On February 27, 2025, Financial Crimes Enforcement Network (FinCEN) announced that it would not impose fines or penalties, nor any kind of enforcement action, on organizations that do not report or correct Beneficial Ownership Information (BOI) reports by the current BOIR deadlines under the Corporate Transparency Act (CTA).
This option mirrors the Treasury Department’s emphasis on curtailing regulatory compliance burdens on corporations while addressing groups that represent substantial law enforcement and national security threats.
Corporate Transparency Act & BOI Reporting FinCEN
The CTA, enacted to prevent illegal financial activity, mandates certain parties to disclose their beneficial ownership to FinCEN. The rationale behind the requirement is to enhance transparency and avert the misuse of corporate structures for money laundering, tax evasion, and other illegal purposes.
Initially, parties formed or incorporated on or after January 1, 2024, had a BOIR deadline of 90 days after the incorporation or formation.
Legal Developments Affecting Beneficial Ownership Information Reporting
In December 2024, the enforcement of the BOI reporting requirements faced a significant challenge when a federal judge in Texas issued a nationwide injunction halting the reporting mandate. The judge’s decision was later upheld by the Fifth Circuit Court of Appeals. During this period, businesses were not required to submit their BOI reports but could do so voluntarily. The legal uncertainty surrounding the enforcement continued until January 2025, when the U.S. Supreme Court lifted the injunction, allowing the BOI reporting requirements to move forward.
Following this ruling, FinCEN announced that the new BOIR deadline for submitting BOI reports was set for March 21, 2025. However, the U.S. Treasury Department later clarified that penalties for non-compliance would not be enforced, and the Corporate Transparency Act would primarily apply to foreign reporting companies.
As of March 3, 2025, businesses are now required to comply with the BOIR deadline, but penalties for failing to meet it will not be issued. While the reporting requirement is in effect, the full enforcement of penalties remains on hold, with businesses awaiting further regulatory updates.
Conclusion
Businesses that are BOI reportable need to stay current on impending regulatory shifts. Although FinCEN put a hold on enforcement activities, businesses should prepare to comply as soon as the BOIR deadline is announced. Engagement in the public comment process may also provide businesses with an opportunity to influence how future requirements for reporting will be shaped so that their concerns and realities of doing business are addressed.
In general, the latest FinCEN announcement is a measured step towards bringing BOI reporting under the CTA, taking into account future judicial challenges and the need to reconcile regulatory objectives with business realities.