Corporate Transparency Act (CTA): BOI Reporting Requirements

The Corporate Transparency Act (CTA) is a U.S. federal law requiring certain companies to report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). The law aims to combat the use of anonymous shell companies for money laundering, tax evasion, and other illicit activities.

March 2025 Update: FinCEN issued an interim final rule significantly narrowing CTA requirements. U.S. domestic companies are now exempt from BOI reporting. Requirements now apply only to foreign entities registered to do business in the United States. This article reflects the current regulatory landscape.

Background: Why the CTA Exists

For decades, the U.S. was criticized as a haven for anonymous corporate structures. Unlike many countries, the U.S. had no federal requirement to disclose who truly owns a company. State incorporation processes collected minimal ownership information, and what was collected often wasn't verified.

This opacity enabled:

Money laundering: Criminals could move illicit funds through U.S. shell companies
Sanctions evasion: Foreign actors could access the U.S. financial system through anonymous entities
Tax evasion: Hidden ownership structures facilitated illegal tax schemes
Corruption: Stolen assets could be hidden in U.S. corporate structures

The Panama Papers (2016) and subsequent leaks highlighted how anonymous companies—including many with U.S. connections—facilitated global financial crime. International bodies like FATF repeatedly cited U.S. beneficial ownership opacity as a major vulnerability.

Congress passed the CTA as part of the National Defense Authorization Act in January 2021, with reporting requirements originally set to take effect in 2024.

Current Requirements (Post-March 2025)

Following the March 2025 interim final rule, the CTA's scope has been substantially reduced:

Who Must Report

Foreign reporting companies only—entities that are:

Formed under the law of a foreign country, AND
Registered to do business in the United States by filing with a state secretary of state or similar office

Who Is Exempt

All U.S. domestic companies are now exempt from BOI reporting requirements, regardless of size. This includes:

Corporations formed in any U.S. state
Limited liability companies (LLCs)
Other entities created by filing with a state

Additionally, the original 23 categorical exemptions remain in place for foreign reporting companies, including:

Publicly traded companies
Banks and credit unions
Insurance companies
SEC-registered investment companies and advisers
Tax-exempt organizations
Large operating companies (20+ U.S. employees, $5M+ revenue, U.S. physical presence)
Subsidiaries of exempt entities

What Information Must Be Reported

Foreign reporting companies must submit to FinCEN:

Beneficial Owner Information

For each beneficial owner:

Full legal name
Date of birth
Current residential address
Unique identifying number from an acceptable ID document (passport, state ID, driver's license)
Image of the identification document

Company Applicant Information

For entities registered after January 1, 2024:

Information about the individual(s) who filed the registration document
Same data points as beneficial owners

Who Is a Beneficial Owner?

Under the CTA, a beneficial owner is any individual who, directly or indirectly:

Exercises substantial control over the company, OR
Owns or controls at least 25% of the ownership interests

Substantial Control

An individual exercises substantial control if they:

Serve as a senior officer (CEO, CFO, COO, general counsel, or similar)
Have authority to appoint or remove senior officers or a majority of the board
Direct, determine, or substantially influence important company decisions
Have any other form of substantial control

Ownership Interests

Ownership interests include:

Equity, stock, or voting rights
Capital or profit interests
Convertible instruments
Options or privileges to acquire ownership
Any other instrument conveying ownership

Reporting Deadlines

For foreign reporting companies (post-March 2025 interim final rule):

Registered before March 26, 2025: April 25, 2025

Registered on or after March 26, 2025: 30 calendar days after registration

Updates or corrections: 30 days after the change occurs

How to File

BOI reports are filed electronically through FinCEN's BOI E-Filing system:

Portal: https://boiefiling.fincen.gov

Filing is:

Free — no fee to submit
Electronic only — no paper filing option
Direct or through third party — companies can file themselves or authorize a service provider

FinCEN Identifier

Beneficial owners can obtain a FinCEN identifier (FinCEN ID)—a unique number that can be used in BOI reports instead of repeatedly submitting personal information. This is useful for individuals who are beneficial owners of multiple reporting companies.

Penalties for Non-Compliance

Willful violations of CTA reporting requirements carry significant penalties:

Civil Penalties

Up to $591 per day (adjusted annually for inflation) for each day the violation continues

Criminal Penalties

Up to $10,000 fine
Up to 2 years imprisonment

Senior officers of reporting companies can be held personally liable if they fail to ensure required reports are filed.

CTA and KYB: Implications for Businesses

While the CTA's direct reporting requirements now apply only to foreign entities, the law has broader implications for KYB practices:

For Financial Institutions

The FinCEN Customer Due Diligence (CDD) Rule remains in effect. Financial institutions must still:

Identify and verify beneficial owners when opening accounts for legal entity customers
Maintain and update beneficial ownership information
Use beneficial ownership information in transaction monitoring

The CDD Rule operates independently of CTA reporting—even though U.S. domestic companies don't report to FinCEN, banks must still collect their beneficial ownership information.

For B2B Companies

Organizations conducting KYB should understand:

BOI database access: FinCEN's BOI database is available to authorized users (financial institutions, law enforcement, certain government agencies) but not the general public
Verification source: BOI reports can supplement—but not replace—independent verification
Foreign entities: Counterparties that are foreign reporting companies should have BOI on file with FinCEN

For Foreign Companies

If you're a foreign entity registered to do business in the U.S.:

Assess applicability: Determine if any exemptions apply
Identify beneficial owners: Map ownership and control structures
Gather documentation: Collect ID documents for all beneficial owners
File on time: Meet applicable deadlines to avoid penalties
Maintain accuracy: Update reports within 30 days of any changes

Regulatory Evolution

The CTA's implementation has been turbulent:

January 2021: CTA enacted as part of NDAA

September 2022: FinCEN issues final BOI reporting rule

January 2024: Reporting requirements take effect

December 2024: Federal court injunctions create uncertainty

March 2025: Interim final rule exempts U.S. domestic companies

The regulatory landscape may continue to evolve. Organizations should monitor FinCEN guidance for updates.

Key Resources

FinCEN BOI Portal: https://www.fincen.gov/boi
BOI E-Filing System: https://boiefiling.fincen.gov
FAQs: https://www.fincen.gov/boi-faqs
Small Entity Compliance Guide: https://www.fincen.gov/boi/small-entity-compliance-guide

Key Takeaways

The Corporate Transparency Act requires beneficial ownership reporting to FinCEN
As of March 2025, only foreign entities registered in the U.S. must report; domestic companies are exempt
Beneficial owners are individuals with 25%+ ownership or substantial control
Reports are filed electronically through FinCEN's free BOI E-Filing portal
Penalties include fines up to $591/day and potential criminal liability
The CDD Rule for financial institutions remains separate and still requires beneficial ownership collection for all legal entity customers
Monitor FinCEN guidance as requirements may continue to evolve