Updated Guidance on the Corporate Transparency Act and Beneficial Ownership Information Reporting Requirements
The Corporate Transparency Act (CTA) and the Financial Crimes Enforcement Network’s (FinCEN) enforcement of the CTA’s beneficial ownership information (BOI) reporting requirements have been the subject of numerous pending legal challenges that have affected compliance dates. Following a recent court decision to stay its injunction, FinCEN has updated guidance resuming its enforcement of BOI reporting requirements. Consequently, the vast majority of non-exempt reporting companies must file initial, amended, and/or corrected BOI reports by March 21, 2025, and as set forth below in the FinCEN Guidance:
For the vast majority of reporting companies, the new deadline to file an initial, updated, and/ or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.
In addition, reporting companies that previously received a different reporting deadline or are involved with certain ongoing litigation should be aware of the additional FinCEN Guidance below:
Reporting companies that were previously given a reporting deadline later than the March 21, 2025 deadline must file their initial BOI report by that later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.
As indicated in the Alert titled, “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.),” Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.) — namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024) — are not currently required to report their beneficial ownership information to FinCEN at this time.
Additionally, moving forward, any new reporting company formed (or foreign reporting company registered) will have 30 days from the date of its formation (or its registration in the case of foreign entities) to file its initial BOI report.
As with past developments, the CTA’s future remains uncertain, and possible Congressional and/or further court actions could delay, change, or eliminate beneficial ownership reporting requirements.
Europe: ESMA and National Regulators Launch Coordinated Review of Fund Manager Compliance and Internal Audit Functions
On 14 February 2025, the EU’s securities and markets regulator, the European Securities and Markets Authority (ESMA), launched a Common Supervisory Action (CSA) with EU Member State National Competent Authorities (NCAs), in relation to compliance and internal audit functions of UCITS management companies and Alternative Investment Fund Managers (AIFMs) across the EU.
The CSA aims to assess to what extent UCITS management companies and AIFMs have established effective compliance and internal audit functions with adequate staffing, authority, knowledge, and expertise to perform their duties under the AIFM and UCITS Directives. The CSA is expected to be conducted through to the end of 2025.
UCITS management companies and AIFMs are required to have robust internal controls to protect investors and preserve financial stability. Their compliance and internal audit functions should accordingly be designed to ensure that internal control mechanisms to monitor, identify, measure, and mitigate any possible risks of non-compliance with relevant legal and regulatory obligations are in place.
A common assessment framework developed by ESMA sets out the scope, methodology, supervisory expectations, and timeline on how to carry out a comprehensive CSA in a convergent manner. It will be used to coordinate and compile the information required to complete the CSA.
Throughout 2025, it is expected that NCAs will share knowledge and experiences through ESMA in order to seek consistency as to how they supervise the compliance of UCITS management companies and AIFMs with the relevant rules in the area.
Next Steps
It is expected that ESMA will publish a final report with the results of the CSA in 2026.
Maryland Extends Lender Licensure Enforcement Deadline Amid Industry Pushback
On February 18, 2025, the Maryland Office of Financial Regulation (OFR) extended its temporary moratorium on the enforcement of mortgage lender licensure guidance and emergency regulations it issued on January 10, 2025. In that guidance and regulations, the OFR for the first time applied the State’s mortgage lender licensure requirements to acquirers and assignees (including passive trusts) of residential mortgage loans on Maryland properties. The temporary moratorium will expire making the new compliance deadline July 6, 2025. Please read our earlier discussion of these emergency regulations in our legal update Even Passive Trusts?!? Maryland Extends Mortgage Lender Licensure Requirements to Holders of Residential Mortgage Loans.
Following broad pushback from industry stakeholders, including some who suspended all mortgage operations in Maryland, Senator Pamela Beidle and Delegate Pam Queen sponsored the Maryland Secondary Market Stability Act of 2025 before both chambers of the Maryland General Assembly. As proposed, the emergency bill would provide an exemption from Maryland’s mortgage lender and installment loan licensure requirements for entities under certain circumstances that acquire or are assigned certain mortgage loan and/or installment loans but who do not originate, service, or collect payments on these loans on their own behalf. In their February 18th release, the OFR indicated they “strongly support[] the passage of this bill to ensure the continued availability of mortgage loans for Maryland consumers.”
Finally, through its announcement, the OFR “clarifie[d] that commercial lenders making loans exclusively for business purposes under Maryland’s installment loan statutes . . . are not subject to OFR’s licensing requirements under mortgage lending and installment licensing provisions.”
Hunton will continue to monitor developments from the Maryland legislature and the OFR regarding these assignee licensure requirements and provide periodic updates to clients.
Corporate Transparency Act Enforceable Again
On February 18, 2025, the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), stayed the nationwide injunction on enforcement of the Corporate Transparency Act, thereby requiring all reporting companies to file beneficial ownership information (“BOI”) with FinCEN.
Accordingly, the new deadline to file an initial, updated, or corrected BOI report is now March 21, 2025. However, reporting companies that were previously given a reporting deadline later than the March 21, 2025, deadline must file their initial BOI report by that later deadline. For instance, this exception applies if your reporting company qualifies for certain disaster relief extensions.
In addition, on February 10, 2025, the U.S. House of Representatives passed the Protect Small Businesses from Excess Paperwork Act of 2025 (“H.R. 736”), which would extend the Corporate Transparency Act’s original filing deadline of January 1, 2025, to January 1, 2026. Importantly, the U.S. Senate has not passed H.R. 736. If passed by the U.S. Senate and signed by the President, the new filing deadline will be January 1, 2026.
Given the shifting regulatory landscape, businesses should stay informed and ensure compliance to avoid potential penalties. For a detailed breakdown of the reporting requirements under the Corporate Transparency Act, visit this article.
CTA Reporting Restored: FinCEN Extends Filing Deadlines and Signals Revisions to Reporting Requirements After Federal Court Lifts Stay
On February 18, 2025, the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex), lifted its order staying the Financial Crimes Enforcement Network (FinCEN) regulations establishing the Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA).
Immediately following this action, FinCEN announced an extension of the deadline for companies to file BOI reports by 30 calendar days. Thus, the new deadline for companies to file an initial, updated, and/or corrected BOI report is Friday, March 21, 2025. The March 21 filing deadline applies to:
existing companies that were originally required to file before January 1, 2025;
companies that were formed in 2024 and originally required to file within 60 days of the formation date; and
companies that were formed on or after January 1, 2025, and before February 20, 2025.
Additionally, the U.S. Department of the Treasury has committed, during this 30-day period, to assess its options to further modify deadlines, prioritize reporting for those entities that pose the most significant national security risks, and initiate a process during this year to revise BOI reporting requirements to reduce the burden for lower-risk entities, such as many U.S. small businesses.
The exceptions to the March 21 reporting deadline include the following:
Those companies that were previously given a reporting deadline later than March 21, 2025—e.g., companies having a later reporting deadline because they qualified for certain disaster relief extensions that were previously granted by FinCEN—may file their BOI report based on that later deadline.
Plaintiffs in the case National Small Business United v. Yellen, 5-22-cv-01488 (N.D. Ala.), are not currently required to report BOI information to FinCEN.
FinCEN announced this change in filing requirements through a notice posted on the BOI Beneficial Ownership Information web page titled “Corporate Transparency Act Reporting Requirements Back in Effect with Extended Reporting Deadline; FinCEN Announces Intention to Revise Reporting Rule.
CFPB Small Business Lending Data Rule Survives Challenge in Federal Court
On February 19, a federal magistrate judge for the United States District Court for the Southern District of Florida issued a report and recommendation rejecting a trade group’s challenge to the CFPB’s small business lending data rule. The ruling found that merchant cash advances lawfully fall within the scope of the rule. The trade group’s lawsuit sought to exclude merchant cash advances from the rule, arguing, among other things, that such transactions do not constitute “credit” under the Equal Credit Opportunity Act (the “ECOA”) and that the rule was arbitrary and capricious, in violation of the Administrative Procedure Act.
Specifically, the trade group’s allegations included the following:
Dispute over the definition of credit. The trade group alleged that the CFPB exceeded its statutory authority by classifying merchant cash advances as “credit” under ECOA and that these transactions do not meet the traditional definition of credit.
Regulatory fairness concerns. The trade group argued that the rule is arbitrary and capricious because the CFPB aimed to “level the playing field” rather than adhering strictly to statutory mandates. The trade group claimed that the CFPB selectively targeted merchant cash advance products without proper justification.
Lack of adequate industry consideration. The trade group alleged that the CFPB failed to properly consider their public comments and industry concerns during the rulemaking process, and that it did not adequately assess the economic impact the rule could have on small business financing.
The court rejected these claims, concluding that merchant cash advances meet the definition of credit under ECOA because they involve deferred debt payments. The court also determined that the CFPB acted within its statutory authority under Section 1071 of the Dodd-Frank Act. Additionally, the court found that the CFPB sufficiently considered industry concerns and balanced the benefits of merchant cash advances against the potential risks to small businesses.
Putting It Into Practice: The magistrate judges findings will need to be adopted by the district court. But it affirms the Bureau’s data collection mandate under the Dodd-Frank Act. However, with the CFPB’s future regulatory activities in flux, it remains to be seen what will eventually happen with the rule. Small business lenders should continue to monitor pending litigation and political developments that could affect their compliance obligations.
More Executive Orders Aimed at Improving the Operation of the Federal Government
Executive Order Directing Deregulation and Termination of Certain Regulatory Enforcement Actions
On February 19, 2025, in an executive order titled Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative, President Trump expressed a policy to “deconstruct[] … the overbearing and burdensome administrative state.” Specifically, President Trump directed each agency head (subject to limited exemptions) to classify all regulations subject to the agency’s sole or shared jurisdiction into one of seven categories. These categories include, for example, “unconstitutional regulations and regulations that raise serious constitutional difficulties,” “regulations that implicate matters of social, political, or economic significance that are not authorized by clear statutory authority,” “regulations that impose significant costs upon private parties that are not outweighed by public benefits,” “regulations that harm the national interest,” and “regulations that impose undue burdens on small business and impede private enterprise and entrepreneurship.” There is no category for a regulation that the agency head finds lawful and appropriate. Each agency head is to provide the Administrator of the Office of Information and Regulatory Affairs (OIRA) the list of those “unconstitutional regulations and regulations that raise serious constitutional difficulties.” The Administrator of OIRA, then, is tasked with developing an agenda to “rescind or modify these regulations.”
In addition, the executive order directs each agency head to assess whether ongoing enforcement of any regulation identified in the above classification process complies with law and the policies of the Trump administration. On a case-by-case basis and consistent with applicable law, the agency head is to “terminat[e] … all such enforcement proceedings that do not comply” with the executive order’s directive.
Executive Order Affecting Independent Agency Power
On February 18, 2025, in an executive order titled Ensuring Accountability for All Agencies, President Trump amended Executive Order (EO) 12866 to require administrative rulemaking by independent regulatory agencies (such as the Securities and Exchange Commission, the Federal Trade Commission, the National Labor Relations Board, and the banking regulatory agencies (Federal Reserve Board, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency)), which are previously exempted by EO 12866, to go through the regulatory review process promulgated by EO 12866, including submission of any proposed or final rules to the White House’s Office of Management and Budget (OMB) for review before publication.
The executive order further:
Directs the OMB Director to:
Adopt performance standards and management objectives for heads of independent agencies;
Conduct performance reviews over independent agency heads and report to the President; and
Review financial obligations and consult agency heads to adjust budget allocations.
Requires heads of independent agencies to
Consult the OMB and other White House offices on policies and priorities;
Establish a White House liaison position in each agency; and
Submit agency strategic plans to OMB for preclearance before publication.
Prohibits government agencies to advance interpretation of laws in rulemaking or litigations inconsistent with the positions taken by the Attorney General.
Executive Order Reducing the Size and Composition of the Federal Government
On February 19, 2025, in an executive order titled Commencing the Reduction of the Federal Bureaucracy, President Trump directed several actions to reduce the size of the federal government. First, the executive order eliminates, to the maximum extent of the law, the non-statutory components and functions of (i) the Presidio Trust, (ii) the Inter-American Foundation, (iii) the United States African Development Foundation, and (iv) the United States Institute of Peace. The head of each of these entities must submit a report to the OMB Director that (i) states the extent to which it and its components and functions are statutorily mandated and (ii) affirms compliance with the executive order. The OMB Director will terminate or reject funding requests for components or functions that are not statutorily mandated. Second, the Director of the Office of Personnel Management will take steps to eliminate the four Federal Executive Boards and the Presidential Management Fellows Program. Third, the heads of the departments and agencies identified below have been instructed to terminate the following committees and councils:
The Advisory Committee on Voluntary Foreign Aid (U.S. Agency for International Development),
The Academic Research Council and the Credit Union Advisory Council (Consumer Financial Protection Bureau),
The Community Bank Advisory Council (Federal Deposit Insurance Corporation),
The Secretary’s Advisory Committee on Long COVID (Department of Health and Human Services), and
The Health Equity Advisory Committee (Centers for Medicare and Medicaid Services).
Fourth, within 30 days, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and the Assistant to the President for Domestic Policy are to recommend additional entities and Federal Advisory Committees to be terminated.
Presidential Memorandum on Disclosure of Terminated Programs, Contracts, and Grants
On February 18, 2025, in a memorandum titled Radical Transparency about Wasteful Spending, President Trump directed the heads of executive departments and agencies to take all appropriate actions to the maximum extent permitted by law to make public the “complete details of terminated programs, cancelled contracts, terminated grants, and any other discontinued obligation of Federal funds.”
FinCen Announces New Deadline for BOI Reporting Under Corporate Transparency Act
The Financial Crimes Enforcement Network of the U.S. Treasury Department (FinCEN) announced a new deadline for most companies covered by the Corporate Transparency Act (CTA). Such reporting companies now must file Beneficial Ownership Information (BOI) reports no later than March 21, 2025.
FinCEN made its announcement on February 18, 2025, in response to a decision by a federal judge in the U.S. District Court for the Eastern District of Texas lifting the preliminary injunction in Smith v. United States Department of the Treasury. That decision removed the last judicial impediment to the enforcement of the CTA. With limited exceptions for certain reporting companies qualifying for an extension due to disaster relief or who may be subject to an exception as a plaintiff in National Small Business United v. Yellen, reporting companies should file their BOI reports no later than March 21, 2025. As of today, the deadline appears firm and should be considered binding. However, in its announcement, FinCEN left itself the option of extending the deadline if it determines an extension is warranted, indicating that it would provide an update of any modification of the March 21, 2025, deadline prior to that date, recognizing companies impacted by this announcement may need additional time to comply with their BOI reporting obligations.
In light of the March 21, 2025, time frame, companies should take heed of this decision and make every effort to meet this reporting deadline.
BOI is Back: Corporate Transparency Act Reporting Requirements Reinstated
Amid a series of ongoing legal battles, the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) have been reinstated. In light of the U.S. Supreme Court’s January 23, 2025 order in McHenry v. Texas Top Cop Shop Inc., which granted the government’s request for a stay of a nationwide injunction in a separate case challenging the BOI reporting requirements, on February 17, 2025, the U.S. District Court for the Eastern District of Texas granted the government’s motion to stay the preliminary injunction issued in Smith v. United States Department of the Treasury. As a result, U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is no longer prohibited from enforcing the CTA’s BOI reporting requirements, and reporting companies’ compliance obligations have resumed. This ruling is pending an appeal to the U.S. Court of Appeals for the Fifth Circuit.
FinCEN has announced a 30-day deadline extension for reporting companies. The new deadline for the majority of reporting companies to file an initial, updated, and/or corrected BOI report is March 21, 2025. FinCEN has also indicated that it will assess the need for further modifications to the reporting deadlines during this 30-day extension period, with a focus on lower-risk entities.
In parallel, BOI reporting requirements are receiving legislative attention. The Protect Small Business from Excessive Paperwork Act of 2025 unanimously passed the U.S. House of Representatives and a companion bill is awaiting action in the Senate. If enacted, reporting companies formed before January 1, 2025 will have until January 1, 2026 to comply with the BOI reporting requirements.
Reporting companies must ensure they are prepared to meet the March 21, 2025 filing deadline. While further adjustments may be forthcoming, companies are advised to remain proactive in their compliance efforts.
Corporate Transparency Act Back in Effect with March 21 Deadline
The Financial Crimes Enforcement Network (FinCEN) issued a notice confirming that beneficial ownership information (BOI) reporting rules are back in effect following a February 18, 2025, ruling in Smith, et al. v. U.S. Department of the Treasury, et al. in the Eastern District of Texas. The Smith Court lifted its injunction following the January 23, 2025, Supreme Court decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al., which we discussed in a previous alert.
For most reporting companies,[1] the deadline to file a new, updated, or corrected BOI report is now March 21, 2025. However, FinCEN’s notice states that the agency will use the 30-day period before the deadline to “assess its options to further modify deadlines, while prioritizing reporting for those entities that post the most significant security risks.” According to the notice, FinCEN may also work toward revising the BOI reporting rules to “reduce the burden for lower-risk entities.”
Recent legislation unanimously passed in the U.S. House of Representatives exacerbates the lack of certainty around the new deadline. H.R. 736, Protect Small Businesses From Excessive Paperwork Act of 2025, which is now before the Senate, would extend the deadline for filing BOI reports to January 1, 2026, for companies formed before January 1, 2024.
The Corporate Transparency Act (CTA) contains civil and criminal penalties for noncompliance. Reporting companies that take a “wait and see” approach between now and March 21, 2025, should be prepared to file quickly as the deadline approaches. Given the compressed timeframe and the single deadline for the vast majority of companies, there may be a significant demand on FinCEN’s online portal as we approach March 21.
CTA in the Courts
For those keeping score on the CTA litigation front, both cases mentioned above are currently pending in the U.S. Court of Appeals for the Fifth Circuit, with oral arguments scheduled in Texas Top Cop Shop for April 1, 2025. Other cases on appeal to circuit courts include:
National Small Business United v. Yellen — The U.S. District Court for the Northern District of Alabama issued an injunction preventing enforcement of the CTA against the named plaintiffs. Oral arguments were held on September 27, 2024, in the government’s appeal to the U.S. Court of Appeals for the Eleventh Circuit. No decision has been issued.
Firestone et al v. Yellen et al. — The U.S. District Court for the District of Oregon denied the plaintiffs’ request for a preliminary injunction, and the plaintiffs appealed the decision to the U.S. Court of Appeals for the Ninth Circuit.
Community Associations Institute et al v. U.S. Department of the Treasury et al. — The U.S. District Court for the Eastern District of Virginia denied the plaintiffs’ request for a preliminary injunction, and the plaintiffs appealed the decision to the U.S. Court of Appeals for the Fourth Circuit.
In a noteworthy decision on February 14, 2025, in Boyle v. Bessent, et al., the U.S. District Court for the District of Maine granted the government’s motion for summary judgment, finding the CTA to be a valid exercise of congressional authority.
We will continue to monitor this situation closely and provide updates as needed.
ENDNOTES
[1] Companies that were previously granted an extended deadline later than March 21, 2025, must file by such later deadline. In addition, the injunction in favor of the plaintiffs in National Small Business United v. Yellen remains unaffected by the latest ruling. Companies formed after February 19, 2025, must file within 30 days of formation.
Corporate Transparency Act Returns: New Deadline March 21, 2025
On February 17, 2025, the Eastern District of Texas in Smith v. United States Department of the Treasury lifted the last remaining nationwide preliminary injunction on enforcement of the filing deadline under the Corporate Transparency Act (CTA) in light of the Supreme Court’s stay of the injunction in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, et al., earlier this year. Following the ruling, the Treasury Department stated that it would extend the filing deadline to March 21, 2025.
With the deadline back in effect, newly formed entities will also need to file within 30 days of formation. In addition, any changes to filings already made will need to be updated within 30 days of the change (if, for example, ownership or control of the entity changes, or if a beneficial owner moves to a new residential address).
The Financial Crimes Enforcement Network (FinCEN), tasked with enforcing the CTA, advised that it is undertaking a review of the CTA to determine if lower-risk categories of entities should be excluded from the reach of the filing requirements. FinCEN will make an initial statement on that review prior to the March 21, 2025 deadline. However, unless and until FinCEN makes changes in the applicability of the requirement, all companies subject to the CTA should treat the deadline as enforceable.
FinCEN also announced that it will initiate a longer process this year to revise the reporting rule to reduce the filing burden for lower-risk entities, but it’s currently unclear as to what those modifications might entail.
Passed in the first Trump Administration but implemented during the Biden presidency, the CTA — an anti-money laundering law designed to combat terrorist financing, seize proceeds of drug trafficking, and root out illicit assets of sanctioned parties and foreign criminals in the U.S. — has faced legal challenges around the country, many of which are ongoing despite the lifting of the preliminary injunctions. In addition to district court proceedings, appeals are currently pending before the Fourth, Fifth, Ninth, and Eleventh Circuits.
Please note that if you file or have already filed and the law is ultimately found unconstitutional or otherwise overturned or rescinded, you will not be under any continuing obligation regarding that filing.
TMA Chicago/Midwest Podcast Hosted by Paul Musser | Jonathan Weinberg on Private Credit and the Importance of Early Intervention in Workouts [Podcast]
In the latest TMA Chicago/Midwest podcast episode, host and Insolvency and Restructuring Partner Paul Musser sat down with Jonathan Weinberg, Co-Head of the Portfolio Group at Monroe Capital LLC. Together, they discussed Jonathan’s career path in restructuring, comparisons and contrasts between private credit and traditional bank lending horizons, and the importance of early intervention in workouts. Jonathan also noted highlights from his involvement in the Turnaround Management Association (TMA) as well as the benefits of building one’s network and fostering relationships within the restructuring community.
Jonathan explained that his career began in investment banking, where he developed a keen interest in capital structures during the subprime mortgage boom. This experience led to his transition into restructuring and distressed investment banking, where he found fulfillment in using his deep understanding of capital markets to solve complex financial issues. Jonathan said that in his role at Monroe Capital, early intervention and proactive management have been instrumental in leading strategies for stressed credits.
Paul and Jonathan went on to discuss comparisons and contrasts between private credit and traditional bank lending, particularly in terms of flexibility and decision-making. Jonathan explained that private credit lenders such as his firm have more leeway in managing stressed and distressed situations due to fewer regulatory constraints, as compared to traditional banks. This flexibility allows them to engage in creative solutions, including taking equity positions or working closely with sponsors to navigate financial challenges. In any workout, both Jonathan and Paul emphasized the value of maintaining strong borrower relationships in order to foster collaborative problem-solving.
Finally, Jonathan shared takeaways from his experiences as a member of the TMA organization and how it fostered his own professional growth and business development. He underscored the value of building relationships with industry peers across different functions, such as legal, financial advisory and lending. He encourages professionals at the beginning of their restructuring careers to proactively foster their skills and networks, as such connections can be crucial when seeking guidance on complex distressed or financial situations.