FinCEN Issues Proposed Rule Exempting U.S. Companies and Persons from CTA

On March 21, FinCEN issued an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (“BOI”) to FinCEN under the Corporate Transparency Act. In the interim final rule, FinCEN has proposed revising the definition of “reporting company” to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office. FinCEN also has proposed exempting entities previously known as “domestic reporting companies” from BOI reporting requirements.

If the interim final rule is finalized as proposed, all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN. Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements would still be required to report their BOI to FinCEN. These foreign entities, however, will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.

Upon the publication of the interim final rule, the following deadlines apply for foreign entities that are reporting companies:

• Reporting companies registered to do business in the United States before the date of publication of the IFR must file BOI reports no later than 30 days from that date.
• Reporting companies registered to do business in the United States on or after the date of publication of the IFR have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.

FinCEN’s interim final rule is consistent with the announcement made by the U.S. Department of Treasury on March 2^nd, which stated that the Treasury Department will suspend the enforcement of the Corporate Transparency Act against U.S. citizens and domestic reporting companies. FinCEN is accepting comments on this interim final rule and intends to finalize the rule this year.