The Treasury “Suspends” Enforcement of the Corporate Transparency Act for U.S. Companies

On March 2, 2025, the U.S. Department of the Treasury (Treasury) announced that it had suspended enforcement of the Corporate Transparency Act (CTA) for U.S. companies and U.S. citizens. However, it is helpful to consider recent events to understand what this may mean for financial services firms and their clients.

The Corporate Transparency Act

The CTA came into force on January 1, 2024, to provide certain government agencies and financial institutions with greater transparency into the beneficial owners of small companies for the purpose of preventing and detecting the financing of crime, including terrorist financing, human trafficking, and money laundering.

The CTA requires each applicant creating a corporation or limited liability company under the laws of any state or Indian tribe to file a report with the Financial Crimes Enforcement Network (FinCEN) providing certain identifying information about the company’s beneficial owners and the applicant, if the applicant is not a beneficial owner. After the initial filing, the company is required to update its filing if the information in the report changes. The deadline for initial filings was December 31, 2024.

The Treasury’s role implementing the CTA

The CTA directed the Secretary of the Treasury to issue the following regulations. The Treasury assigned this work to FinCEN, which has completed some of this work and announced its intention to begin the final step of this implementation in 2025.

Congressional Directive	FinCEN Rule
Carry out the CTA, including any necessary clarifications to the CTA definitions	Beneficial Ownership Rule adopted September 29, 2022 and amended November 8, 2023 Access Rule adopted December 21, 2023
Require reporting companies to update their beneficial ownership reports within a specified amount of time after the date of any change	Beneficial Ownership Rule adopted September 29, 2022 and amended November 8, 2023
Conform FinCEN’s “Customer Due Diligence Requirements for Financial Institutions” to the CTA	Amended Customer Due Diligence Rule scheduled for proposal in April 2025 (see Regulatory Flexibility Agenda)

FinCEN set a deadline of January 1, 2024, to implement CTA reporting for entities created on or after January 1, 2024. Entities created before 2024 had an additional year, until January 1, 2025, to report. FinCEN has also issued several extensions; reporting companies are encouraged to consult the FinCEN website to determine whether an extension applies to them.

Recent events

December 3, 2024: The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the CTA, suspending the Beneficial Ownership Rule, pending court rulings on the merits of those claims.

December 5, 2024: FinCEN announced that “[w]hile this litigation is ongoing…. reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect.”

February 19, 2025: After the nationwide injunctions staying the CTA were lifted, FinCEN announced a new Beneficial Ownership Rule compliance date of March 21, 2025. However, the rule remains suspended for the parties in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), in response to the injunction issued regarding those parties.

February 27, 2025: FinCEN announced that it will not assess fines or penalties under the CTA pending issuance of an "interim final rule" extending the CTA's deadlines to file or update beneficial ownership information reports and indicating that it was considering further amendments to the Beneficial Ownership Rule.

March 2, 2025: The Treasury issued a press release announcing it will not impose penalties or fines on domestic reporting companies or U.S. citizens for violations of the Beneficial Ownership Rule.

In its March 2nd announcement, the Treasury also indicated that it intends to propose an amendment to the beneficial ownership reporting rule to narrow its scope to foreign reporting companies only. However, the CTA does not authorize the Treasury to vacate or repeal its provisions, so court challenges may follow.

The Treasury’s March 2nd press release does not address whether FinCEN will continue its rulemaking effort to modify the deadlines for the Beneficial Ownership Rule. The Treasury’s announcement may be intended to pre-empt that rulemaking. For that reason, foreign reporting companies should prepare to report by the March 21, 2025 deadline.

Congress weighs in

Congress passed the CTA in 2020 with bipartisan support and over President Trump’s veto. Five years later, on February 10, 2025, the U.S. House of Representatives passed the Protect Small Businesses from Excessive Paperwork Act (H.R. 736). This bill would amend the CTA to allow reporting companies formed prior to January 1, 2026, to submit reports about their beneficial owners to FinCEN. On February 11, a companion bill (S. 505) was introduced in the Senate with 10 sponsors, all Republicans, which has now been referred to the Committee on Banking, Housing and Urban Affairs.

This legislation, which differs materially from the Treasury announcement, suggests that Congress, the Treasury, and FinCEN may wish to confer regarding the CTA.

Ongoing litigation

Currently, lawsuits contesting the constitutionality of the CTA are proceeding. Among them:

• Fourth Circuit: On appeal from the District Court's rejection of plaintiff's motion for a preliminary injunction. 
• Fifth Circuit: Oral arguments are scheduled for March 25 on appeal from a ruling in the Eastern District of Texas overturning the CTA. Another appeal is pending from a ruling by the Eastern District of Texas also overturning the CTA.
• Ninth Circuit: Briefs were filed in January in an appeal from an Oregon District Court's decision upholding the CTA.
• Eleventh Circuit: Oral argument was heard in October on an appeal from a District Court ruling in Alabama overturning the CTA. The court has not yet ruled on the matter
• Actions in the District Courts
  • The District Courts of Virginia, Maine, and the Western District of Michigan rejected plaintiffs’ motions for preliminary injunctions.
  • The District Court of Ohio stayed an action challenging the CTA pending receipt of a ruling from the Eleventh Circuit, considering the same issues.
  • Actions have also been filed in the U.S. District Courts of Massachusetts and the District of Columbia.

As of now, the Trump Administration is continuing to defend the constitutionality of the CTA. 

Our guidance

• Foreign reporting companies should prepare to comply with the Beneficial Ownership Rule by the March 21, 2025, deadline.
• Domestic companies remain free to file CTA reports with FinCEN voluntarily. However, domestic companies that do not wish to voluntarily report beneficial ownership information will not be subject to CTA enforcement for at least the next few months.
• U.S. reporting companies should continue to monitor the situation, which is subject to further developments
• All reporting companies and their beneficial owners should look out for possible proposed rulemaking by FinCEN.
• Financial institutions may determine that CTA information will provide useful data for their customer due diligence and anti-money laundering programs.

We will continue to provide updates as events evolve.

How we help

The compliance environment has never been more complex. ACA Signature can help you navigate the evolving regulatory landscape while considering the complexity of your firm’s unique compliance requirements. 

With ACA Signature, you can choose the combination of regulatory compliance consulting, innovative compliance technology, compliance management services, and cybersecurity technology assessments to create a scalable solution that is right for your firm and gain expert insight, guidance, and support as you navigate emerging compliance and risk challenges.

Reach out to your ACA consultant, or contact our experts to learn how ACA Signature can help you launch, grow, and protect your firm.

Contact us