This is the second part of a three-part series about beneficial ownership reporting; in the first part we discussed the Financial Crimes Enforcement Network’s (“FinCEN”) general residential real estate geographic targeting orders (“GTOs”), the Southwest U.S. border GTO, and the soon to be effective non-financed residential real estate reporting regulations.[1] We now turn our attention to the Corporate Transparency Act (“CTA”) and its Reporting Rules[2] as (being generous) “revised” by the Interim Final Rule (the “IFR) published on March 26, 2025.
When we brought to a close the last of our earlier articles reviewing the CTA,[3] both of the nationwide injunctions against its enforcement had been lifted, court challenges to the constitutionality of the CTA were proceeding in a variety of district and appellate courts, the administration had informally announced a revision of the Reporting Rules to the effect that U.S. companies and U.S. persons would be exempt from reporting obligations, and Senators Whitehouse and Grassley had written to Treasury Secretary Bessent asking for an explanation of how that proposed significant restriction of the CTA is consistent with the statutory requirements and the congressional findings in support thereof.[4] As we write this installment of this seemingly never-ending story, the IFR has been published, comments have been solicited, and we await a final rule promised before the end of the year. Meanwhile steps have been taken to hold the litigation against the CTA in abeyance.
If January 1, 2021, the date of passage of the CTA, and September 22, 2022, the date of the release of the Reporting Rules, have been the crucial dates for those practicing in this realm, then March 21, 2025,[5] will be added to that series of dates of crucial developments. On that day, FinCEN released the IFR, effecting its stated plan of neutering the CTA by exempting U.S. organized companies and all U.S. persons from its scope.[6] Complementing the IFR,[7] FinCEN released a press release,[8] a notice,[9] and an alert.[10] Collectively, they rendered the CTA statute as implemented by FinCEN’s regulations a pale and withered shadow of itself.
So, What Has Changed?
The question of “what has changed” between the Reporting Rules[11] and the IFR is, depending on your perspective, either “almost everything” or “almost nothing.”
As for the former viewpoint, what were previously domestic reporting companies[12] have been exempted from the scope of the Reporting Rules. Further, if a foreign reporting company as defined under the Reporting Rules, now a “reporting company” under the IFR, has a U.S. person as a beneficial owner (regardless of whether that person is a beneficial owner under the beneficial ownership test, the control test, or both), there is no obligation to report that person on the filed Beneficial Ownership Information Report (“BOIR”) (whether initial or updated).[13] To that end, a foreign business organization that is qualified to transact business in one or more of the states and that has only U.S. persons as beneficial owners will have nothing to report beyond its own identification and perhaps that of a company applicant, depending upon when it files or will file its initial BOIR. As herein otherwise discussed, FinCEN’s system will not accept a BOIR that does not list at least one beneficial owner,[14] so what is to happen in that circumstance is as of now unknown.
Turning to the “almost nothing” perspective on the changes wrought by the IFR, there are innumerable other obligations and rules set forth in the Reporting Rules. The ownership test and the control test for who is a beneficial owner remain in place,[15] as do the rules for reporting of trusts[16] and the treatment of ownership interests in an estate.[17] The twenty-three categories of companies exempt from the BOIR reporting obligations[18] have been left in place even as another category has been added.[19] Meanwhile, it must be recognized that the rule as to ownership interests owned by a minor was updated in the IFR to address the now-limited scope of the IFR as contrasted with the Reporting Rules.[20] Retained as well is the ambiguity in needing to determine whether a foreign organized venture is an “entity,”[21] a condition precedent to bringing it into the BOIR filing requirements.[22]
Various terms—including “crumbled,”[23] “gutted,”[24] “significantly limited,”[25] “broadly eliminated,”[26] “hollowed out,”[27] and the far gentler “out like a lamb”[28]—have all been used to describe the impact of the IFR on the CTA. But let’s not kid ourselves—the IFR has destroyed[29] the beneficial ownership system approved by Congress in the CTA. Domestic reporting companies, estimated as of September 2022 to number 32,600,000 and more than 36,500,000 by 2024,[30] were expected to be filing BOIRs; now they are not obligated to do so.[31] These estimates stand in opposition to estimates of “foreign reporting companies,” which measure in the low tens of thousands.[32] Assuming 36.5 million domestic reporting companies and FinCEN’s high-end estimate of 20,000 foreign reporting companies, requiring only the latter to file BOIRs yields .0547 percent of the total sum, a vanishingly small number.[33] Put another way, the IFR has released 99.945 percent of the universe of CTA reporting companies from the reporting obligation. By illustration, if we assume that the population of the United States is 342 million and reduce it by the same percent that the CTA reporting companies have been cut, our country would now have 187,000 souls (not even enough for one congressional district). Going forward, those few reporting companies remaining, being what were previously “foreign reporting companies,” do not have to identify on a BOIR any beneficial owner who is a U.S. person.[34] As noted below, it is so easy for persons who are not U.S. persons to circumvent the remaining reporting obligations that their existence is a joke—just not a funny joke.
Noteworthy Gaps in the IFR and a Huge Blind Spot (or Is That a Planning Opportunity?)
There are at least four noteworthy gaps in the IFR as well as a huge blind spot even in its greatly reduced scope. These are just five of the “ready-fire-aim” criticisms raised as to the IFR. First, although the IFR (i) exempts from reporting all business organizations “created”[35] in the U.S. (they are no longer “reporting companies”)[36] and (ii) relieves foreign business organizations that are reporting companies of the responsibility of providing either the personally identifiable information (“PII”) or a FinCEN ID for any U.S. person who is a beneficial owner,[37] there is no exemption from providing the PII or a FinCEN ID for a U.S. person who is a company applicant.[38] So, although a U.S. person who is the sole beneficial owner of a reporting company need not be identified on a BOIR, the attorney, paralegal, or employee of a service company who files the “application for a certificate of authority”[39] must be so identified even though in most instances that person has only a passing relationship with the reporting company.[40]
Second, a BOIR must identify at least one beneficial owner; the BOIR’s cells for a beneficial owner are marked with an asterisk on the BOIR form as mandatory.[41] Assume a German GmbH is qualified to transact business in, say, Kentucky; it is a reporting company and must file a BOIR.[42] However, further assume that the only beneficial owners of that GmbH are U.S. persons; per the IFR, they are not to be identified.[43] As noted above, in order to file a BOIR, that GmbH reporting company must identify at least one beneficial owner, but on these facts all beneficial owners are exempt from being identified. The IFR did not address what this GmbH should do. Is there an implicit exemption for reporting companies in which all beneficial owners are U.S. persons?[44] It would seem that this is the case as they cannot file a “true, correct, and complete” BOIR,[45] but the Reporting Rules as amended by the IFR do not provide an exemption to that effect. Granted, the release accompanying the IFR says that no filing is required; are we now in a realm in which the language of the regulations may be superseded by language in a subsequent release?
Third, while exempting U.S. persons from being identified on BOIRs filed by reporting companies (a set now reduced to what were “foreign reporting companies”), no relief was granted to U.S. persons from the obligation to update the applications they filed for FinCEN IDs.[46] While numbers have not been published by FinCEN that will enable an exact calculation, it is a fair assumption that the vast majority of persons who applied for a FinCEN ID were U.S. persons who were or anticipated that they would be beneficial owners of what were domestic reporting companies. While those companies are no longer obligated to file initial or updated BOIRs reporting changes in information as to the organization or its beneficial owners, those beneficial owners with FinCEN IDs must still update the FinCEN ID applications until, as matters stand currently, death.[47] In effect, holders of a FinCEN ID must keep it current even though there is almost no circumstance in which that FinCEN ID number will be submitted on a BOIR.[48] The only exceptions are as follows: (i) the holder of the FinCEN ID is a company applicant or (ii) the holder is a beneficial owner who is not a U.S. person. It is a fair assumption that the group comprising the excepted holders is a small subset of the persons who in 2024 applied for a FinCEN ID.
Fourth, the IFR created a twenty-fourth exemption from status as a reporting company for those companies formed in the U.S.[49] This exemption applies to all U.S. organized reporting companies (previously defined as “domestic reporting companies”) that filed a BOIR prior to the publication of the IFR. Under the Reporting Rules as amended by the IFR, a company that has filed a BOIR but that comes within the scope of an exemption from reporting is to file an updated BOIR indicating that it now satisfies an exemption from reporting.[50] But must every company that has filed a BOIR that is now exempt from reporting under the IFR file an updated BOIR in order to give notice that it is no longer obligated to file BOIR updates? On the one hand, a strict reading of the Reporting Rules as amended by the IFR would say that the amended BOIR is required. On the other hand, FinCEN said in the release accompanying the IFR amendments to the Reporting Rules that such a filing is not necessary.[51] But can commentary released with an interim final rule modify an existing regulation that is itself not revised/amended/supplemented by the interim final rule?
Last, notwithstanding that the CTA as approved by Congress and implemented in the Reporting Rules has been destroyed by the IFR and its exclusion of U.S. persons and business entities created in the U.S., leaving only within its grasp business organizations formed under non-U.S. law, that grasp is easy to avoid. Assume a Spanish Sociedad de Responsabilidad Limitada (“S.A.”) has qualified to transact business in one or more states and has beneficial owners who are not U.S. persons. Absent the application of one of the twenty-four exemptions,[52] the S.A. must file a BOIR—but it would rather not. Appreciating that regulatory or tax considerations need to be taken into account and may derail on particular facts this “easy out,” our S.A. can avoid the application of the CTA by forming a U.S. subsidiary, probably a single-member LLC, and transferring to it its U.S. operations. Then our S.A. withdraws its certificate(s) of authority to transact business. While the new subsidiary has as beneficial owners a mix of persons only some of whom are U.S. persons, none needs to be identified to FinCEN because the subsidiary itself, being what was previously a “domestic reporting company,” is exempt from a CTA reporting obligation.[53] In its simplest application, our S.A. operates its U.S. operations through a single-member LLC that is not a CTA reporting company. And life goes on.
The Comments
Some 137 comments were submitted to FinCEN in response to the IFR.
Some of the comments are generously characterized as misguided. Included in this category are the following:
- The comment from an established 501(c)(3) organization about the complexity of the Reporting Rules. A 501(c)(3) is exempt from the reporting system, and it cannot get more simple than being categorically exempt.
- The person who wanted to know, now that BOIRs are no longer required, how to get a refund of the filing fee on the report he did file. Filing a BOIR did not have a filing fee.
Some of the comments lauded the IFR and the demise of the CTA, some going on to ask/insist that FinCEN purge the existing database,[54] while others lamented the elimination of the beneficial ownership database and the loss of a tool intended to address the misuse of the business organizations.[55] For example, the National District Attorneys Association (“NDAA”) wrote:
NDAA respectfully urges the Department to not proceed with this course of action. Weakening or narrowing the CTA will have devastating consequences for law enforcement’s ability to fight criminal enterprises that exploit shell companies to launder money, traffic drugs and weapons, and fund human trafficking and terrorism. For those of us charged with protecting public safety and administering justice in our communities, the CTA has been a long overdue and vital tool to pull back the veil of anonymity that has enabled criminal networks to thrive.[56]
Similarly, the Main Street Alliance wrote:
We are disappointed by the IFR, because it will make it harder for honest small businesses to operate on a level playing field, harming our members overall, in ways that outweigh any compliance cost savings. We therefore ask FinCEN to withdraw this harmful IFR.[57]
Shortly after the IFR was described, Senators Grassley and Whitehouse inquired of Secretary Bessent as to the authority by which the Treasury / FinCEN would so restrict the CTA:[58]
We request that you provide us the legal basis for the Treasury Department’s policy decision to categorically suspend enforcement of the CTA’s reporting requirements for all U.S. citizens and domestic reporting companies. In addition, we request that you provide us with information about how you intend to satisfy the policy goals of the CTA. As part of your response, please address the following questions:
- Has the Treasury Department followed or initiated the process required by the CTA to exclude an entity or class of entities from its reporting requirements?
- What steps has Treasury taken to ensure that any change in the practice or rulemaking governing BOI reporting fulfills the law enforcement and national security purposes of the CTA?
To the knowledge of these authors, no response has ever been provided.[59] In response to the IFR, other senators weighed in. In a letter dated May 27, 2025, Senators Wyden and Warren wrote:
By excluding more than 99% of previously in-scope companies and company owners from BOI reporting, the interim final rule would directly undermine Congress’ core policy goals in enacting the CTA – to improve law enforcement and national security outcomes by combating money laundering and other forms of illicit finance. . . .
Indeed, removing domestic companies, along with the U.S. owners of foreign reporting companies, from the purview of the CTA would entirely defeat the purpose of the CTA by continuing to allow almost all shell corporations operating in the U.S. to remain unknown to law enforcement and national security officials. The CTA itself established that it is the sense of Congress that “the collection of beneficial ownership information for [corporate] entities formed under the laws of the States is needed to . . . protect vital United States national security interests.” The interim final rule lacks any support in the legislative record, which clearly shows that Congress viewed the inclusion of domestic entities to be essential to accomplishing the goals of the CTA.
. . . The interim final rule fails to provide a reasonable explanation for how those objectives can be met while retaining the broad exemptions the rule provides.[60]
In a comment letter, Senators Grassley and Whitehouse made numerous similar points, including the following:
- Congress wrote the CTA to cover domestic companies and U.S. persons;
- the CTA’s legislative history supports that Congress intended domestic entities to file BOIRs; and
- the information as to domestic entities is essential for national security, intelligence, and law enforcement agencies.
The letter concluded with the following:
The Treasury Department’s decision to categorically exempt all U.S. persons and domestic entities from the CTA’s beneficial ownership information reporting requirements is inconsistent with the text and original policy goals of the CTA. We encourage you to rescind this interim final rule and fully implement the CTA so that law enforcement and national security agencies around the country have access to information necessary to prevent human trafficking, terrorist financing, border smuggling, drug distribution, sanctions evasion, and many other categories of criminal activity.[61]
Meanwhile, the CTA Litigation?
The CTA has been struck down in a number of cases as violative of the Commerce Clause or, in one instance, the Fourth Amendment; in other cases it has been found to be within Congress’s proper purview.[62]
If one begins with the assumption that the current presidential administration desires, for all intents and purposes, to eliminate the CTA (that being the functional effect of the IFR),[63] one must wonder why it continues to defend the CTA in the numerous cases that are pending in which the validity of the CTA has been challenged. While in numerous instances the government has moved to hold the case in abeyance pending the issuance of new final rules,[64] it has not “thrown in the towel” and withdrawn any of the pending appeals.
The reason for that reticence in effecting the final destruction of the CTA may be the Financial Action Task Force (“FATF”). An international body of which the United States is a founding member, FATF traces its roots to 1989 and a declaration of the G-7 members to coordinate their efforts to prevent international and domestic money laundering.[65] FATF promulgates recommendations as to practices that various states should implement in order to reduce the risk of money-laundering activities; over time, these recommendations have been updated.[66] What is now labeled as Recommendation 24 provides that
Countries should assess the risk of misuse of legal persons for money laundering or terrorist financing, and take measures to prevent their misuse. Countries should ensure that there is adequate, accurate and up-to-date information on the beneficial ownership and control of legal persons that can be obtained or accessed rapidly and efficiently by competent authorities, through either the register of beneficial ownership or an alternative mechanism. Countries should not permit legal persons to issue bearer shares or bearer share warrants, and take measures to prevent the misuse of existing bearer shares and bearer share warrants. Countries should take effective measures to ensure that nominee shareholders and directors are not misused by money laundering or terrorist financing. Countries should consider facilitating access to beneficial ownership and control information by financial institutions and DNFBP’s undertaking the requirements set out in Recommendations 10 and 22.[67]
FATF assesses the legal and regulatory environment of its member countries for the strength or weakness of their anti–money laundering systems; it was a desire, in connection with FATF’s review of the United States, to receive a passing grade as to Recommendation 24 that in part drove the adoption of the CTA.[68] In the most recent preliminary assessment, the U.S. received a “largely compliant” grade as to Recommendation 24.[69] It may be that the smallest shard of the CTA is being held onto to buttress an argument that the U.S. is still “largely compliant” with FATF Recommendation 24.
Is the IFR Legitimate?
This brings us to the most challenging question: Is the IFR and its almost complete elimination of the beneficial ownership reporting system provided for in the CTA statute itself and in the Reporting Rules a legitimate exercise of regulatory authority? A case (whether it is a good case remains to be seen) can be made that the IFR is illegitimate.[70]
Recall that the CTA provides that additional exemptions beyond the original twenty-three may be adopted,[71] and it is under that authority that the CTA’s reach has been cut back.[72] This change is also justified as being consistent with the current administration’s goals,[73] but nowhere does the CTA indicate that its essential construction and structure are subject to changes in the political winds. Rather, the CTA created a broad reporting requirement with twenty-three specific exemptions.[74] These exemptions applied in certain cases to vanishingly small groups: those for “financial market utilit[ies]”[75] and securities “exchange[s] or clearing agenc[ies]”[76] cover a total of maybe fifty organizations nationwide;[77] the middling circa 4,400 companies that have issued publicly traded securities;[78] and the granddaddy of them all, the perhaps 650,000 companies that might take advantage of the large operating company exemption.[79] Generously, these exemptions cumulatively removed half a million potential reporting companies from the CTA’s beneficial ownership reporting requirements. From there was created the new IFR “(xxiv) exemption,” which may be summarized as “and everyone else.”
There are significant issues with the implementation of the IFR, three of which we will here explore.[80] The first is the venerable rule of construction ejusdem generis, the second is the Major Questions Doctrine, and the third is regulatory action in direct opposition to congressional findings. This discussion is not in any manner intended to exhaust the menu of potential challenges to the IFR or to be a fully comprehensive examination of any of these potential challenges.
Foundation of the Twenty-Three Exemptions
To set the stage,[81] the CTA was approved by Congress in light of its determination that
(1) more than 2,000,000 corporations and limited liability companies are being formed under the laws of the States each year;
(2) most or all States do not require information about the beneficial owners of the corporations, limited liability companies, or other similar entities formed under the laws of the State;
(3) malign actors seek to conceal their ownership of corporations, limited liability companies, or other similar entities in the United States to facilitate illicit activity, including money laundering, the financing of terrorism, proliferation financing, serious tax fraud, human and drug trafficking, counterfeiting, piracy, securities fraud, financial fraud, and acts of foreign corruption, harming the national security interests of the United States and allies of the United States;
(4) money launderers and others involved in commercial activity intentionally conduct transactions through corporate structures in order to evade detection, and may layer such structures, much like Russian nesting “Matryoshka” dolls, across various secretive jurisdictions such that each time an investigator obtains ownership records for a domestic or foreign entity, the newly identified entity is yet another corporate entity, necessitating a repeat of the same process.[82]
After defining what would ultimately be labeled a “reporting company,”[83] Congress created twenty-three narrow exemptions to the reach of that class.[84] It was then provided that the Secretary of the Treasury, working in cooperation with the Attorney General and Secretary of Homeland Security, could provide additional exemptions from classification as a reporting company.[85] Tellingly for our purposes, this authorization follows a listing of twenty-three specific types of companies that were assessed, based upon either the degree of regulation to which they were otherwise subject or their structure, to not be likely candidates for the type of illicit activity that the CTA was intended to identify.[86] The statute’s structure begins by defining the companies subject to the reporting rules, then defines twenty-three narrow exemptions to the statute’s application, and then grants regulatory authority to define additional exemptions.
Ejusdem Generis
The IFR adopted pursuant to this authority is anything but a narrow extension of the list of exempt reporting companies; rather, as noted above, it is “and everyone else.”[87] The venerable rule of construction ejusdem generis directs that “when general words follow specific words in an enumeration describing a statutes’ legal subjects the general words are construed to embrace only objects similar in nature to those enumerated in the preceding specific words.”[88]
We typically see this principle applied in listings to restrict the scope of general descriptions: a statute setting a rate of tax for motor vehicles such as cars, minivans, pickup trucks “and similar motorized modes of transport” will not be read to include boats because although they are means of transport and are motorized, they are entirely dissimilar from the fundamental character of the specific examples provided, i.e., wheeled land transport. While Congress in authorizing additional exemptions from the CTA’s intended reporting regime did not employ an express restriction in the nature of “and similar narrow exemptions,” it is hard to imagine that Congress did not have that in mind.
The point here is straightforward: when Congress enabled additional exemptions from classification of particular ventures as “reporting companies,” it could only have meant narrow exemptions similar to those already in place. Candidates for this treatment are the condominium and homeowner associations that, to their great chagrin, discovered that they are reporting companies.[89] Similar cases can be made that federally licensed firearms dealers and holders of a Basic Permit for the manufacture of alcoholic beverages, classes of companies that are required to report their beneficial ownership to the federal government[90] and that are otherwise subject to pervasive regulation, should be exempt.[91] Another possibility would be to apply the “group” rules[92] to allow the aggregation of employees in order to satisfy the employee head count component of the large operating company exemption, thereby returning that rule to what was likely its intended scope.
Turning over that coin, it cannot be credibly thought that Congress intended to create a license to entirely eliminate the CTA’s coverage as to its primary focus, namely the misuse of domestic organizations for nefarious purposes.[93] The capacity to provide additional targeted exemptions from the CTA was not a license to in effect repeal the CTA—which brings us to the Major Questions Doctrine.
The Major Questions Doctrine
Under the Major Questions Doctrine as articulated by the U.S. Supreme Court, there are certain topics of major importance, either political or economic, that may not be delegated by Congress to an administrative agency absent clear and explicit authorization.[94] While appearing inter alia in Utility Air Regulatory Group v. Environmental Protection Agency[95] and King v. Burwell,[96] it received its moniker in West Virginia v. Environmental Protection Agency,[97] where Chief Justice Roberts wrote:
Nonetheless, our precedent teaches that there are extraordinary cases that call for a different approach—cases in which the history and the breadth of the authority that [the agency] has asserted, and the economic and political significance of that assertion, provide a reason to hesitate before concluding that Congress meant to confer such authority.[98]
That opinion went on to observe that the doctrine has previously been applied to strike down the U.S. Food and Drug Administration’s assertion of its capacity to regulate tobacco products[99] and the Centers for Disease Control and Prevention’s efforts to impose a nationwide eviction moratorium during the COVID-19 pandemic.[100] Other cases referenced included one rejecting the attorney general’s assertion that he could “rescind the license of any physician who prescribed a controlled substance for assisted suicide, even in a State where such action was legal,”[101] and another rejecting the Occupational Safety and Health Administration’s requirement that “84 million Americans . . . either obtain a COVID-19 vaccine or undergo weekly medical testing at their own expense.”[102]
It is not enough that FinCEN and the Treasury can point to a provision of the CTA that colorably enables the IFR;[103] there needs to be a clear statement of authority to effect the monumental changes effected by the IFR.[104] It cannot be argued that reducing the scope of the CTA from perhaps thirty-five million reporting companies, a group including essentially every business corporation and LLC in the nation and their respective beneficial owners, to the paltry few non-U.S. organized companies that are also qualified to transact business in the U.S. is anything other than a monumental change in the regulatory scheme that Congress enacted. Even before Loper Bright, it was the law that “an agency’s interpretation of a statute is not entitled to deference when it goes beyond the meaning that the statute can bear.”[105]
Now some may argue that the IFR is different in that it relieved the universe of domestic reporting companies and U.S. persons of an obligation, rather than imposing one, and therefore the Major Questions Doctrine does not apply. That differentiation is not valid. Rather, the Supreme Court, in MCI Telecommunications Corp. v. American Telephone & Telegraph Co., has already held that a regulatory determination to not regulate 40 percent of the subject industry was a “fundamental revision of the statute” and that “it may be a good idea, but it is not the idea Congress enacted into law.”[106] Clearly, the statutory scheme adopted by Congress in the CTA is wildly at odds with the anemic program that exists under the IFR; Congress intended the former, and the latter should fall.
Acts in Opposition to Congressional Findings and Statutory Structure
In passing the CTA, Congress made explicit findings with respect to the nefarious use of U.S organized business organizations[107] and directed that additional study be performed as to further potential weak spots in the beneficial ownership reporting system.[108] In light of those findings, Congress dictated that there be instituted a system by which essentially all companies organized or doing business in the United States would centrally file information as to their beneficial ownership. Irrespective of whether any particular person thinks that to have been a good response, a bad response, or otherwise, it cannot be questioned what Congress did. “Based on this extensive record, Congress concluded that collecting beneficial ownership information is necessary to protect national security and promote U.S. interests abroad, regulate interstate and international commerce, and facilitate tax collection.”[109] FinCEN, in promulgating the IFR, acted in direct opposition to Congress’s factual findings and the statutory structure of the CTA. In doing so, FinCEN and the Treasury acted without authority.[110]
Nothing has changed since those findings were made and that structure defined. There has not arisen a beneficial ownership reporting system comparable to that anticipated by the CTA, and there has been no showing that the use of “shell corporations” for illegal purposes has been eliminated or even significantly reduced. In terms of both the prior Chevron deference model and today’s Loper Bright nondeferential model, an administrative agency, in implementing a statute, is bound by Congress’s predicate fact-findings. Put another way, an agency’s implementation of a statute is bound by not only the statutory language but also Congress’s factual findings made in support of the statutory scheme. Furthermore, the agency does not have the authority to modify the structure set forth by Congress in the statute. Congress’s intent was clearly a robust beneficial ownership database of both domestically created and foreign formed companies.[111] FinCEN is way outside its lane in setting that aside via the IFR.
FinCEN, while an office of the Department of the Treasury, is a creation of Congress.[112] As the subordinate, it is not in a position to disagree with and flagrantly disregard Congress’s intent as detailed in the factual findings and the structure of the enacted statute. There is no need to parse and negotiate with the testimony received by Congress in connection with the proposals that became the CTA; Congress wrote its findings, rationale, and intended structure into the statute.[113] If a court cannot interpret a statute such that it nullifies itself,[114] certainly an administrative agency created by Congress cannot nullify a statute by regulating away compliance therewith. In the same vein, if the courts are bound to “respect the formula that Congress prescribed,”[115] how can an administrative agency be less bound?
No doubt there are readers taking umbrage at this challenge to the IFR’s legitimacy as they view the CTA’s beneficial ownership reporting system to be “a bad idea” or “an invasion of privacy” or “governmental overreach” or “clearly a plot of the Illuminati working in concert with the Priory of Sion backed by the Masons. Oh, and the Knights Templar—can’t forget them.” Those views are not the point. There exists within the rule of law legitimate paths to challenge actions taken by Congress.[116] An unelected regulatory agency ignoring congressional findings and directions is not a legitimate act and directly undermines the rule of law.[117]
While the current administration likes to focus upon the charge to “minimize[e] burdens on reporting companies associated with the collection of beneficial ownership information,”[118] by doing so they ignore that said mission is to be accomplished in the context of an obligation to “collect information in a form and manner that it is reasonably designed to generate a database that is highly useful to national security, intelligence and law enforcement agencies and Federal functional regulators.”[119] The charge is not to “minimize the regulatory burden” as a freestanding objective but rather to do so in the context of organizing the BOIR database. Eliminating from an intended database more than 99 percent of the companies falling within the statutorily defined class of “reporting companies” does not yield a database that is “highly useful,” and doing so is not “consistent with the purposes of this title.”[120] Not only does the IFR conflict with congressional findings, the IFR squarely ignores and negates Congress’s directions as to the objective of the database and the tensions to be reconciled in its design.
Further to its questionable validity, the IFR is an extreme and unworkable solution to the problems presented by the CTA, which is itself an extreme and unworkable solution to problem of beneficial ownership anonymity. Like the CTA, the IFR has come under vigorous attack[121] and may be unenforceable. FinCEN’s stridency in the demands it made under its initial rules for implementation of the CTA and then, under a new administration, in its extremist limitations on the application of those rules, has effectively left the issues of the determination of beneficial ownership unaddressed. Regardless of whether the IFR is legally defective, the next steps in finalizing the IFR should serve as an opportunity to consider the concerns of both the business community and law enforcement in the thoughtful development of workable rules to address this issue.
The authors claim no particular insight into the workings of the Treasury or FinCEN, and as such know nothing about the status of a new “final” reporting rule to replace the IFR, it promised for this calendar year.[122] That said, if the Treasury and FinCEN are aware of the questionable legality of the system put in place by the IFR, they may hold off on issuing a final rule in order to preclude a challenge.[123]
Stay Tuned
In the next installment of this series[124] we will consider the soon-to-be-effective New York LLC Transparency Act, a statute currently nullified by the IFR.
See Christina M. Houston, Robert R. Keatinge, Thomas E. Rutledge & James J. Wheaton, What Fresh Hell Can This Be? Beneficial Ownership Reporting in Limbo, Bus. L. Today (Dec. 9, 2025). ↑
The Reporting Rules appear at 31 C.F.R. § 1010.380(a) et seq. As noted, the “final” pre–Interim Final Rule (“IFR”) Beneficial Ownership Information Report (“BOIR”) regulations were released in Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. 59498 (Sept. 30, 2022). The final rules followed from Beneficial Ownership Information Reporting Requirements, 86 Fed. Reg. 69920 (Dec. 8, 2021) (notice of proposed rulemaking (“NPRM”)), which itself followed from Beneficial Ownership Information Reporting Requirements, 86 Fed. Reg. 17557 (Apr. 5, 2021) (advance notice of proposed rulemaking (“ANPR”)). Those “final” regulations detail certain due dates, amended by Beneficial Ownership Information Reporting Deadline Extension for Reporting Companies Created or Registered in 2024, 88 Fed. Reg. 66730 (Sept. 28, 2023); supplemented with regard to the use of FinCEN identifiers by the release of Use of FinCEN Identifiers for Reporting Beneficial Ownership Information of Entities, 88 Fed. Reg. 76995 (Nov. 8, 2023); and expanded with regard to the exemption for public utilities (31 C.F.R. § 1010.380(c)(2)(xvi)) in Update to the Public Utility Exemption Under the Beneficial Ownership Information Reporting Rule, 89 Fed. Reg. 83782 (Oct. 18, 2024)—collectively, the “Reporting Rules.” To be clear, when the Reporting Rules are herein referenced, we refer to the regulations in effect prior to the IFR. ↑
See Christina Houston, Robert R. Keatinge, Thomas E. Rutledge & James J. Wheaton, The Corporate Transparency Act: Are Rumors of Its Death Exaggerated?, Bus. L. Today (Mar. 17, 2025). That article followed Christina Houston, Robert R. Keatinge, Thomas E. Rutledge & James J. Wheaton, How FinCEN Stole Christmas: The Corporate Transparency Act, Year 1, Bus. L. Today (Jan. 13, 2025) and Christina Houston, Robert R. Keatinge, Thomas E. Rutledge & James J. Wheaton, The Corporate Transparency Act Is Still on Pause, but Less So, Bus. L. Today (Feb. 6, 2025). ↑
See Letter from Sheldon Whitehouse and Charles E. Grassley, U.S. Senators, to Scott Bessent, U.S. Sec’y of the Treasury (Mar. 10, 2025). ↑
On March 21, 2025, FinCEN released the IFR, which appeared in the Federal Register on March 26. ↑
See, e.g., Press Release, U.S. Dep’t of the Treasury, Treasury Department Announces Suspension of Enforcement of Corporate Transparency Act Against U.S. Citizens and Domestic Reporting Companies (Mar. 2, 2025) (“The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.”). ↑
See Beneficial Ownership Information Reporting Requirement Revision and Deadline Extension, 90 Fed. Reg. 13688 (Mar. 26, 2025) [hereinafter the “IFR Release”]. ↑
See Press Release, Fin. Crimes Enf’t Network, FinCEN Removes Beneficial Ownership Reporting Requirements for U.S. Companies and U.S. Persons, Sets New Deadlines for Foreign Companies (Mar. 21, 2025). ↑
This notice provided:
Beneficial Ownership Information Reporting
[Updated March 21, 2025] All entities created in the United States—including those previously known as “domestic reporting companies”—and their beneficial owners are now exempt from the requirement to report beneficial ownership information (BOI) to FinCEN. Existing foreign companies that must report their beneficial ownership information have at least an additional 30 days from the date of publication of the interim final rule. For more information, see press release and alert.
Notice, Fin. Crimes Enf’t Network (updated Mar. 21, 2025). ↑
See Alert, Fin. Crimes Enf’t Network, Alert: FinCEN Removes Beneficial Ownership Reporting Requirements for U.S. Companies and U.S. Persons, Sets New Deadlines for Foreign Companies (updated Mar. 21, 2025):
Today, the Financial Crimes Enforcement Network (FinCEN) announced that, consistent with the Department of the Treasury’s March 2, 2025, announcement, it is issuing 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 that interim final rule, FinCEN revises the regulatory 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 (formerly known as “foreign reporting companies”). FinCEN also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements. Thus, through this interim final rule, 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.
However, foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines. These foreign entities 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 interim final rule 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 interim final rule have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.
In accord with its prior notices and the Department of the Treasury’s March 2, 2025, announcement, FinCEN is applying all exemptions and deadline extensions in the interim final rule as of today, in advance of formal publication in the Federal Register, and will further not enforce any beneficial ownership reporting penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners.
FinCEN also released a series of questions and answers about the IFR. Interim Final Rule: Questions and Answers, Fin. Crimes Enf’t Network (last visited Nov. 18, 2025) [hereinafter IFR FAQs]. ↑
The Reporting Rules as amended, including as amended by the IFR, are set forth in fully annotated form in Christina M. Houston, Robert R. Keatinge, Thomas E. Rutledge & James J. Wheaton, CTA Beneficial Ownership Reporting Rules, Annotated, Bus. L. Today (Dec. 10, 2025), published in concert with this article. ↑
See 31 C.F.R §1010.380(c)(1)(i) (prior to the IFR); see also 1 Larry E. Ribstein, Robert R. Keatinge & Thomas E. Rutledge, Ribstein and Keatinge on Limited Liability Companies § 4A:9 (Dec. 2025). ↑
There is also a change of the reporting rule for foreign pooled funds. Under the Reporting Rules, a foreign pooled fund, on its BOIR, was obligated to identify “one individual who exercises substantial control over the entity.” 31 C.F.R. § 1010.380(b)(2) (before modification by the IFR). As modified by the IFR, the one person to be identified is not to be a U.S. person. See 31 C.F.R. § 1010.380(b)(2)(iii) (after modification by the IFR) (“. . . except the report shall include the information required under paragraph (b)(1) of this section solely with respect to an individual who exercises substantial control over the entity if that individual is not a United States person”); see also IFR FAQ 4. ↑
See Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. at 59525 (“FinCEN expects that a reporting company will always identify at least one beneficial owner under the ‘substantial control’ component, even if all other individuals are subject to an exclusion or fail to satisfy the ‘ownership interests’ component.”). ↑
See 31 C.F.R. § 1010.380(d). ↑
See id. § 1010.380(d)(2)(ii)(C). ↑
See id. §§ 1010.380(d)(3)(iv), 1010.380(A)(2)(iii). ↑
See id. § 1010.380(c)(2); see also Ribstein, Keatinge & Rutledge, supra note 12, § 4A:11. ↑
See 31 C.F.R. § 1010.380(c)(2)(xxiv) (exempting from classification as a “reporting company” “[a]ny entity that is: (A) A corporation, limited liability company, or other entity; and (B) Created by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe”). ↑
See id. § 1010.380(d)(3)(i). ↑
See id. § 1010.380(c)(1)(ii) (“any entity”). ↑
See Ribstein, Keatinge & Rutledge, supra note 12, § 4A:10. ↑
See Jodi Vittori, Another Anti-Corruption Pillar Crumbles, FP (Foreign Pol’y) (Apr. 7, 2025). ↑
See Thomas W. Antonucci, Vesna K. Harasic-Yaksic & Ira B. Mirsky, FinCEN Guts Corporate Transparency Act; Narrows Scope to Cover Only Foreign Companies and Beneficial Owners, Wiley (Mar. 25, 2025). ↑
See Ross P. Keogh & McKenna R. Ford, FinCEN Interim Rule Significantly Limits Application of CTA: Domestic Reporting Companies Exempt from BOI Reporting, Parsons Behle & Latimer (Apr. 1, 2025). ↑
See Bryan R. Walters, FinCEN Eliminates Corporate Transparency Act’s Reporting Obligations for U.S. Persons, Nat’l L. Rev. (Mar. 24, 2025) (“On March 21, 2025, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) released an interim final rule (Interim Rule) that broadly eliminates Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act (CTA) for all U.S. reporting companies and all U.S. beneficial owners of foreign reporting companies.”). ↑
See Brett Erickson, Australia Is Closing the Money Laundering Loopholes the US Keeps Open, Hill (Oct. 28, 2025) (“The Corporate Transparency Act, intended to expose shell-company owners, was hollowed out by exemptions that removed most domestic firms from reporting.”). ↑
See Corporate Transparency Act: In Like a Lion, Out Like a Lamb, Kutak Rock (Mar. 24, 2025). ↑
Any claim that the CTA was “decimated” is inaccurate and understates the state of affairs—in a decimation (decimate), one in ten is killed. See, e.g., Polybius, Histories bk. VI, § VI, at 331 (W.R. Paton trans.); see also Plutarch, Antony 39:7 (“Antony was enraged, and visited those who had played the coward with what is called decimation. That is, he divided the whole number of them into tens and put to death that one from each ten upon whom the lot fell.”). ↑
See Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. at 59549 (“FinCEN estimates that there will be approximately 32.6 million reporting companies in Year 1, and 5 million additional reporting companies each year in Years 2–10.”); id. at 59584 (“FinCEN estimates that there will be approximately 32.6 million existing reporting companies and 5 million new reporting companies formed each year. (citation omitted)). That same release provided: “Summing the estimates of both domestic and foreign entities, the total number of existing entities in 2024 that may be subject to the reporting requirements is 36,581,506 and the total number of new companies annually thereafter is 5,616,362.” Id. at 59565 (citation omitted). ↑
See 31 C.F.R. § 1010.380(c)(2)(xxiv) (as created by the IFR). ↑
See IFR Release, 90 Fed. Reg. at 13695 (“Estimated Number of Respondents: 11,667 reporting companies per year, on average.”); id. at 13695 n.51 (“This estimate is based on a three-year average that assumes all reporting companies that were previously expected to have a reporting obligation, and would retain an obligation under the interim final rule, but did not already file a BOIR with FinCEN in calendar year 2024 (approximately 0.6 percent of the total original population, or 20,000 reporting companies) would come into compliance in year one and that approximately 5,000 new reporting companies would file their first report in each of years one through three.”). ↑
See Maureen Leddy, Groups Sound Alarm After Treasury Backtracks on Beneficial Ownership Reporting, Thomson Reuters (Mar. 10, 2025) (“Over 99% of entities previously subject to the Corporate Transparency Act’s reporting requirements could be exempt after Treasury announced a shift in focus to foreign entities last week, said the FACT Coalition, a nonpartisan coalition aimed at combating illicit finance.”). ↑
See 31 C.F.R. § 1010.380(c)(2)(xxiv). ↑
In the Reporting Rules, the test was whether the business organization was “created” by a secretary of state or equivalent office filing. See 31 C.F.R. § 1010.380(c)(1)(i)(C); see also Thomas E. Rutledge & Robert R. Keatinge, LLPs Are Not CTA Reporting Companies, Bus. L. Today (Oct. 10, 2024); Thomas E. Rutledge, Kentucky Business Organizations “Created” by a Filing with the Secretary of State, 113 Ky. L.J. Online 1 (May 2, 2025). ↑
See 31 C.F.R. § 1010.380(c)(2)(xxiv). ↑
See id. § 1010.380(d)(4); IFR FAQ 3 (“Reporting companies do not need to report BOI for any U.S. person, and U.S. persons are exempt from having to provide BOI with respect to any reporting company for which they are a beneficial owner.”). ↑
See 31 C.F.R. §§ 1010.380(e), 1010.380(b)(ii). ↑
See id. § 1010.380(b)(1)(ii) (requiring that an initial BOIR set forth information as to “every individual who is a company applicant with respect to such reporting company”). ↑
The same point was raised in comment letters including those from Wolters Kluwer (May 22, 2025), American College of Real Estate Lawyers (May 20, 2025), and Stephen Liss (Dungey Dougherty PLLC) (May 6, 2025). ↑
See also Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. at 59525 (“FinCEN expects that a reporting company will always identify at least one beneficial owner under the ‘substantial control’ component . . . .”); Fin. Crimes Enf’t Network, Small Entity Compliance Guide 16 (Dec. 2024) (“FinCEN expects that every reporting company will be substantially controlled by one or more individuals, and therefore that every reporting company will be able to identify and report at least one beneficial owner to FinCEN.”); Fin. Crimes Enf’t Network, Frequently Asked Questions (“FAQs”), FAQ D.1 (Oct. 3, 2024) (“FinCEN expects that every reporting company will be substantially controlled by one or more individuals, and therefore that every reporting company will be able to identify and report at least one beneficial owner to FinCEN.”). ↑
It is assumed that none of the twenty-four exemptions applies. ↑
See 31 C.F.R. § 1010.380(c)(2)(xxiv) (as created by the IFR). ↑
See IFR Release, 90 Fed. Reg. at 13692 (“Foreign reporting companies that only have beneficial owners that are U.S. persons will be exempt from the requirement to report any beneficial owners.”). ↑
See 31 C.F.R. § 1010.380(b) (“Each [BOIR] shall be filed with FinCEN in the form and manner that FinCEN shall prescribe in the forms and instructions for such report or application, and each person filing such report or application shall certify that the report or application is true, correct, and complete.”); see also Robert R. Keatinge & Thomas E. Rutledge, Impossible Things: Compliance with the Corporate Transparency Act When Beneficial Owners or Company Applicants Are Nonresponsive, Bus. L. Today (Dec. 16, 2024). ↑
See generally Ribstein, Keatinge & Rutledge, supra note 12, § 4A:25. ↑
See 31 C.F.R. § 1010.380(b)(4)(iii)(A). This issue was identified in a number of the comment letters including those from Wolters Kluwer (May 22, 2025), American College of Real Estate Lawyers (May 20, 2025), and Stephen Liss (Dungey Dougherty PLLC) (May 6, 2025). ↑
This same point was raised in comment letters including those from Wolters Kluwer (May 22, 2025), American College of Real Estate Lawyers (May 20, 2025), Stephen Liss (Dungey Dougherty PLLC) (May 6, 2025), and the National Public Records Research Association (May 8, 2025). ↑
See 31 C.F.R. § 1010.380(c)(2)(xxiv). ↑
See id. § 1010.380(b)(3)(ii). ↑
See IFR Release, 90 Fed. Reg. at 13688 (“Under this interim final rule, entities previously defined as ‘domestic reporting companies’ are exempted from the reporting requirements and do not have to report BOI to FinCEN, or update or correct BOI previously reported to FinCEN.”); see also IFR FAQ 1 (“Companies created in the United States are no longer considered [to be] reporting companies and therefore do not need to report BOI to FinCEN under the Corporate Transparency Act.”). ↑
Including that it does not satisfy the large operating company exemption. See 31 U.S.C. § 5336(a)(11)(B)(xxi); 31 C.F.R. § 1010.380(c)(2)(xxi); see also Ribstein, Keatinge & Rutledge, supra note 12, § 4A:11. ↑
See 31 C.F.R. § 1010.380(c)(2)(xxiv). ↑
See Carmen Molina Acosta, FinCEN Plans to Delete Data on U.S. Companies from Beneficial Ownership Database, Int’l Consortium Investigative Journalist (Sept. 17, 2025). On September 8, some eighty-five members of Congress wrote to Secretary Bessent, stating, “We also acknowledge that millions of U.S. small businesses have already registered with FinCEN. This data must be immediately destroyed to protect the privacy of small business owners.” Letter from Warren Davidson et al., Cong. Member, to Scott Bessent, U.S. Sec’y of the Treasury (Sept. 8, 2025). ↑
See Vittori, supra note 23; CREW Supports the Corporate Transparency Act Against Lobbying and Congressional Pressure, CREW (Apr. 30, 2024). ↑
See Comment Letter from National District Attorneys Association (undated). In a similar vein, the National Narcotic Officers’ Associations’ Coalition, in its comment letter dated May 27, 2025, wrote:
Requiring businesses to disclose their true beneficial owners under the CTA is a critical tool for law enforcement. It reduces criminals’ ability to obscure financial trails and helps investigators follow the money – a proven strategy in combating organized criminal activity, particularly drug trafficking. With limited resources, law enforcement needs every advantage. The CTA, if fully implemented, would significantly strengthen efforts to dismantle these criminal networks. ↑
See Comment Letter from Main Street Alliance (May 27, 2025). ↑
See Letter from Whitehouse & Grassley, supra note 4. ↑
See Letter from Elizabeth Warren & Maxine Waters, U.S. Senators, to Scott Bessent, U.S. Sec’y of the Treasury (Sept. 15, 2025) (citations omitted):
Given that your prior responses to congressional inquiries provided no meaningful information about how Treasury is addressing the national security and illicit finance concerns documented over many years—including in Treasury rulemaking efforts—we ask you to answer the following questions by September 26, 2025:
- Have you conducted any analysis of the extent to which terrorists, human traffickers, drug cartel leaders, foreign adversaries, or other malign actors and facilitators will be able to abuse the U.S. financial system absent enforcement of the Corporate Transparency Act?
- If so, please provide that analysis in writing.
- If not, what plans do you have in place to ensure the U.S. financial system is not exploited by terrorists and criminals using opaque corporate structures while Treasury refuses to enforce the law?
- Do you disagree with national security and law enforcement officials across Republican and Democratic administrations who emphasized that centralized beneficial ownership information reporting would assist law enforcement and protect our national security? ↑
- Have you conducted any analysis of the extent to which terrorists, human traffickers, drug cartel leaders, foreign adversaries, or other malign actors and facilitators will be able to abuse the U.S. financial system absent enforcement of the Corporate Transparency Act?
See Comment Letter from Ron Wyden & Elizabeth Warren, U.S. Senators (May 27, 2025). ↑
See Comment Letter from Charles E. Grassley & Sheldon Whitehouse, U.S. Senators, to Scott Bessent, U.S. Sec’y of the Treasury (May 27, 2025). ↑
These cases are reviewed in the three articles cited in footnote 3. ↑
See, e.g., Press Release, supra note 6. ↑
For example, in the National Small Business United v. U.S. Department of the Treasury case that is currently pending before the U.S. Court of Appeals for the Eleventh Circuit, on March 11 of this year the court ordered all parties to file supplemental briefs addressing the then-described but not-yet-issued IFR and how it “impacts the analysis of National Small Business Association’s facial challenge to the statute in this case.” No. 24-10736 (docket item 113). In its supplemental filing, the government stated, “This change in how the Executive Branch is implementing the CTA does not directly affect this Court’s analysis of plaintiffs’ facial constitutional challenge, which turns on whether the statutory reporting requirements are within Congress’s broad powers under the Commerce Clause and Necessary and Proper Clause.” Supplemental Brief for Appellants at 1 (docket item 115). In Texas Top Cop Shop v. Bondi, pending currently before the U.S. Court of Appeals for the Fifth Circuit, on March 24 the parties were directed to “file simultaneous letter briefs addressing the [IFR’s] impact, if any, on this appeal.” No. 24-40792 (docket item 344). In response, the government wrote:
Although the regulatory changes underscore that plaintiffs are not entitled to a preliminary injunction, they do not render this case moot. As noted, Treasury “is accepting comments on th[e] interim final rule” and “will assess the exemptions, as appropriate, in light of those comments and intends to issue a final rule this year.” 90 Fed. Reg. at 13,690. If that process results in a final rule exempting domestic companies from the reporting requirements, any requests for relief by those companies would likely be moot. At this point, however, the rulemaking remains ongoing. In any event, although plaintiffs’ underlying claim might become moot at the conclusion of the rulemaking, the government’s appeal would not become moot because the district court’s preliminary injunction extends beyond plaintiffs to foreign companies and thus would continue to have effect even if the narrowing of the reporting rule is reaffirmed by the final rule.
(docket item 349.) ↑
See Kevin L Shepherd, The Financial Action Task Force, the Gatekeeper Initiative, and the Risk-Based Approach to Client Due Diligence nn.1–7 & accompanying text (rev. June 15, 2025) (copy in possession of authors); see also id. nn.18–34 & accompanying text. This paper is a chapter in the forthcoming Suzanne Shier & Carolyn Reers, Guide to International Estate Planning (3d ed., ABA forthcoming 2025). ↑
See id. nn.35–43 & accompanying text. The current recommendations are available at Fin. Action Task Force, International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation: The FATF Recommendations (updated Oct. 2025). ↑
Fin. Action Task Force, supra note 66, at 22. ↑
William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, H.R. 6395, 116th Cong., Pub. L. No. 116-283, 134 Stat. 338, § 6402(5) (2021) (not codified in U.S. Code) [hereinafter NDAA] (“Federal legislation providing for the collection of beneficial ownership information for corporations, limited liability companies, or other similar entities formed under the laws of the States is needed to— . . . (E) bring the United States into compliance with international anti–money laundering and countering the financing of terrorism standards.”). ↑
See Press Release, U.S. Dep’t of the Treasury, Financial Action Task Force Highlights Treasury’s Efforts to Counter Illicit Finance (Mar. 26, 2024) (“Today, the Financial Action Task Force (FATF)—the global standard-setting body for anti–money laundering, countering the financing of terrorism, and countering proliferation financing (AML/CFT/CPF)—announced that the United States has been upgraded to “largely compliant” with FATF Recommendation 24, which relates to beneficial ownership transparency for legal persons.”); see also Fin. Action Task Force, Anti–Money Laundering and Counter-Terrorist Financing Measures: United States 7th Follow-Up Report & Technical Compliance Re-Rating (Mar. 2024). ↑
The authors intentionally exclude from this discussion the important question of who might have standing to make these and other arguments as to the validity of the IFR. That is a discussion for another day. ↑
See 31 U.S.C. § 5336(a)(11)(B)(xxiv). ↑
See IFR Release, 90 Fed. Reg. at 13690:
FinCEN is exercising the authority under 31 U.S.C. 5336(a)(11)(B)(xxiv) to exempt domestic reporting companies from the Reporting Rule and the authority under 31 U.S.C. 5318(a)(7) to exempt foreign reporting companies from having to report the BOI of any U.S. persons who are beneficial owners of the foreign reporting company, as well as to exempt U.S. persons from having to provide such information to the foreign reporting companies for which they are a beneficial owner.
See also id. at 13695. ↑
See, e.g., Press Release, supra note 6 (“Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest. ‘This is a victory for common sense,’ said U.S. Secretary of the Treasury Scott Bessent. ‘Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy.’”). ↑
See 31 U.S.C. § 5336(a)(11)(B); see also 31 C.F.R. § 1010.380(c)(2). ↑
See 31 U.S.C. § 5336(a)(11)(B)(xvii); see also 31 C.F.R. § 1010.380(c)(2)(xvii). ↑
See 31 U.S.C. § 5336(a)(11)(B)(viii); see also 31 C.F.R. § 1010.380(c)(2)(viii). ↑
See Ribstein, Keatinge & Rutledge, supra note 12, § 4A:11 n.3. ↑
See 31 U.S.C. § 5336(a)(11)(B)(i); see also 31 C.F.R. § 1010.380(c)(2)(i). ↑
See 31 U.S.C. § 5336(a)(11)(B)(xxi); see also 31 C.F.R. § 1010.380(c)(2)(xxi). In application, it is likely that FinCEN’s estimate of the number of companies able to avail themselves of the large operating company exemption overstated its availability. In practice, significant numbers of companies that on first blush would fall within the scope of this exemption were in fact excluded, often because of internally utilized employee leasing companies that deprived the operating company with the necessary $5 million or more of sales/revenue of the necessary employee count. ↑
No doubt any number of law students are out there working on law review notes on this topic; the authors would much like to hear from them. ↑
See also William Shakespeare, As You Like It act II, sc. 7, l. 139. ↑
NDAA § 6402(5). ↑
See 31 U.S.C. § 5336(a)(11) (“(A) means a corporation, limited liability company, or other similar entity that is—(i) created by the filing of a document with a secretary of state or a similar office under the law of a State or Indian Tribe; or (ii) formed under the law of a foreign country and registered to do business in the United States by the filing of a document with a secretary of state or a similar office under the laws of a State or Indian Tribe.”). ↑
See 31 U.S.C. § 5336(a)(11)(B). While in concept a “foreign reporting company” is able to avail itself of certain of the twenty-three exemptions provided for in the CTA and the related Reporting Rules, in application many are not available to a foreign reporting company. ↑
See 31 U.S.C. § 5336(a)(11)(B)(xxiv):
[A]ny entity or class of entities that the Secretary of the Treasury, with the written concurrence of the Attorney General and the Secretary of Homeland Security, has, by regulation, determined should be exempt from the requirements of subsection (b) because requiring beneficial ownership information from the entity or class of entities—
(I) would not serve the public interest; and
(II) would not be highly useful in national security, intelligence, and law enforcement agency efforts to detect, prevent, or prosecute money laundering, the financing of terrorism, proliferation finance, serious tax fraud, or other crimes. ↑
See Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. at 59539 (“The CTA exempts from the definition of ‘reporting company’ twenty-three specific types of entities. Many of these exempt entities are already subject to substantial federal and/or state regulation or already have to provide their beneficial ownership information to a governmental authority.” (citation omitted)). ↑
Yes, it is true that what were previously classified as “foreign reporting companies” (see 31 U.S.C. § 5336(a)(11)(A)(ii) and 31 C.F.R. § 1010.380(a)(1)(ii)) are still subject to the Reporting Rules, but that group is vanishingly small (circa one-half of one percent) as to the intended scope of the CTA, and even to the extent they are preserved as having an obligation to file BOIRs, they do so on a significantly more limited basis, namely not identifying as a beneficial owner any U.S. person. ↑
See 2A Norman Singer & Sambie Singer, Sutherland Statutory Construction § 47:17 (Apr. 2025); see also Harrison v. PPG Indus., Inc., 446 U.S. 578, 601 (1989) (“The rule of ejusdem generis ordinarily ‘limits general terms which follow specific ones to matters similar to those specified.’ Gooch v. United States, 297 U.S. 124, 128, 56 S.Ct. 395, 397, 80 L.Ed. 522 (1936).”); id. (“It rests on the notion that statutes should be construed so that the ‘sense of the words . . . best harmonizes with the context and the end in view.’”). ↑
See Comty. Ass’ns Inst. v. Yellen, No. 1:24-cv-1597, 2024 WL 4571412, 2024 U.S. Dist. LEXIS 193958 (E.D. Va. Oct. 24, 2024), appeal filed, No. 24-2118 (4th Cir. 2024); see also Cmty. Ass’ns Inst. v. U.S. Dep’t of the Treasury, No. 24-2118, 2025 WL 1824824 (4th Cir. May 6, 2025). In response to the IFR, the Community Associations Institute reiterated its request for relief from the CTA’s reporting system. See Comment Letter from Community Associations Institute (May 27, 2025). ↑
See Bureau of Alcohol, Tobacco, Firearms & Explosives, U.S. Dep’t of Just., Application for Federal Firearms License, Part B; Alcohol & Tobacco Tax & Trade Bureau, Dep’t of the Treasury, Application for Basic Permit Under the Federal Alcohol Administration Act §§ 8, 9. ↑
See also Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. at 59539 (“The CTA exempts from the definition of ‘reporting company’ twenty-three specific types of entities. Many of these exempt entities are already subject to substantial federal and/or state regulation or already have to provide their beneficial ownership information to a governmental authority.” (citation omitted)). ↑
See I.R.C. §§ 414(b)–(c), 1563(a); see also Fin. Crimes Enf’t Network, Frequently Asked Questions (“FAQs”), FAQ L.4 (Nov. 26, 2024) (providing that employee count aggregation is not permitted for purposes of the large operating company exemption). ↑
See supra note 82 and accompanying text. ↑
The characterization of “major questions” as a “doctrine” was traced in Allison Orr Larson, Becoming a Doctrine, 76 Fla. L. Rev. 1 (2024); see also West Virginia v. Env’t Prot. Agency, 597 U.S. 697, 724 (2022) (“As for the major questions doctrine ‘label[ ],’ post, at [], it took hold because it refers to an identifiable body of law that has developed over a series of significant cases all addressing a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted. Scholars and jurists have recognized the common threads between those decisions. So have we.”). ↑
573 U.S. 302 (2014). As a concession to the brevity of life, only the official reporter cites for the various decisions of the U.S. Supreme Court are provided. ↑
576 U.S. 473 (2015). ↑
597 U.S. 697 (2022). ↑
Id. at 721. ↑
Id. (citing Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000)). ↑
Id. (citing Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 594 U.S. 758 (2021)). ↑
See id. at 722 (citing Gonzales v. Oregon, 546 U.S. 243 (2006)). ↑
See id. at 723 (citing Nat’l Fed’n of Indep. Bus. v. Dep’t of Lab., 595 U.S. 109 (2022)). ↑
See id. at 722–23 (“All of these regulatory assertions had a colorable textual basis. And yet, in each case, given the various circumstances, ‘common sense as to the manner in which Congress [would have been] likely to delegate’ such power to the agency at issue . . .” (citation omitted)). ↑
See id. at 723 (“Extraordinary grants of regulatory authority are rarely accomplished through ‘modest words,’ ‘vague terms,’ or ‘subtle device[s].’” (citing Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468 (2001))); id. (“Agencies have only those powers given to them by Congress, and ‘enabling legislation’ is generally not an ‘open book to which the agency [may] add pages and change the plot line.’ E. Gellhorn & P. Verkuil, Controlling Chevron-Based Delegations, 20 Cardozo L. Rev. 989, 1011 (1999). We presume that ‘Congress intends to make major policy decisions itself, not leave those decisions to agencies.’”). ↑
MCI Telecomms. Corp. v. Am. Tel. & Tel. Co., 512 U.S. 218, 229 (1994) (citing Pittston Coal Grp. v. Sebben, 488 U.S. 105, 113 (1988); Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842–43 (1984)). Chevron was overruled as to a different issue by Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024). ↑
MCI Telecomms. Corp., 512 U.S. at 231–32 (“But even assuming it is, we think an elimination of the crucial provision of the statute for 40% of a major sector of the industry is much too extensive to be considered a ‘modification.’ What we have here, in reality, is a fundamental revision of the statute, changing it from a scheme of rate regulation in long-distance common-carrier communications to a scheme of rate regulation only where effective competition does not exist. That may be a good idea, but it was not the idea Congress enacted into law in 1934.”). ↑
See supra note 82 and accompanying text. ↑
See NDAA §§ 6502–6508. See also U.S. Gov’t Accountability Off., GAO-25-106955, Illicit Finance: Treasury Should Monitor Partnerships and Trusts for Future Risks (Dec. 19, 2024). ↑
Brief of Senators Sheldon Whitehouse, Ron Wyden, Elizabeth Warren, Jack Reed, & Representatives Maxine Waters as Amici Curiae in Support of Defendants-Appellants, Nat’l Small Bus. United v. U.S. Dep’t of the Treasury, No. 5:22-cv-1448 (11th Cir. filed Apr. 22, 2024) (No. 24-10736). ↑
See Chevron, U.S.A., 467 U.S. at 842–43, overruled as to a different point by Loper Bright, 603 U.S. 369 (“When a court reviews an agency’s construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” (citation omitted)). See also BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183 (2004) (quoting Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992)) (“The preeminent canon of statutory interpretation requires [courts] to ‘presume that [the] legislature says in a statute what it means and means in a statute what it says there.’”). ↑
See also 31 U.S.C.A. § 5336(a)(11) (definition of “reporting company”). ↑
See id. § 310(a); see also Nat’l Fed’n of Indep. Bus. v. Dep’t of Lab., 595 U.S. 109, 117 (2022) (“Administrative agencies are creatures of statute.”). ↑
See supra note 82 and accompanying text; see also Zuni Pub. Sch. Dist. v. Dep’t of Educ., 550 U.S. 81, 94 (2007) (“To ascertain Congress’s intent, we begin with the statutory text because if its language is unambiguous, no further inquiry is necessary.”). ↑
See N.Y. State Dep’t of Soc. Servs. v. Dublino, 413 U.S. 405, 419–20 (1973) (“We cannot interpret federal statutes to negate their own stated purposes.”); see also Kress Stores of P.R., Inc. v. Wal-Mart P.R., Inc., 121 F.4th 228, 241 (1st Cir. 2024) (“When Congress enacts its purposes and findings into the text, ‘[w]e cannot interpret federal statutes to negate their own stated purposes.’ King v. Burwell, 576 U.S. 473, 493, 135 S.Ct. 2480, 192 L.Ed.2d 483 (2015) (quoting New York State Dep’t of Social Servs. v. Dublino, 413 U.S. 405, 419–20, 93 S.Ct. 2507, 37 L.Ed.2d 688 (1973)).”). Justice Scalia called this interpretive principle the “presumption against ineffectiveness.” Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 63 (2012). ↑
See Advoc. Christ Med. Ctr. v. Kennedy, 605 U.S. 1, 20 (2025). ↑
In the case of the CTA, those challenges have been reviewed in the three articles by Houston et al., supra note 3. ↑
See also Declaration of Independence (objecting that King George III had declared “themselves invested with power to legislate for us in all cases whatsoever”). ↑
See NDAA § 6402(8)(A); see also Press Release, supra note 6. ↑
NDAA § 6402(8)(C). Section 6402(8) of the CTA provides that
(8) in prescribing regulations to provide for the reporting of beneficial ownership information, the Secretary shall, to the greatest extent practicable consistent with the purposes of this title—
(A) seek to minimize burdens on reporting companies associated with the collection of beneficial ownership information;
(B) provide clarity to reporting companies concerning the identification of their beneficial owners; and
(C) collect information in a form and manner that is reasonably designed to generate a database that is highly useful to national security, intelligence, and law enforcement agencies and Federal functional regulators. ↑
Id. ↑
See, e.g., Letter from Ian Gary, Exec. Dir., FACT Coalition, et al., to Andrea Gacki, Dir., FinCEN (May 27, 2025); see also U.S. Gov’t Accountability Off., GAO-25-107143, Fraud in Federal Programs: FinCEN Should Take Steps to Improve the Ability of Inspectors General to Determine Beneficial Owners of Companies (updated June 9, 2025). ↑
In written testimony to Congress on September 9, FinCEN Director Gacki wrote: “FinCEN accepted comments on the interim final rule through May 27, 2025, and intends to issue a final rule this year.” Statement by FinCEN Director Andrea M. Gacki Before the House Committee on Financial Services, Subcommittee on National Security, Illicit Finance, and International Financial Institutions (Sept. 9, 2025). However, in a status report filed by the government on December 1, 2025, in the Community Associations Institute appeal pending currently before the U.S. Court of Appeals for the Fourth Circuit (Community Associations Institute, Inc. v. Dept. of the Treasury, No. 24-2118, docket item 65), it was stated:
FinCEN is currently reviewing comments regarding the interim final rule as part of its final rulemaking. Although the interim final rule stated that FinCEN “intend[ed] to issue a final rule this year,” id. at 13,689, FinCEN’s progress has been delayed by various factors, including the recent lapse in appropriations.
In the Smith suit currently pending in Texas (Smith v. Dept. of the Treasury, No. 6:24-cv-336, E.D. Tex.), on December 3 the government filed a status report (docket item 53) that provides in part:
FinCEN is currently reviewing comments regarding the interim final rule as part of its final rulemaking. Although the interim final rule stated that FinCEN “intend[ed] to issue a final rule this year,” FinCEN’s progress has been delayed by various factors, including the recent lapse in appropriations. (citation omitted).
In response, on December 4 the plaintiffs filed a response (docket item 54) that provides in part:
Plaintiffs’ summary judgment motion has been on file for almost seven months. On July 2, 2025, the Court ordered this case be held in abeyance until further order of the Court. At the time, Defendants argued that this abeyance “will be less than six months” because the Financial Crimes Enforcement Network (FinCEN) intended to issue a final rule by the end of the year. Plaintiffs argued that an abeyance tied to a final rule is effectively an open-ended stay because FinCEN’s self-imposed year-end deadline was not enforceable. . . .
Indeed, as Plaintiffs previously explained, Defendants’ ongoing rulemaking will not moot Plaintiffs’ challenge to the statute, regardless of the outcome of that rulemaking. Now that the Defendants’ stay appears to be completely open-ended, this Court should refuse to extend its abeyance beyond the December 31 deadline that Defendants originally represented to this Court in support of their motion. There is no need for this case to sit in limbo forever. To the contrary, a final judgment from this Court on the merits (simply restating the reasoning from its judgment on preliminary relief) could provide needed guidance to the agency which, apparently, cannot figure out what it wants to do. (citations omitted)
There is no equivalent action in either Texas Top Cop Shop (Texas Top Cop Shop v. Bondi, No. 24-40792, 5th Cir.) or National Small Business United (National Small Business United, Case No. 24-10736, 11th Cir.), but that could change quickly. ↑
This rationale is separate and apart from the possibility that with the IFR in place and the CTA rendered a nullity, neither the Treasury nor FinCEN is interested in devoting the energy needed to draft and promulgate a final rule. ↑
See Christina M. Houston, Robert R. Keatinge, Thomas E. Rutledge & James J. Wheaton, What Fresh Hell Can This Be? Beneficial Ownership Reporting and the New York LLC Transparency Act, Bus. L. Today (Dec. 11, 2025). ↑
