign Terrorist Organizations (FTOs). On February 20, the State Department formally classified eight cartels under this designation, triggering sweeping legal and financial consequences.
Under U.S. law, FTO designation prohibits financial institutions from conducting transactions with these organizations and mandates the immediate blocking or freezing of assets linked to them. The move significantly expands the enforcement scope of the Treasury’s Office of Foreign Assets Control (OFAC), which oversees sanctions on terrorist organizations and other prohibited entities.
For financial institutions, this shift requires a fundamental reassessment of compliance strategies. Banks must refine sanctions screening processes, update risk management frameworks, and bolster due diligence measures to ensure they do not inadvertently facilitate transactions tied to these entities. Even transactions that do not explicitly list cartel-affiliated individuals or businesses may pose risks, necessitating enhanced scrutiny of financial flows originating from cartel-controlled regions.
In addition to shifting compliance strategies, the new FTO designation carries with it a risk for increased civil litigation against banks under the Anti-Terrorism Act (ATA). From approximately 2014 to present, federal courts throughout the country have seen an increase in civil matters against banks for providing financial services to FTOs and/or their affiliates, and therefore aiding and abetting acts of terrorism. While these claims ordinarily involve foreign banks predominantly located in the Middle East, Russia, China, and Europe, this new designation and the accompanying GTO could result in similar lawsuits against U.S. depository institutions.
Cartels have embedded themselves in diverse sectors — including agriculture, mining, transportation, and even financial services — complicating compliance efforts. Institutions that fail to adapt face increased criminal and civil liabilities, underscoring the urgent need for proactive risk mitigation measures.
The Road Ahead: Navigating an Intensified Regulatory Landscape
As the Trump administration intensifies efforts to dismantle cartel financial networks, financial institutions must brace for a rapidly evolving regulatory environment. Enhanced reporting obligations, stricter compliance requirements, and expanded due diligence mandates are set to redefine risk management strategies across the sector.
Institutions operating along the U.S.-Mexico border will be particularly affected, navigating the dual pressures of FinCEN’s GTO mandates and broader cartel-related sanctions. Strengthening internal controls, refining anti-money laundering frameworks, and integrating advanced transaction monitoring tools will be critical in maintaining compliance and mitigating legal risks.
While these regulatory shifts may impose short-term costs, they ultimately safeguard financial institutions from unwitting involvement in illicit activities. More importantly, they reinforce the industry’s pivotal role in national security efforts, ensuring that the financial system remains a bulwark against transnational crime.
By staying ahead of regulatory developments and embracing a proactive compliance posture, banks and financial institutions can not only protect themselves but also contribute meaningfully to the broader fight against cartel-driven financial crime.
FinCEN Eliminates Corporate Transparency Act’s Reporting Obligations for U.S. Persons
On March 21, 2025, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) released an interim final rule (Interim Rule) that broadly eliminates Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act (CTA) for all U.S. reporting companies and all U.S. beneficial owners of foreign reporting companies. Under the Interim Rule, which FinCEN is implementing immediately, only companies created under foreign law and registered to do business in the U.S. will be required to submit BOI reports (unless otherwise exempt), and only foreign beneficial owners of such nonexempt foreign entities will be reportable.
Based on FinCEN’s estimates supporting the original BOI Rule (Original Rule), exempting all U.S. reporting companies shrinks the compliance universe by 99.8 percent.
How Did We Get Here?
The CTA whiplash, playing out in courts since early December, took a sharp turn by the government over the last month. On February 18, FinCEN restored the reporting obligations under the Original Rule after the last nationwide injunction against the CTA had been lifted at the government’s request. FinCEN gave reporting companies a grace period for compliance that would have ended, for most companies, on March 21.
Then, on February 27, FinCEN announced that it was suspending CTA enforcement pending a formal extension of the compliance deadlines beyond March 21. On March 2, the U.S. Treasury took this a step further, announcing the total suspension of CTA enforcement against U.S. persons and a rulemaking process “that will narrow the scope of the [BOI] rule to foreign reporting companies only.”
The Interim Rule puts this policy change into effect. The primary legal basis for this “narrowing” is a provision of the CTA that provides a regulatory process by which the U.S. Treasury may, subject to several statutory requirements, create additional exemptions from the BOI reporting obligations. In a court filing made after the March 2 announcement, the government elaborated on the policy change by noting the U.S. Treasury “intends to focus on foreign entities that could engage in illicit transactions from abroad.”
Policy Change or a New CTA?
Congress enacted the CTA to combat money laundering, the financing of terrorism, and other serious financial crimes by requiring tens of millions of private companies operating in the U.S. to identify their beneficial owners and disclose to FinCEN personal information about such companies and beneficial owners. FinCEN stores this information in a secure, nonpublic electronic warehouse for law enforcement purposes. Yet, FinCEN pegs the estimated number of reporting companies subject to the Interim Rule at less than 12,000 annually. Supporters of the CTA point to this fact, and findings made by Congress that bad actors conceal their ownership of entities in the U.S. to facilitate illicit transactions, in their criticism of the policy change. We could see judicial scrutiny of the Interim Rule if a plaintiff with legal standing decides to bring a case.
FinCEN is soliciting comments from the public on the Interim Rule, noting it “will assess the exemptions [in the Interim Rule], as appropriate, in light of those comments and intends to issue a final rule this year.” Among other unanswered questions, the Interim Rule does not address how BOI received by FinCEN from U.S. companies and their beneficial owners will be handled – nearly 16 million reports under the Original Rule were submitted to FinCEN prior to March 21.
Expect the CTA Saga to Continue
In addition to potential legal challenges to the Interim Rule, numerous cases challenging the CTA remain on court dockets and will continue to work their way through the legal process. Separately, some state legislatures have shown interest in developing their own versions of the CTA (which could be impacted by the ultimate resolution of the pending cases against the CTA), with New York having adopted the New York LLC Transparency Act (applicable to limited liability companies formed or registered to do business in New York and set to take effect January 1, 2026).
New York Attorney General Proposes Bill to Expand Consumer Protection Law
On March 13, New York Attorney General Letitia James announced the introduction of the Fostering Affordability and Integrity through Reasonable Business Practices Act (FAIR Business Practices Act). The proposed legislation seeks to extend the state’s existing ban on deceptive business practices to also prohibit unfair and abusive practices, aligning New York with 42 other states.
The bill, introduced in both state Senate and Assembly, would enhance enforcement capabilities for the Office of the Attorney General (OAG) and private consumers, including the ability to seek civil penalties and restitution for UDAAP violations. According to Attorney General James, the legislation is needed to tackle a host of consumer harms, including:
Subscription cancellations. Preventing companies from making it unreasonably difficult for consumers to cancel recurring payments.
Debt collection abuses. Prohibiting debt collectors from improperly seizing Social Security benefits or nursing homes from suing relatives of deceased residents for unpaid bills.
Auto dealer practices. Prohibiting car dealerships from withholding a customer’s photo identification until a sale is finalized.
Student loan servicing misconduct. Restricting student loan servicers from steering borrowers into costlier repayment plans.
Exploitation of limited English proficiency consumers. Addressing deceptive practices targeting non-English-speaking consumers.
Junk fees and hidden costs. Reducing unnecessary and deceptive charges in various industries, including healthcare and lending.
Artificial intelligence (AI) scams and online fraud. Strengthening enforcement against AI-driven scams, phishing schemes, and deceptive digital marketing practices.
The proposal has garnered support from former CFPB director Rohit Chopra and former FTC Chair Lina Khan, both of whom have emphasized the need for stronger state-level enforcement against deceptive and abusive business practices.
Putting It Into Practice: New York’s proposed legislation is the latest example of a growing trend among states taking a more active role in consumer protection enforcement (previously discussed here and here). This also highlights how some states are proactively responding to the CFPB’s state-level consumer protection recommendations from January, which encourage the adoption of the “abusive” standard (previously discussed here). With ongoing uncertainty surrounding the future of the CFPB, more states are likely to step in to fill the regulatory void by expanding their own consumer protection laws.
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The Government Contractor: False Claims Act Liability Based On A DEI Program? Let’s Think It Through
One of the more attention-grabbing aspects of Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” is the specter of False Claims Act liability for federal contractors based on their Diversity, Equity, and Inclusion (DEI) programs. Many workplace DEI programs have been viewed as a complement to federal anti-discrimination law—a tool for reducing the risk of discrimination lawsuits. The new administration, however, views DEI programs as a potential source of discrimination. EO 14173 proclaims that “critical and influential institutions of American society … have adopted and actively use dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called ‘diversity, equity, and inclusion’ (DEI) or ‘diversity, equity, inclusion, and accessibility’ (DEIA) that can violate the civil- rights laws of this Nation.” To counteract this potential “illegal” use of DEI programs, the Trump administration is leveraging the FCA, a powerful anti-fraud statute, to enforce its policy within the Federal Government contractor community.
We discuss below the framework of the FCA, how it might apply to federal contractor DEI programs under the administration’s orders, and potential hurdles the Government may face in pursuing FCA claims based on a contractor’s allegedly illegal DEI program. We recommend steps contractors can take to mitigate potential FCA risks when evaluating their own DEI programs.
To read the full article, please click here.
Effective April 14: FinCEN GTO Requires MSBs Along US Southwest Border to Report Transactions in Currency of More than $200
Go-To Guide:
The Financial Crimes Enforcement Network (FinCEN) issued a Geographic Targeting Order (GTO) requiring all money services businesses (MSBs) located in 30 ZIP codes across California and Texas to, among other things, report and maintain records of cash transactions exceeding $200 (up to $10,000), and to verify the identity of persons presenting such transactions.
The GTO does not alter existing obligations for MSBs, except as otherwise provided in the GTO.
The GTO takes effect April 14, 2025, and will remain in effect until Sept. 9, 2025, unless renewed.
Background
Effective April 14 through Sept. 9, 2025, unless renewed, FinCEN’s GTO aims to combat Mexico-based cartels and other illicit actors in certain California and Texas counties along the U.S.-Mexico border. The GTO requires all MSBs located in the specified targeted areas to (i) file Currency Transaction Reports (CTRs) with FinCEN for cash transactions of more than $200 but not more than $10,000; and (ii) verify the identity of persons making such transactions.
The GTO is intended to support the Trump administration’s goal of halting the flow of harmful drugs into the United States by drug cartels and other criminal actors. President Trump issued an executive order (EO) in January mandating the classification of drug cartels and other organizations as Foreign Terrorist Organizations (FTOs) or Specially Designated Global Terrorists (SDGTs). Following the EO, the U.S. Departments of the Treasury and State designated eight organizations as FTOs and SDGTs, including six drug cartels based in Mexico. According to U.S. Treasury Secretary Scott Bessent, the GTO “underscores [the] deep concern with the significant risk to the U.S. financial system of the cartels, drug traffickers, and other criminal actors along the Southwest border.”
Which MSBs Must Comply with the GTO?
MSBs1 located in the seven counties in California and Texas listed below, as denoted by their respective ZIP codes, are required to comply with the GTO (collectively, Covered MSBs):
Imperial County, California: 92231, 92249, 92281, and 92283;
San Diego County, California: 91910, 92101, 92113, 92117, 92126, 92154, and 92173;
Cameron County, Texas: 78520 and 78521;
El Paso County, Texas: 79901, 79902, 79903, 79905, 79907, and 79935;
Hidalgo County, Texas: 78503, 78557, 78572, 78577, and 78596;
Maverick County, Texas: 78852; and
Webb County, Texas: 78040, 78041, 78043, 78045, and 78046.
MSBs located in these specified targeted areas must transmit the GTO to each of their agents located in these areas.
What Transactions Must Be Reported and How?
Covered MSBs must report each deposit, withdrawal, exchange of currency, or other payment or transfer by, through, or to the Covered MSB that involves a transaction in currency of more than $200 but not more than $10,000. The CTR filing requirement, however, does not apply to transactions with a commercial bank.
The Covered MSB must report the transaction to FinCEN in a CTR through the BSA E-Filing System within 15 days of the date when the transaction occurred and include “MSB0325GTO” in Field 45 in Part IV of the CTR. FinCEN instructs Covered MSBs to continue with the submission notwithstanding the BSA E-Filing System-generated warnings indicating the transaction being reported is below the $10,000 reporting threshold.
The GTO reminds Covered MSBs to comply with the identification requirements set forth at 31 C.F.R. § 1010.312 before concluding a covered transaction, including the requirement that the specific identifying information used in verifying the identity of the customer be recorded on the CTR. The GTO prohibits the mere notation of “known customer” or “bank signature card on file” on the CTR. The GTO exempts Covered MSBs from verifying the identity of armored car service employees.
Although dollar thresholds for Suspicious Activity Report requirements remain the same (i.e., as low as $2,000),2 FinCEN encourages the voluntary filing of SARs where appropriate to report transactions conducted to evade the $200 reporting threshold imposed by the GTO.
Record Retention Requirements
Covered MSBs must retain all CTRs filed in compliance with the GTO and any related records for a period of five years from the last day the GTO is in effect (including any renewals thereof). MSBs must make these records available to FinCEN or any other law enforcement or regulatory agencies upon request.
Noncompliance
Noncompliance with the terms of the GTO may result in civil or criminal fines/penalties for the Covered MSB and any of its officers, directors, employees, and agents.3
Key Takeaways for Covered Businesses
The GTO will directly impact the operations of MSBs that engage in cash-based transactions in the 30 ZIP codes subject to the GTO. MSBs operating in these areas should become familiar with the GTO’s requirements and take steps to ensure the implementation of adequate controls to comply with the GTO’s terms by April 14, 2025. This may involve updating existing risk assessments, reviewing BSA-mandated compliance programs, and training customer-facing and compliance staff.
Covered MSBs should closely monitor regulatory updates from FinCEN, as GTOs historically have been renewed and at times, expanded to address emerging areas of concern.
1 FinCEN regulations define an “MSB” to include dealers in foreign exchange, check cashers, issuers or sellers of traveler’s checks or money orders, providers of prepaid access, money transmitters and sellers of prepaid access. 31 C.F.R. § 1010.100(ff).
2 31 C.F.R. § 1022.320.
3 31 U.S.C. §§ 5321-5322.
Video: Whistleblower Challenges and Employer Responses: One-on-One with Alex Barnard
Addressing whistleblower claims is one of the most sensitive and complex issues employers face. It becomes especially challenging when the claims involve compliance officers, risk officers, or even lawyers tasked with identifying potential problems.
In this one-on-one interview, Epstein Becker Green attorney Alex Barnard sits down with George Whipple to explore the unique challenges whistleblower allegations present within organizations. Alex explains how courts distinguish between performing one’s job duties and raising legitimate whistleblower concerns, particularly when internal experts are involved. He also outlines key strategies for investigating claims fairly, avoiding retaliation, and navigating the fine line between good-faith and bad-faith whistleblowing.
Drawing on more than 25 years of experience in litigation and internal investigations, Alex emphasizes the importance of treating every claim as having merit while acting with caution in cases involving potential bad faith. He provides actionable insights for employers on maintaining professionalism, minimizing risks, and fostering respect for the whistleblower process while upholding organizational integrity.
Learn effective techniques to handle whistleblower claims, mitigate risks, and ensure compliance in an increasingly scrutinized workplace environment.