Instead, BOI reporting requirements will only apply to “foreign reporting companies,” with limited exceptions.
The rule also exempts foreign companies from having to report beneficial ownership information of any U.S. citizens who have financial interest in that foreign company, and exempts U.S. citizens from having to provide such information to them.
The ruling lifts a “significant administrative burden” for many small and mid-sized businesses in the Dayton region, said Chuck Edmonson, the director of marketing and member engagement for the Dayton Chamber of Commerce.
“The prior requirements created confusion and concern, especially around duplicative reporting and the risk of steep penalties,” he said. “Removing the need to submit beneficial ownership information allows business owners to focus on growth and operations rather than regulatory red tape.
The new rule also extends the deadline for foreign companies to file or update initial BOI reports to April 20, if they registered before March 21.
BOI reporting was introduced as part of the now-embattled Corporate Transparency Act, originally passed by Congress in 2021. The Act is designed to combat money laundering, tax fraud, and other financial crimes, but “the jury is still out” on whether the act can actually accomplish those things, Edmonson said.
Some have criticized the Corporate Transparency Act as ham-handed in its approach. In January, Congressman Warren Davidson (R-OH) introduced a bill that would repeal the Corporate Transparency Act in its entirety. Several lawsuits have also challenged the constitutionality of the CTA.
“While this does reduce compliance burdens for local businesses, preventing illicit financial activity through greater transparency will be more challenging,” Edmonson said. “It’s impossible to know for sure, but anytime reporting requirements are reduced, risk of activities by bad actors will increase.”
FinCEN, or the Financial Crimes Enforcement Network, operates under the Treasury Department, which announced at the beginning of March that it would not enforce penalties or fines associated with BOI reporting, regardless of what rules changes took place.
“This is a victory for common sense,” said U.S. Secretary of the Treasury Scott Bessent, adding that the move is “reining in burdensome regulations, in particular for small businesses.”
FinCEN is accepting comments on this interim final rule on www.regulations.gov.
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