As the flurry of Corporate Transparency Act (CTA) developments continues, on March 2, the US Department of the Treasury (Treasury) announced the suspension of CTA enforcement against US citizens and domestic reporting companies, following on the heels of last week’s announcement by the Financial Crimes Enforcement Network (FinCEN) that it is not issuing fines or penalties in connection with beneficial ownership information (BOI) reporting for the time being. Going forward, as indicated by Treasury, the CTA will apply only to foreign reporting companies.
FinCEN’s February 27 Announcement
Barely more than a week after announcing a new March 21 reporting date for most reporting companies that have not yet filed all required reports under the CTA (see our prior alert for more information about this), FinCEN announced that it will not issue any fines or penalties, or take any other enforcement actions against any companies based on any failure to file or update their BOI reports. FinCEN’s nonenforcement of penalties will continue until a forthcoming interim final rule becomes effective and new reporting deadlines set forth in that rule have passed.
FinCEN expects to issue this interim final rule no later than March 21, 2025. Additionally, FinCEN intends to solicit public comments on revisions to existing BOI reporting requirements, which it will consider as part of a notice of proposed rulemaking that the agency anticipates issuing later this year to minimize the burden of CTA compliance on small businesses while maintaining the usefulness of BOI to key enforcement functions.
Treasury’s March 2 Announcement
Wasting no time, on March 2, Treasury released a statement announcing that, not only would it not enforce penalties or fines associated with BOI reporting under the existing regulatory deadlines, but it also would not enforce any penalties or fines against US citizens or domestic reporting companies or their beneficial owners after forthcoming rule changes take effect. Treasury’s announcement noted that it will issue a proposed rule that will narrow the scope of CTA reporting obligations to foreign reporting companies only, a step that, according to Treasury, would support American taxpayers and small businesses while ensuring that the rule is appropriately tailored to advance the public interest.