FinCEN Suspends CTA Enforcement

March 3, 2025
Publications

by Timothy Finnerty, Tre Blomeier, and Frank Lavery, III

Background

On February 18, 2025, the United States District Court for the Eastern District of Texas reinstated reporting obligations under the Corporate Transparency Act (CTA) (31 U.S.C. §5336), requiring reporting companies to resume CTA filings. The ruling in Smith, et al v. U.S. Department of Treasury, et al., effectively restarted the clock for reporting companies to file Beneficial Ownership Information (BOI) reports with the United States Department of Treasury Financial Crimes Enforcement Network (FinCEN) after the CTA mandates were paused in December 2024. The deadline for most reporting companies to file their BOI report was extended until March 21, 2025, with certain exceptions.

FinCEN Pauses CTA Enforcement

Responding to the recent ruling in Smith, FinCEN issued a release announcing that it will not issue any fines or penalties or take any other enforcement actions against any reporting companies based on any failure to file or update BOI reports under the current CTA deadlines. This effectively means that reporting companies will not face any legal or financial consequences for not filing prior to the March 21, 2025, deadline, rendering timely BOI reports optional. FinCEN further explained that it intends to issue a final rule that extends BOI Reporting deadlines and new guidance to clarify the current status of CTA’s enforcement. We will provide an update when that guidance is released.

Impact on Reporting Companies

As the dynamics of the CTA continue to evolve with various legal challenges and updated guidance from FinCEN, companies should continue working with their legal advisors to monitor further CTA developments. Under the most recent FinCEN guidelines, timely BOI reporting obligations are not mandatory, pending further guidance, and businesses may weigh the option to file timely. Reporting companies should still consider collecting BOI information in advance of any future FinCEN announcements or guidance.

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