Media Coverage 03.03.25
Service
Corporate Transparency Act Resource Center
Contacts
Robert B. Robbins
Partner, Washington, DC
T: +1.202.663.8136
robert.robbins@pillsburylaw.com
Deborah S. Thoren-Peden
Partner, Los Angeles
T: +1.213.488.7320
deborah.thorenpeden@pillsburylaw.com
Andrew J. Weiner
Partner, New York
T: +1.212.858.1034
andrew.weiner@pillsburylaw.com
See All Professionals
UPDATE (3/3/25): On March 2, 2025, the Treasury Department, of which FinCEN is a part, announced that it:
- “will not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect” and
- “will be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.”
The existing regulatory deadline is generally March 21, 2025, except where a further extension has already been granted to locations affected by recent natural disasters. The Treasury statement, combined with FinCEN statements of February 19 and February 28 (discussed below), contain uncertainties and ambiguities, even though they can be read as an intention for an indefinite suspension of the CTA reporting rules, at least for U.S. reporting companies and their beneficial owners. We continue to recommend that parties be prepared to make beneficial ownership filings by the existing regulatory deadline, particularly foreign reporting companies, but hold off making such filings until prior or close to the deadline, unless either FinCEN or Treasury has issued a new interim final rule that gives effect to a further extension or waiver of enforcement applicable to them.”
UPDATE (2/28/25): On February 19, 2025, FinCEN extended the deadline for filing of most beneficial ownership information reports to March 21, 2025. On February 28, 2025, FinCEN issued an alert updating its position. The key points are:
- FinCEN reiterated that it will not take enforcement action and impose fines or penalties on companies due to failure to file or update beneficial ownership information reports under the CTA by the deadlines it announced on February 19, 2025.
- FinCEN adds that no fines or penalties will be issued, and no enforcement actions will be taken, until a “a forthcoming interim rule becomes effective and the new relevant due dates in the interim final rule have passed.”
- FinCEN intends to issue such an interim final rule extending filing deadlines by March 21, 2025, but provides no other information as to the nature of the extension that might be proposed.
- FinCEN also intends to issue a notice of proposed rulemaking and solicit public comment later in 2025 intended to minimize the CTA reporting burdens on small businesses while still ensuring that beneficial ownership information necessary for national security and law enforcement efforts is being provided.
Although FinCEN did not mention fines or penalties against individuals and it did not say that those filing after the current deadlines would not be considered to be in default, it does not appear that this is reason for concern. Nonetheless, we recommend that parties be prepared to make beneficial ownership filings by the deadlines announced on February 19, 2025, but hold off making such filings until FinCEN has issued its new interim final rule.
The Corporate Transparency Act (CTA), adopted in January 2021, is now in effect. Pillsbury has assembled a multi-disciplinary task force to assist clients in preparing for and responding to the new and evolving requirements that the CTA will impose.
The stated purpose of the CTA is to assist in identifying beneficial ownership and control of entities operating in the United States, in order to facilitate anti-terrorism, anti-money laundering and tax collection activities of federal, state and foreign governments. It imposes on entities formed or qualified to do business in the U.S. the obligation to report individuals who substantially own and control them, or who helped form them—except for entities that benefit from one of the numerous exemptions provided. This information will be collected by FinCEN, an arm of the U.S. Treasury Department, in a confidential database that will be accessible by governmental authorities and authorized lenders, but not to the general public.
Willful failure to comply with the CTA can result in material civil and criminal fines and penalties.
View More
FinCEN has announced that the CTA will take effect for new entities formed from and after, January 1, 2024, and on January 1, 2025, for previously formed entities. Every business entity doing business in the U.S. will have to determine whether it might benefit from an exemption and, if not, how to prepare itself to respond to the CTA’s disclosure requirements. This may involve, among other things, becoming familiar with new forms and new procedures, and changes in the documentation used by the business entities generally (for example, joint venture agreements and loan agreements). Individuals whose identity might be disclosed will also want guidance. Financial institutions will need to reconsider their Customer Due Diligence (CDD)/Know Your Customer (KYC) procedures when, as planned, the existing rules are modified to conform more closely with the CTA.
Members of the Pillsbury CTA task force have been tracking the CTA’s evolution since 2021, including the voluminous regulations it entails. The firm's lawyers are prepared to assist clients in dealing with the tricky and not always clear requirements of the CTA, and to support related legal needs.
