On March 3, 2025 we posted BOI Was Back But Treasury Now Says That It's Off Again - Is This Any Way to Run a Country? where we discussed that the Department declared that it would suspend enforcement of the CTA and the associated Beneficial Ownership Information (BOI) reporting requirements for domestic companies and U.S. citizens. This shift represents a major departure from the original intent of the law, which was designed to combat illicit financial activities through increased transparency of both domestic and foreign entities.
Key Developments
- Enforcement Pause: The Treasury Department will not enforce CTA reporting requirements against U.S. citizens, domestic entities, and their beneficial owners.
- Scope Reduction: Treasury intends to issue a proposed rule limiting the CTA's application to foreign reporting companies only.
- Deadline Extension: FinCEN previously announced a revision of beneficial ownership information reporting deadlines, with a new deadline to be set in an upcoming interim final rule.
Support for the Change:
- Treasury Secretary Scott Bessent views this as a "victory for common sense" aligning with efforts to reduce regulatory burdens on small businesses.
- The Cato Institute's Brent Skorup suggests Treasury may rely on statutory discretion to exempt most small businesses and nonprofits.
Criticism and Concerns:
- Transparency advocates argue this change could make the U.S. a haven for illicit financial activity and may violate global anti-money laundering standards.
- Some legal experts, like Chye-Ching Huang of the Tax Law Center, contend that Treasury lacks the authority to not enforce a law enacted by Congress.
- Critics, including Senator Ron Wyden, view this as potentially benefiting entities seeking to hide illicit activities.
Ongoing Uncertainties
- Legal Status: The CTA remains in effect, despite Treasury's non-enforcement stance, creating potential risks for non-compliant entities.
- Information Clarity: There are concerns about the consistency and accessibility of information regarding these changes, with announcements coming from different sources within Treasury.
- Future Developments: The situation remains fluid, with potential for further legal challenges, congressional action, or additional regulatory changes.
This shift in CTA enforcement represents a significant policy change with wide-ranging implications for corporate transparency and anti-money laundering efforts in the United States.
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