Part V · Compliance · No. 04

Beneficial ownership

The Corporate Transparency Act (2021) authorised FinCEN to collect beneficial-ownership information (BOI) from companies. After litigation and a March 2025 interim final rule, FinCEN’s final rule of August 2026 permanently removed U.S.-formed companies and U.S. persons from the regime. As of this review, only certain foreign entities registered to do business in a U.S. state must report.

Current scope (as of October 2026)

• U.S. companies. Entities created in the United States (corporations, LLCs and similar entities formed by filing with a secretary of state) are excluded from the definition of “reporting company” and have no BOI filing obligation (interim final rule published 26 March 2025; final rule issued 11 August 2026).
• Foreign reporting companies. An entity formed under the law of a foreign country that has registered to do business in a U.S. state or tribal jurisdiction by filing a document with a secretary of state or similar office, and that does not qualify for an exemption, must report.
• U.S. persons. Foreign reporting companies do not report U.S. persons as beneficial owners or as company applicants, and U.S. persons need not provide BOI to them. FinCEN has said it will delete BOI previously reported by U.S. persons.

What is reported (foreign reporting companies)

• Identifying information about the company (name, jurisdiction of formation and of first U.S. registration, address, taxpayer ID).
• For each non-U.S. beneficial owner: full legal name, date of birth, residential address, and an identifying number and image from an acceptable unexpired document (such as a passport).

Exemptions and definitions

The statute lists twenty-three categories of exempt entities, including SEC-reporting issuers, banks, registered investment advisers, insurance companies, registered accounting firms, tax-exempt entities and “large operating companies” (more than 20 full-time U.S. employees, more than $5 million of U.S.-source gross receipts or sales, and an operating presence at a physical U.S. office). A beneficial owner is an individual who exercises substantial control over the company or owns or controls at least 25% of its ownership interests.

Deadlines

Foreign reporting companies registered before 26 March 2025 had to report by 25 April 2025. Those registered on or after that date must report within 30 calendar days of receiving notice that their registration is effective. Reports are filed electronically through FinCEN’s BOI E-Filing System.

Penalties

• Civil: $500 per day under the statute, adjusted for inflation (31 C.F.R. §1010.821), while a violation continues.
• Criminal: willful violation, fine up to $10,000 and/or imprisonment up to two years.
• Unauthorized disclosure or use of BOI: civil $500 per day (inflation-adjusted); criminal fine up to $250,000 and/or imprisonment up to five years (higher where aggravated).

In March 2025 the Treasury Department also announced it would not enforce BOI penalties against U.S. citizens or domestic reporting companies.

Litigation

In National Small Business United v. Yellen (N.D. Ala., 1 March 2024) the district court held the CTA unconstitutional as applied to the plaintiffs. On 16 December 2025 the Eleventh Circuit reversed, holding that the CTA is a valid exercise of the commerce power and does not facially violate the Fourth Amendment (No. 24-10736). In Texas Top Cop Shop, Inc. v. Garland (E.D. Tex.) a nationwide preliminary injunction issued in December 2024 was stayed by the Supreme Court in January 2025 (McHenry v. Texas Top Cop Shop). The regulatory narrowing in 2025–2026 has largely overtaken the litigation for U.S. companies.

Interaction with luxury-asset holdings

Holding LLCs and corporations formed in a U.S. state (for example to own aircraft, yachts, real estate or art) no longer file BOI reports. A foreign holding company (for example a Cayman or BVI entity) that registers to do business in a U.S. state may be a foreign reporting company, but need not report U.S.-person owners. Trusts are not themselves reporting companies. Separate beneficial-ownership and customer-due-diligence rules (such as the banks’ CDD rule) continue to apply independently of the CTA.

Reviewed October 2026