Domestic Companies No Longer Required to Report to FinCEN
Effective immediately, all entities formed in the United States (such as corporations, LLCs, and other common U.S. business structures), along with the beneficial owners of such entities, are exempt from Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act (CTA). This exemption also applies to any updates or corrections to previously submitted BOI reports.
U.S. Citizens Exempt from Foreign Reporting
U.S. persons who hold ownership interests in foreign companies are not required to report their ownership. Likewise, foreign entities who are otherwise required to report BOI to FinCen are not required to report BOI for any U.S. persons who are beneficial owners.
Foreign Companies May Still Be Required to Report
Foreign reporting companies may continue to have BOI filing requirements. Please consult legal counsel if this may impact you or your business.
Why the Change? Deregulation and Executive Priorities
This new rule reflects a significant policy shift following the January 2025 change in presidential administrations.
President Donald Trump’s Executive Order 14192, “Unleashing Prosperity Through Deregulation,” directs federal agencies to reduce regulatory burdens on U.S. businesses.
FinCEN, citing this order and the CTA’s instruction to “minimize burdens,” concluded that domestic BOI reporting was not sufficiently valuable for law enforcement or national security. The DOJ and DHS agreed.
The Numbers That Drove the Decision
FinCEN previously projected CTA compliance would cost businesses:
- $21.7 billion in labor costs for initial filings (Year 1),
- $3.3 billion/year for new company filings,
- $2.3 billion/year for ongoing updates.
Under the new rule:
- Estimated annual compliance costs are reduced by $9 billion.
- More than 91 million hours of paperwork are eliminated each year.
What’s Next?
FinCEN is currently accepting public comments for 60 days and plans to finalize the rule later in 2025. However, the rule is already in effect, justified under the “good cause” exemption to the Administrative Procedure Act, which allows immediate implementation when necessary.
Takeaway for Businesses
This is a major win for domestic businesses, particularly small entities previously burdened by the reporting requirements. However, foreign companies operating in the U.S. should remain alert—while domestic scrutiny is easing, international enforcement is intensifying.
