FinCEN ends beneficial ownership reporting

The Treasury Department's Financial Crimes Enforcement Network issued a final rule permanently removing the requirement for U.S. companies and U.S. persons to report beneficial ownership information to FinCEN under the Corporate Transparency Act.  

FinCEN also announced it would delete previously reported information by U.S. persons — now exempt from the reporting requirements — from the beneficial ownership information database. 

The Treasury drastically limited the requirement at least for U.S.-based companies, by issuing an interim final rule in March of last year that suspended enforcement, fines and penalties against domestic businesses after a series of court rulings. Companies had pushed for the existing information to be deleted for the companies that had reported. The new rule makes permanent the March 2025 interim rule that exempted nearly all entities from reporting their true ownership information under the statute, which was originally enacted during the first Trump administration.

"Today's action is a victory for common sense and American small businesses," said Treasury Secretary Scott Bessent in a statement Tuesday. "President Trump promised to cut red tape, and this final rule delivers. Treasury is eliminating a burdensome reporting requirement for millions of law-abiding business owners without compromising our national security."

The CTA was signed into law as part of the National Defense Authorization Act of 2021 and requires individuals with an ownership interest in a limited liability company to disclose personal data to FinCEN as a way to deter illicit activity such as money laundering, tax fraud, drug trafficking and terrorism financing by anonymous shell companies.

However, the requirement provoked a wave of lawsuits and court decisions, along with heavy industry opposition, including from the American Institute of CPAs, which has thrown its support behind legislation to limit the requirement only to foreign companies. Some groups, such as the National Federation of Independent Business, have sought to force FinCEN to delete the existing reports altogether. 

Among other things, the final rule:

• Adopts the exemptions in the interim final rule issued in March 2025, making the rollback of beneficial ownership reporting by U.S. companies permanent;
• Exempts U.S. persons who have obtained FinCEN IDs from any obligation to update or correct the information they originally provided to FinCEN to obtain their FinCEN IDs;
• Eliminates the requirement for foreign companies to report U.S. person "company applicants" (e.g, the individuals who helped those foreign companies register to do business in the United States);
• Exempts foreign pooled investment vehicles registered in the United States from reporting the beneficial ownership information of a U.S person in control of the investment vehicle; and,
• Confirms that FinCEN will delete information about any individuals — company applicants, beneficial owners, or recipients of a FinCEN ID — that FinCEN reasonably believes is a U.S. person (e.g., the information is linked to a U.S. passport or U.S. driver's license).

Under the final rule, foreign entities that are reporting companies will still be required to report beneficial ownership information for foreign individuals. The final rule is effective on its publication in the Federal Register. In addition to the final rule, FinCEN has issued a set of frequently asked questions, and will be updating guidance on FinCEN.gov to reflect the final rule.

Financial transparency advocacy groups criticized the move. "This final rule keeps the floodgates open for criminals to launder money through U.S. shell and front companies," said Erica Hanichak, co-director of the Financial Accountability and Corporate Transparency Coalition, in a statement. "By failing to fulfill Congress' mandate for greater financial integrity, the Treasury Department has handed a major victory to U.S. adversaries, corrupt officials, fraudsters, and tax evaders who use our financial system to move and hide illicit wealth."

"The United States Treasury has taken a step that enables criminals to continue financing and profiting from their crimes by using anonymous companies formed in the United States as their 'getaway vehicles,'" said Scott Greytak, deputy executive director of Transparency International U.S., in a statement. "Today's rule permits drug cartels to continue relying on such companies to move money, expand fentanyl distribution networks, and bankroll the deadly drugs that are killing Americans every day. The same secrecy that enables drug cartels has long enabled corrupt officials and other criminals to hide and move dirty money."

However, some groups hailed the decision, including the National Federation of Independent Business, which had filed a lawsuit in 2024 blocking implementation of the Corporate Transparency Act.

"Small businesses greatly appreciate President Trump and Secretary Bessent standing up for Main Street," said NFIB president Brad Close in a statement. "The final rule protects American small and independent businesses from this onerous reporting mandate and requires the destruction of previously submitted personal data. But Congress needs to finish the fight. We look forward to working with the Trump Administration to urge Congress to permanently repeal the invasive BOI law. We thank the Trump administration for its work on behalf of America's small businesses."

Another small business group that had also sued over the CTA was also happy with the decision by the Treasury but wants to see the law repealed entirely.

"I applaud Treasury and this administration for seeing this law for what it is: a massive burden on America's job creators which will do next to nothing to actually stop money-laundering," said National Small Business Association president and CEO Todd McCracken in a statement. "We have been beating the drum on this flawed concept for three administration's now, and I'm glad our message has finally gotten through. Unfortunately, as we've seen repeatedly, winds can change and regulatory declarations can easily be reversed. The CTA is still the law of the land and, while small businesses have a reprieve for now, NSBA will remain vigilant in its work to end this flawed concept for once and for all. I want to personally thank Sec. Scott Bessent for his leadership on ensuring America's small businesses aren't harmed by the CTA. More must be done, however, to ensure the CTA doesn't come back as political tides may turn. I believe firmly that a final decision from the U.S. Supreme Court on NSBA's lawsuit over the CTA is the only surefire way to ensure this flawed policy doesn't make a come-back. So while this fight is absolutely a major win we will take some time to celebrate, the battle continues."

The Cato Institute, a conservative think tank, also praised the move but suggested the Bank Secrecy Act should be reformed as well. "The beneficial ownership system was a mistake from day one. Forcing countless Americans to report their activity without any evidence of a crime was the exact opposite of innocent until proven guilty," said research fellow Nicholas Anthony in a statement. "The Treasury did well to step away from this system. It should press forward and reform more of the Bank Secrecy Act."