The Corporate Transparency Act (CTA), effective January 1, 2024, requires all “reporting companies” to identify their “beneficial owners” and “company applicants” in a report to be filed with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Initially, the CTA was broadly applicable to small businesses both domestically in the U.S. and for foreign entities registered to do business in the U.S. As of March 2025, however, FinCEN issued an interim final rule (IFR) that modified the definition of “reporting company” and narrowed the scope of the CTA to apply exclusively to foreign entities that have registered to conduct business within any U.S. state or tribal jurisdiction through filings with a secretary of state or equivalent office.
Pending a final rule issuance by FinCEN (which is expected to come within the year), domestic entities formed under the laws of a U.S. state or tribal jurisdiction are exempt from the CTA’s reporting requirements.
Foreign entities that meet the definition of a reporting company, do not qualify for an exemption under the CTA, and which were registered to do business in the U.S. before March 26, 2025, must file BOI reports by April 25, 2025. Foreign reporting companies that register to do business in the U.S. on or after March 26, 2025 will have 30 days from the date they receive notice that their registration is effective to submit the required report.
Importantly, foreign reporting companies are not obligated to report any U.S. persons as beneficial owners. Likewise, U.S. individuals who qualify as beneficial owners of such entities are not required to provide their information to the reporting company for inclusion in its FinCEN filing. U.S. persons for purposes of the IFR are citizens and residents of the United States.
The new rules are potentially subject to change by litigation and legislation, as well as regulatory action.
Determining whether a foreign entity is a reporting company and identifying its beneficial owners involves substantive legal questions that may require legal analysis and advice from counsel.
Saul Ewing’s CTA Compliance team advises businesses in real estate, private equity, and various other industries on their obligations under the law, as well as its impact on transactions. Our services include:
- Analysis: collecting and reviewing all relevant corporate documentation; conducting an analysis to determine whether an entity is a reporting company, whether any exemptions apply, and identifying the entity’s beneficial owners
- Reporting: preparing and filing any required reports with FinCEN
- Compliance: providing ongoing CTA compliance triggered by transactions or changes in beneficial ownership
Frequently Asked Questions
The following are answers to some basic question about the Corporate Transparency Act. For more information, please refer to FinCEN’s resource page on Beneficial Ownership Information.
What is the Corporate Transparency Act?
Congress enacted the Corporate Transparency Act (CTA) in 2021 as part of the U.S. government’s efforts to combat money laundering, terrorist financing, tax fraud, and other illicit activities. It is designed to ensure that U.S. law enforcement can identify the individuals connected to entities operating in or accessing the U.S. market. The law requires all “reporting companies” to identify their beneficial owners and company applicants.
What does the CTA do?
The CTA establishes a uniform beneficial ownership information (BOI) reporting requirement for certain business entities. A BOI Report is filed with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The information will be collected in a non-public database only accessible for law enforcement or national security purposes.
What is a reporting company?
Foreign reporting companies are corporations, limited liability companies, or other similar entities which are registered to do business in the U.S. by filing a document with a Secretary of State or similar office under the law of any U.S. State or Indian Tribe.
Are there any exemptions?
The CTA lays out 23 specific exemptions, which may still be applicable to and exempt foreign reporting companies from filing requirements. The 23 exemptions are largely for highly-regulated entities (such as banks, insurance companies, SEC reporting companies, etc.) that are already required to report their beneficial owner information. There is also an exemption for large operating companies, defined as companies with more than 20 full-time employees that have an operating presence in the U.S. and that filed a federal income tax return demonstrating over $5 million in gross income the previous year.
What information is reported?
Beneficial ownership information includes personal data on the reporting company, each beneficial owner, and every company applicant.
Who is a beneficial owner?
Beneficial owners are broadly defined as individuals that exercise substantial control over a reporting company or own/control at least 25% interest in the reporting company.
Who is a company applicant?
Company applicants are the individuals involved in registering the entity with the Secretary of State.
When must the report be filed?
Reporting companies registered to do business before March 26, 2025, should have filed their initial BOI reports by April 25, 2025. Reporting Companies created or registered after March 26, 2025, must file an initial BOI Report within 30 days of the earlier of (1) the date of receipt of actual notice of the entity’s creation or registration; or (2) the date of first public notice provided by the applicable Secretary of State or similar office. In addition, previously exempt entities that become reporting entities have 30 days to file.
CTA Compliance: A Guide for In-House Legal Professionals
