On March 2, 2025, the Department of Treasury (“DOT”) announced that it will not enforce the Corporate Transparency Act (“CTA”) by imposing “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 either.”
For the time being, foreign entities that have registered to do business in any state in the U.S. have to report information on their beneficial ownership.
In the meantime, the DOT is working on regulations that should clarify which types of entities must file information on their beneficial owners. The distinction between “U.S. citizens” and “foreign citizens” could very well come into play where FinCEN may require foreign owned domestic companies report their ownership information.
The DOT’s stance renders the CTA almost useless for the time being. An executive branch agency may render an act of the Congress ineffective for the period that the executive branch in power remains in power. However, unless the Congress, through another legislation, renders the CTA ineffective, the CTA can be enforced in the next administration. The CTA, which had a strong bipartisan support, is a very effective tool to combat money laundering and illegal financial activities.
For now, we are monitoring the situation.