[Federal Register Volume 90, Number 57 (Wednesday, March 26, 2025)]
[Rules and Regulations]
[Pages 13688-13697]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-05199]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
RIN 1506-AB49
Beneficial Ownership Information Reporting Requirement Revision
and Deadline Extension
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Interim final rule; request for comments.
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SUMMARY: FinCEN is adopting this interim final rule to narrow the
existing beneficial ownership information (BOI) reporting requirements
under the Corporate Transparency Act (CTA) to require only entities
previously defined as ``foreign reporting companies'' to report BOI.
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. With limited exceptions, the
interim final rule does not change the existing requirement for foreign
reporting companies to file BOI reports, but it extends the deadline to
file initial BOI reports, and to update or correct previously filed BOI
reports, to 30 days from the date of this publication to give foreign
reporting companies additional time to comply. However, the interim
final rule exempts foreign reporting companies from having to report
the BOI of any U.S. persons who are
[[Page 13689]]
beneficial owners of the foreign reporting company and exempts U.S.
persons from having to provide such information to any foreign
reporting company for which they are a beneficial owner. FinCEN is
accepting comments on this interim final rule. FinCEN will assess the
exemptions, as appropriate, in light of those comments and intends to
issue a final rule this year.
DATES: This rule is effective March 26, 2025. Written comments must be
received on or before May 27, 2025.
ADDRESSES: Comments may be submitted by any of the following methods:
Federal E-Rulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Refer to Docket Number
FINCEN-2025-0001, the Office of Management and Budget (OMB) control
number 1506-0076, and Regulatory Identification Number (RIN) 1506-AB49.
Mail: Policy Division, Financial Crimes Enforcement
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2025-0001, OMB control number 1506-0076 and RIN 1506-AB49.
FOR FURTHER INFORMATION CONTACT: FinCEN's Regulatory Support Section by
submitting an inquiry at www.fincen.gov/contact.
SUPPLEMENTARY INFORMATION:
I. Background
On January 1, 2021, Congress enacted into law the CTA as part of
the broader Anti-Money Laundering Act of 2020.\1\ Section 6403 of the
CTA, among other things, amends the Bank Secrecy Act (BSA) by adding a
new section 5336, Beneficial Ownership Information Reporting
Requirements, to subchapter II of chapter 53 of title 31, United States
Code. This section established new BOI reporting requirements for many
corporations, limited liability companies, and other similar entities
operating in the United States. The CTA excludes from that general
definition, however, specified categories of businesses. The CTA also
authorizes the Secretary of the Treasury (Secretary) to exempt any
other ``entity or class of entities'' for which the Secretary, with the
written concurrence of the Attorney General and the Secretary of
Homeland Security, has, by regulation, determined that ``requiring
beneficial ownership information from the entity or class of entities .
. . would not serve the public interest'' and ``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.'' \2\ In addition, section 5318(a)(7) of the BSA provides
that the Secretary may make appropriate exemptions from a requirement
in the BSA or regulations prescribed under the BSA.\3\ Taken together,
these provisions authorize the issuance of regulations that may provide
additional exemptions from the requirements of the CTA.
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\1\ The CTA is Title LXIV of the William M. (Mac) Thornberry
National Defense Authorization Act for Fiscal Year 2021, Public Law
116-283 (2021) (NDAA). The Anti-Money Laundering Act of 2020--which
includes the CTA--is Division F, sections 6001-6511, of the NDAA.
\2\ 31 U.S.C. 5336(a)(11)(B)(xxiv).
\3\ 31 U.S.C. 5318(a)(7).
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The CTA requires the Secretary to prescribe regulations to
implement the CTA's reporting requirements. For most reporting
companies, the CTA authorized the Secretary to allow up to two years
from the regulation's effective date for reporting companies to file
their initial BOI reports. The Secretary has delegated these and other
CTA-implementing responsibilities to FinCEN, a bureau of the Department
of the Treasury (Treasury).\4\
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\4\ The Secretary delegated the authority to implement,
administer, and enforce the BSA and its implementing regulations to
the Director of FinCEN. See Treasury Order 180-01, paragraph 3(a)
(Jan. 14, 2020), available at https://home.treasury.gov/about/general-information/orders-and-directives/treasury-order-180-01; see
also 31 U.S.C. 310(b)(2)(I) (providing that FinCEN Director
``[a]dminister the requirements of subchapter II of chapter 53 of
this title, chapter 2 of title I of Public Law 91-508, and section
21 of the Federal Deposit Insurance Act, to the extent delegated
such authority by the Secretary'').
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On September 30, 2022, FinCEN published the Beneficial Ownership
Information Reporting Requirements final rule (Reporting Rule),
implementing the CTA's reporting requirements (31 U.S.C. 5336(b)). The
Reporting Rule became effective on January 1, 2024, and is codified in
FinCEN's regulations at 31 CFR 1010.380.\5\ Section 1010.380 requires
certain corporations, limited liability companies, and other similar
entities (reporting companies) \6\ to report certain identifying
information about the reporting companies themselves, the beneficial
owners who own or control them, and, for companies created on or after
January 1, 2024, the company applicants who form or register them.\7\
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\5\ FinCEN, Beneficial Ownership Information Reporting
Requirements, 87 FR 59498 (Sept. 30, 2022). On November 30, 2023,
FinCEN also issued a final rule amending the Reporting Rule to
extend the filing deadline for reporting companies created or
registered in 2024. FinCEN, Beneficial Ownership Information
Reporting Deadline Extension for Reporting Companies Created or
Registered in 2024, 88 FR 83499 (Nov. 30, 2023).
\6\ See 31 U.S.C. 5336(a)(11).
\7\ See FinCEN, Beneficial Ownership Information Reporting
Requirements, 87 FR 59498 (Sept. 30, 2022), at 59498-99; 31 CFR
1010.380(b)(2)(iv).
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Section 1010.380 previously required domestic reporting companies
and foreign reporting companies \8\ created or registered to do
business in the United States before the rule's effective date of
January 1, 2024, to file initial BOI reports with FinCEN by January 1,
2025, one year after the effective date of the regulations.\9\ Domestic
reporting companies created in 2024 and those foreign reporting
companies registered to do business in the United States in 2024 had 90
days to file their initial BOI reports with FinCEN.\10\ Starting on
January 1, 2025, section 1010.380 provided all reporting companies
created or registered on or after that date with 30 days to file their
initial reports.
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\8\ A domestic reporting company was previously defined at 31
CFR 1010.380(c)(1)(i) as ``a corporation; a limited liability
company; or other entity that is 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.'' A foreign reporting company was defined at
31 CFR 1010.380(c)(1)(ii) as ``a corporation, limited liability
company, or other entity that is formed under the law of a foreign
country and that is registered to do business in the United States
by the filing of a document with a secretary of state or equivalent
office under the law of a state or Indian tribe.''
\9\ 31 CFR 1010.380(a)(1)(iii).
\10\ FinCEN, Beneficial Ownership Information Reporting Deadline
Extension for Reporting Companies Created or Registered in 2024, 88
FR 83499 (Nov. 30, 2023), at 83504.
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The January 1, 2025, deadline previously established in FinCEN's
regulations has changed in light of litigation challenging the CTA. In
two cases, district courts issued universal orders that preliminarily
enjoined FinCEN from implementing and enforcing the CTA and the
Reporting Rule or stayed the effective date of section 1010.380 on a
nationwide basis.\11\ First, on December 3, 2024, in Texas Top Cop
Shop, Inc. v. Bondi, the U.S. District Court for the Eastern District
of Texas, Sherman Division, issued an order that preliminarily enjoined
the government from enforcing the CTA and stayed its implementing
regulation's reporting deadlines.\12\ The government appealed and
separately sought a stay of the district court's order
[[Page 13690]]
pending that appeal, and on January 23, 2025, the Supreme Court granted
a stay pending appeal of that order.\13\ Second, on January 7, 2025, in
Smith v. U.S. Department of the Treasury, the U.S. District Court for
the Eastern District of Texas, Tyler Division, issued a similar
preliminary order that prevented the government from enforcing the CTA
against the plaintiffs and stayed the effective date of the
implementing regulation during the pendency of that litigation.\14\ The
government appealed and sought a stay of this order, which the district
court granted on February 18, 2025. The district court's stay of its
order lifted the last remaining nationwide order preventing FinCEN from
implementing and enforcing the CTA and section 1010.380.
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\11\ Two other district courts have issued more limited orders
that enjoined FinCEN from enforcing the CTA against the parties in
those cases. See Nat'l Small Bus. United v. Yellen, 721 F. Supp. 3d
1260 (N.D. Ala. 2024); Small Bus. Ass'n of Michigan v. Yellen, No.
1:24-cv-314, 2025 WL 704287 (W.D. Mich. Mar. 3, 2025). Secretary
Bessent has automatically been substituted as the defendant in those
cases.
\12\ See Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-00478,
2024 WL 4953814 (E.D. Tex. Dec. 3, 2024). Attorney General Bondi has
automatically been substituted as the defendant in this case.
\13\ See McHenry v. Texas Top Cop Shop, Inc., 145 S. Ct. 1
(2025).
\14\ See Smith v. U.S. Dep't of the Treasury, No. 6:24-cv-00336,
2025 WL 41924 (E.D. Tex. Jan. 7, 2025).
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Recognizing that the reporting deadlines set by section 1010.380
for many companies had already passed while those deadlines were stayed
by court order and that companies would need additional time to comply,
FinCEN extended the reporting deadlines for most reporting companies
until March 21, 2025.\15\ In addition, FinCEN announced that during the
30-day extension period, it would ``assess its options to further
modify deadlines, while prioritizing reporting for those entities that
pose the most significant national security risks.'' \16\ On March 2,
2025, Treasury announced the suspension of enforcement of the CTA
against U.S. citizens, domestic reporting companies, and their
beneficial owners, and Treasury further announced its intent to engage
in a rulemaking to narrow the Reporting Rule to foreign reporting
companies only.\17\
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\15\ See FinCEN Notice, FIN-2025-CTA1, FinCEN Extends Beneficial
Ownership Information Reporting Deadline by 30 Days; Announces
Intention to Revise Reporting Rule, (Feb. 18, 2025), available at
https://www.fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf.
\16\ Id.
\17\ Treasury, Treasury Department Announces Suspension of
Enforcement of Corporate Transparency Act Against U.S. Citizens and
Domestic Reporting Companies (Mar. 2, 2025), available at https://home.treasury.gov/news/press-releases/sb0038.
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II. The Interim Final Rule
A. Overview of Rule
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. Related to the second exemption, FinCEN is also exercising the
authority under 31 U.S.C. 5318(a)(7) to revise the special rule
associated with foreign pooled investment vehicles to exempt such
entities from having to report the BOI of U.S. persons who exercise
substantial control over the entity.
First, this interim final rule exempts all domestic reporting
companies, and their beneficial owners, from the requirement to file
initial BOI reports, or to update or correct previously filed BOI
reports, by excluding domestic companies from the scope of the term
``reporting company,'' pursuant to a determination made by the
Secretary under 31 U.S.C. 5336(a)(11)(B)(xxiv). The rule text provides
for this change by redefining the term ``reporting company'' at 31 CFR
1010.380(c) to remove the previously defined term ``domestic reporting
company'' at 31 CFR 1010.380(c)(1)(i). By taking this step, any entity
that meets the definition of the previously defined term ``domestic
reporting company'' is no longer within the scope of the Reporting
Rule. Moreover, FinCEN is adding an exemption to the list of exempted
entities at 31 CFR 1010.380(c)(2). This exemption is applies to ``any
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.''
Second, this interim final rule exempts foreign reporting
companies, and their U.S. person beneficial owners, from the
requirement to provide the BOI of any U.S. persons who are beneficial
owners of the foreign reporting company. The rule text provides for
this change by adding an exemption at 31 CFR 1010.380(d)(4)(i):
``Reporting companies are exempt from the requirement in 31 U.S.C. 5336
and this section to report the beneficial ownership information of any
U.S. persons who are beneficial owners.'' It also adds an exemption at
31 CFR 1010.380(d)(4)(ii): ``U.S. persons are exempt from the
requirements in 31 U.S.C. 5336 and this section to provide beneficial
ownership information with respect to any reporting company for which
they are a beneficial owner.'' Foreign reporting companies that only
have beneficial owners that are U.S. persons will be exempt from the
requirement to report any beneficial owners.
Related to the second exemption, this interim final rule revises
the special rule associated with foreign pooled investment vehicles at
31 CFR 1010.380(a)(b)(2)(iii) to exempt foreign pooled investment
vehicles from having to report the BOI of U.S. persons who exercise
substantial control over the entity. Under the special rule, foreign
pooled investment vehicles that would be a reporting company but for
the exemption at 31 CFR 1010.380(c)(2)(xviii), and are formed under the
laws of a foreign country, are required to report beneficial ownership
information solely with respect to an individual who exercises
substantial control over the entity. If more than one individual
exercises substantial control over the entity, the entity is required
to report information with respect to the individual who has the
greatest authority over the strategic management of the entity. FinCEN
has revised the rule text such that foreign pooled investment vehicles
must report the BOI of an individual who exercises substantial control
over the entity if that individual is not a U.S. person. If more than
one individual exercises substantial control over the entity and at
least one of those individuals is not a U.S. person, the entity must
report information with respect to the individual who is not a U.S.
person who has the greatest authority over the strategic management of
the entity. If there is no individual with substantial control who is
not a U.S. person, the foreign pooled investment vehicle is not
required to report any beneficial owners.
This interim final rule otherwise retains the requirement for
foreign reporting companies, and their beneficial owners (excluding
U.S. persons), to report their BOI to FinCEN, while extending the
deadline for those companies to file initial BOI reports, or update or
correct previously filed BOI reports, to 30 days after the date of this
publication or 30 days after their registration to do business in the
United States, whichever comes later.
FinCEN is accepting comments on this interim final rule. FinCEN
will assess the exemptions, as appropriate, in light of those comments
and intends to issue a final rule this year.
B. Exempting Domestic Companies
The CTA recognizes that BOI reporting requirements impose burdens
on businesses. The CTA therefore directs the Secretary to ``minimize
burdens on reporting companies associated with the collection of the
[[Page 13691]]
information . . . in light of the private compliance costs placed on
legitimate businesses.'' \18\ The CTA also authorizes the Secretary to
exempt from the reporting requirements ``any entity or class of
entities'' if the Secretary, with the written concurrence of the
Attorney General and the Secretary of Homeland Security, determines
that ``requiring beneficial ownership information from the entity or
class of entities . . . would not serve the public interest'' and
``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.'' \19\
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\18\ See 31 U.S.C. 5336(b)(1)(F)(iii).
\19\ See id., at (b)(1)(A)(xxiv).
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In issuing the Reporting Rule, FinCEN estimated the burdens imposed
on businesses. FinCEN estimated the total aggregate labor costs for
reporting companies filing initial BOI reports in the first year of the
Reporting Rule to be $21.7 billion and for reporting companies filing
initial BOI in future years to be $3.3 billion annually.\20\ FinCEN
estimated the total aggregate labor costs for reporting companies
filing updated BOI reports in the first year to be $1.0 billion and in
future years to be $2.3 billion.\21\ Estimates for the five-year
average cost were $6.9 billion for initial reports and $2.0 billion for
updated reports.\22\ FinCEN also noted that many comments stated that
``the proposed reporting requirements are excessively onerous'' and
``focused on how the proposed reporting requirements might negatively
affect small businesses.'' \23\ FinCEN further noted that multiple
comments stated that ``costs to comply with the proposed reporting
requirements would hurt small businesses during financially difficult
times.'' \24\ While explaining that it ``is sensitive to concerns from
small businesses about having to comply with a new set of regulations,
and has endeavored to minimize unnecessary compliance burdens,'' FinCEN
recognized that achieving the CTA's goal of collecting information that
is ``highly useful'' while ``minimiz[ing] burden on reporting
companies'' requires a ``delicate balance.'' \25\
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\20\ FinCEN, Beneficial Ownership Information Reporting
Requirements, 87 FR 59498 (Sept. 30, 2022), at 59490.
\21\ Id.
\22\ Id.
\23\ Id. at 59550.
\24\ Id.
\25\ Id.
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On January 20, 2025, there was a change in presidential
administrations, which has resulted in a reassessment of the balance
struck by the Reporting Rule. On January 31, 2025, President Trump
issued Executive Order (E.O.) 14192, Unleashing Prosperity Through
Deregulation, which announced an Administration policy ``to
significantly reduce the private expenditures required to comply with
Federal regulations to secure America's economic prosperity and
national security and the highest possible quality of life for each
citizen'' and ``to alleviate unnecessary regulatory burdens placed on
the American people.'' Consistent with the exemptive authority provided
in the CTA and the direction of the President, the Secretary has
reassessed the balance between the usefulness of collecting BOI and the
regulatory burdens imposed by the scope of the Reporting Rule.
The Secretary, with the written concurrence of the Attorney General
and the Secretary of Homeland Security, has determined for purposes of
this interim final rule that the reporting of BOI by domestic reporting
companies and their beneficial owners ``would not serve the public
interest'' and ``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.'' The Secretary is aware
that most domestic reporting companies that are not already covered by
a statutory exemption are small businesses and that any regulations
affecting them must recognize this fact. As the preamble to the
Reporting Rule states, ``[s]mall businesses are a backbone of the U.S.
economy, accounting for a large share of U.S. economic activity, and
driving U.S. innovation and competition.'' The vast majority of
domestic small businesses are legitimate and owned by hard-working
American taxpayers who are not engaged in illicit activity. The
Secretary has assessed that exempting them would ensure that the
Reporting Rule is appropriately tailored to advance the public
interest, considering the burdens imposed by the regulations without
sufficient benefits. The Attorney General and the Secretary of Homeland
Security have concurred that collecting BOI from domestic reporting
companies would not be ``highly useful in national security,
intelligence, and law enforcement agency efforts.'' The Secretary's
determination is also consistent with the direction of the President,
including as set forth in E.O. 14192, Unleashing Prosperity Through
Deregulation.
In conducting this reassessment, the Secretary has considered that
failure to require BOI reporting by domestic reporting companies could
result in illicit finance risks, as Treasury has acknowledged. For
example, the preamble to the Reporting Rule noted that Treasury's 2022
National Money Laundering Risk Assessments identified lack of timely
access to BOI as a key weakness within the U.S. anti-money laundering/
countering the financing of terrorism (AML/CFT) regulatory regime.\26\
The preamble to the Reporting Rule also noted that while FinCEN's 2016
customer due diligence rule increased transparency by requiring covered
financial institutions to collect a legal entity customer's BOI at the
time of an account opening,\27\ it did not address the collection of
BOI at the time of a legal entity's creation, and BOI collected at the
time of a legal entity's creation provides additional insight into the
original beneficial owners of the entity.\28\ The Secretary has taken
illicit finance risks into account in considering the usefulness of
collecting BOI, the burdens such collection imposes on the public, and
the public interest. Additionally, the Secretary has considered
alternative sources of information to mitigate risks. For example, the
continuing requirement for covered financial institutions to collect a
legal entity customer's BOI at the time of account opening will serve
to mitigate certain illicit finance risks associated with exempting
domestic reporting companies from reporting their BOI.
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\26\ FinCEN, Beneficial Ownership Information Reporting
Requirements, 87 FR 59498 (Sept. 30, 2022), at 59506.
\27\ FinCEN, Customer Due Diligence Requirements for Financial
Institutions, 81 FR 29398 (May 11, 2016) (codified in relevant part
at 31 CFR 1010.230).
\28\ FinCEN, Beneficial Ownership Information Reporting
Requirements, 87 FR 59498 (Sept. 30, 2022), at 59502.
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Consistent with 31 U.S.C. 5336(a)(11)(B)(xxiv), and after
conferring with the Department of Justice and the Department of
Homeland Security and receiving written concurrences from the Attorney
General and the Secretary of Homeland Security, the Secretary has
directed FinCEN to issue this interim final rule exempting domestic
reporting companies and their beneficial owners from the reporting
requirements imposed through the Reporting Rule. The Secretary has also
directed FinCEN to solicit comments on the approach taken in this
interim final rule; the Secretary and FinCEN will assess this
exemption, as appropriate, in
[[Page 13692]]
light of those comments, and FinCEN intends to issue a final rule this
year.
C. Reporting by Foreign Reporting Companies
Foreign reporting companies, however, present heightened national
security and illicit finance risks and different concerns about
regulatory burdens. Congress, through certain provisions in the CTA,
recognized these heightened concerns about national security and
illicit finance risks posed by foreign ownership or foreign control of
reporting companies. Congress thus limited certain CTA exemptions to
companies that are exclusively domestic. For example, the CTA requires
that an entity be a ``United States person'' and be ``beneficially
owned or controlled exclusively by 1 or more United States persons that
are United States citizens or lawfully admitted for permanent
residence'' to qualify for the BOI reporting exemption for entities
assisting a tax-exempt entity, 31 U.S.C. 5336(a)(11)(B)(xx). In
addition, the CTA states that the inactive entity reporting exemption,
31 U.S.C. 5336(a)(11)(B)(xxiii), is available only if an entity is not
``owned by a foreign person, whether directly or indirectly, wholly or
partially.'' These exemptions reflect Congress's intent to establish
narrow, zero-threshold bars for foreign-owned or foreign-controlled
entities, given heightened risks posed by companies with foreign
ownership or control.
Throughout the rulemaking process implementing the CTA's reporting
requirements, FinCEN has emphasized the risks of foreign illicit actors
accessing the U.S. financial system through the use of legal entities
created in foreign jurisdictions but registered to do business in the
United States. For example, FinCEN noted that ``[c]orrupt foreign
officials, sanctions evaders, and narco-traffickers, among others,
exploit the current gap in the U.S. BOI reporting regime to park their
ill-gotten gains in a stable jurisdiction, thereby exposing the United
States to serious national security threats.'' \29\ FinCEN highlighted
specific examples of significant criminal investigations into the use
of shell companies throughout the world to launder money or evade
sanctions imposed by the United States, including sanctions evasion by
Iran through shell companies abroad.
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\29\ See, e.g., FinCEN, Notice of Proposed Rulemaking,
Beneficial Ownership Information Reporting Requirements, 86 FR
69920, 69928 (Dec. 8, 2021).
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Furthermore, on February 4, 2025, President Trump issued a National
Security Presidential Memorandum (NSPM) addressing Iranian ``behavior
[that] threatens the national interest of the United States.'' \30\
This NSPM directs the Secretary to:
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\30\ White House, National Security Presidential Memorandum/
NSPM-2 (Feb. 4, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/02/national-security-presidential-memorandum-nspm-2/.
maintain countermeasures against Iran at the Financial Action Task
Force, evaluate beneficial ownership thresholds to ensure sanctions
deny Iran all possible illicit revenue, and evaluate whether
financial institutions should adopt a ``Know Your Customer's
Customer'' standard for Iran-related transactions to further prevent
sanctions evasion.\31\
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\31\ Id.
Requiring BOI reporting by foreign reporting companies is
consistent with the actions regarding beneficial ownership that this
NSPM directs the Secretary to take to address the national security
threat arising from Iran.
The Financial Action Task Force (FATF) \32\ Report on the
Concealment of Beneficial Ownership has also found that shell companies
can be used in complex structures involving the distribution of assets
across multiple companies in multiple jurisdictions. When these
structures are used for illicit purposes, money may flow through
multiple layers of shell companies before finally being withdrawn in
cash or transferred to its final destination internationally. Of the
cases analyzed by FATF that included shell companies, the majority
included a corporation located in a foreign jurisdiction.\33\ Foreign
companies registered to do business in the United States therefore pose
a heightened risk to U.S. national security.
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\32\ The FATF, of which the United States is a founding member,
is an international, inter-governmental task force whose purpose is
the development and promotion of international AML/CFT standards and
the effective implementation of legal, regulatory, and operational
measures to combat money laundering, terrorist financing, the
financing of proliferation, and other related threats to the
integrity of the international financial system. The FATF assesses
over 200 jurisdictions against its minimum standards, known as FATF
Recommendations.
\33\ FATF, 2018 Concealment of Beneficial Ownership (July 2018),
p. 29, available at https://www.fatf-gafi.org/content/dam/fatf-gafi/reports/FATF-Egmont-Concealment-beneficial-ownership.pdf.coredownload.pdf.
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At the same time, foreign companies present fewer concerns
regarding regulatory burdens that would not serve the public interest.
Foreign companies are subject to the Reporting Rule only if they
register to do business in the United States, thereby already filing a
document in the United States. Moreover, E.O. 14192 announces a policy
``to alleviate unnecessary regulatory burdens placed on the American
people.'' The policy direction to minimize regulatory burdens placed on
the American people can be achieved by exempting foreign reporting
companies from having to report the BOI of any U.S. persons who are
beneficial owners of the foreign reporting company.
Consistent with the CTA's stated purposes, the CTA's exclusion of
foreign reporting companies from certain other exemptions, the risks
identified above, and the relative burdens, the Secretary has
determined that exempting foreign companies would not serve the public
interest. FinCEN is therefore continuing to require foreign reporting
companies to report their BOI, except with respect to U.S. person
beneficial owners. Foreign reporting companies that only have
beneficial owners that are U.S. persons will be exempt from the
requirement to report any beneficial owners.
The Secretary has determined for purposes of this interim final
rule that it would be appropriate to exempt U.S. persons from having to
provide BOI and, accordingly, to exempt foreign reporting companies
from having to report the BOI of any U.S. persons who are beneficial
owners of a foreign reporting company. The Secretary has assessed that
exempting U.S. persons' BOI would ensure that the Reporting Rule is
appropriately tailored to advance the public interest, considering the
burdens imposed by the regulations without sufficient benefits. The
Secretary's determination is also consistent with the direction of the
President, including as set forth in E.O. 14192, Unleashing Prosperity
Through Deregulation. In making this determination, the Secretary has
considered that exempting reporting companies from reporting U.S.
persons' BOI could result in risks of evasion or illicit finance risks.
Consistent with 31 U.S.C. 5318(a)(7), the Secretary has therefore
directed FinCEN to issue this interim final rule exempting foreign
reporting companies from having to report the BOI of any U.S. persons
who are beneficial owners of a foreign reporting company. The Secretary
has also directed FinCEN to solicit comments on the approach taken in
this interim final rule; the Secretary and FinCEN will assess this
exemption, as appropriate, in light of those comments, and FinCEN
intends to issue a final rule this year. In addition, FinCEN has
decided to provide foreign companies with an additional 30 days to
comply with the reporting requirements, recognizing that the reporting
deadlines
[[Page 13693]]
had been stayed by court order and were then extended by FinCEN, and
that foreign companies will need advance notice of the new deadline.
III. Basis for Issuing an Interim Final Rule
FinCEN has determined that an interim final rule is the appropriate
mechanism to exempt domestic reporting companies and U.S. persons who
are beneficial owners of foreign reporting companies from the BOI
reporting requirements pending the receipt of comments and issuance of
a final rule. This approach accommodates both the Secretary's direction
and principles of public participation in regulatory action.
First, FinCEN finds that, to the extent that prior notice and
solicitation of public comment would otherwise be required, the need to
expeditiously exempt domestic reporting companies and U.S. persons who
are beneficial owners of foreign reporting companies satisfies the
``good cause'' exception in 5 U.S.C. 553(b)(B). The Administrative
Procedure Act (APA) authorizes agencies to issue regulations without
notice and public comment when an agency finds, for good cause, that
notice and comment is ``impracticable, unnecessary, or contrary to the
public interest,'' 5 U.S.C. 553(b)(B). Reporting companies and their
beneficial owners were, under existing regulations, required to comply
with the BOI reporting requirements by January 1, 2025. Now, in
response to developments in ongoing litigation, they currently face a
March 21, 2025, deadline to comply with BOI reporting requirements. The
purpose of this rule is to exempt domestic reporting companies and U.S.
persons who are beneficial owners of foreign reporting companies from
those requirements. Although public comment will be solicited and a
final rule will be issued this year, soliciting public comment before
providing the exemptions would be impractical, as FinCEN could not--and
would not have been able to--provide notice, solicit public comments,
and review those comments before the March 21, 2025, deadline.
Providing prior public notice would therefore subject domestic
reporting companies and U.S. persons who are beneficial owners of
foreign reporting companies to compliance costs during the pendency of
this rulemaking that could ultimately prove unnecessary when the rule
is finalized, which would frustrate the purpose of this rule.
However, this rulemaking still accommodates the principles of
public participation because the Secretary and FinCEN intend to review
the public comments, assess the exemptions, as appropriate, in light of
those comments, and issue a final rule this year, within the existing
statutory period that the CTA affords for FinCEN to set reporting
deadlines. The CTA provides FinCEN discretion to extend the BOI
reporting deadlines for most reporting companies until two years after
the January 1, 2024, effective date of the Reporting Rule--as far out
as January 1, 2026.\34\ The exemption for domestic reporting companies
provided in this interim final rule therefore serves to suspend any
reporting requirements within this statutorily authorized period while
the rule is finalized during that period. This suspension must be
effective immediately to prevent companies from being required to
report before a final rule is issued.
---------------------------------------------------------------------------
\34\ See 31 U.S.C. 5336(b)(1)(B).
---------------------------------------------------------------------------
In addition, FinCEN finds that prior notice and public comment are
unnecessary because this interim final rule does not impose new
burdens, but rather exempts domestic reporting companies and U.S.
persons who are beneficial owners of foreign reporting companies from
reporting requirements.
Finally, FinCEN finds that proceeding through an interim final rule
will most appropriately address the public confusion about the
Reporting Rule's deadlines that has arisen because the Reporting Rule's
deadlines had been stayed by court order when they originally passed.
FinCEN thus determines that the most appropriate mechanism to provide
for the exemptions just discussed pending issuance of a final rule in
light of the pressing deadline, to avoid imposing immediate compliance
costs on domestic reporting companies and U.S. persons in contradiction
to the rule's purpose, and to minimize and expeditiously resolve this
period of confusion, while still allowing for public participation, is
this interim final rule providing for 60 days for public comment
thereafter.
FinCEN invites interested parties to submit comments on the issues
raised in this interim final rule within 60 days of its publication to
the extent that public comment is needed to inform whether domestic
reporting companies and U.S. persons who are beneficial owners of
foreign reporting companies should be exempted from the BOI reporting
requirements. Comments submitted in response to this interim final rule
will be considered and addressed when a final rule, with changes if
warranted, is issued.
IV. Effective Date
This rule does not impose any new obligations, but rather exempts
domestic reporting companies and U.S. persons who are beneficial owners
of foreign reporting companies from the Reporting Rule requirements,
and it relaxes the deadlines for reporting obligations for foreign
reporting companies. Thus, this rule may be immediately effective under
5 U.S.C. 553(d)(1) as a ``substantive rule which grants or recognizes
an exemption or relieves a restriction.'' For the same reason, a
delayed effective date is unnecessary: because this interim final rule
exempts domestic reporting companies and U.S. persons who are
beneficial owners of foreign reporting companies from the Reporting
Rule requirements, rather than imposes obligations, the public does not
need time to prepare to comply with it. Moreover, as explained in
Section III, delaying the effective date of this rule would be
impractical and unnecessary. FinCEN therefore finds good cause for
making this rule effective immediately upon publication in the Federal
Register, as permitted by 5 U.S.C. 553(d)(3).
V. Compliance With Other Authorities
A. Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess costs
and benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, and public health and
safety effects; distributive impacts; and equity). Executive Order
13563 emphasizes the importance of quantifying both costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility. It has
been determined that this regulation is an economically significant
regulatory action as defined in section 3(f)(1) of Executive Order
12866. Accordingly, this interim final rule has been reviewed by OMB.
As discussed above, FinCEN remains mindful of the ``delicate
balance'' \35\ that exists between the anticipated benefits and the
costs imposed by requirements to report BOI. In promulgating this
interim final rule, FinCEN anticipates certain changes, of varying
magnitude, to both expected benefits and costs--with some easier to
quantify than others. Each are discussed in turn below.
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\35\ See supra note 25.
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FinCEN further notes that, because portions of its regulatory
impact
[[Page 13694]]
analysis consider economic benefits and costs across the various
parties it can reasonably expect to be affected by the rule,\36\
whereas other portions limit the analysis of costs incurred to specific
regulatory stakeholders,\37\ certain differences in the accounting
treatment of costs may arise.\38\ Where relevant to the analysis, the
discussion below makes note of the distinctions in treatment of costs.
---------------------------------------------------------------------------
\36\ See, e.g., Sections V.A and C.
\37\ See, e.g., infra Section V.D.
\38\ For example, to the extent that the costs to collect BOI
that would have been borne by a reporting company would be foregone,
but the information would nevertheless need to be collected for
business purposes (such as the opening of a bank account or other
covered financial transaction) the cost of information production
would only decrease, in an economic sense, if the party completing
the work instead can do so at lower cost than the originally
assigned party.
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1. Anticipated Changes to Expected Benefits
FinCEN has historically considered the benefits of BOI reporting to
a variety of affected parties, including law enforcement, other users
of BOI data, and the general macroeconomy,\39\ and has taken into
consideration the extent to which benefits may change as a consequence
of the interim final rule's reduction in scope.\40\
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\39\ See FinCEN, Beneficial Ownership Information Reporting
Requirements, 87 FR 59498 (Sept. 30, 2022); see also FinCEN, Notice
of Proposed Rulemaking, Beneficial Ownership Information Access and
Safeguards, and Use of FinCEN Identifiers for Entities, 87 FR 77404,
77425 (Dec. 16, 2022).
\40\ To the extent that certain parties would have incurred
direct costs in connection with reporting their BOI and would no
longer be required to do so under the interim final rule, the
estimated value of this private benefit is not treated as benefit of
the IFR, but is included in the discussion of changes to expected
costs below and further described in Section V.D.
---------------------------------------------------------------------------
FinCEN acknowledges that, while more intelligence might be
collected in the absence of this deregulatory effort, it is unclear
that the marginal benefits of the BOI that will no longer be reported
would be comparable to the value of similar entities to which the
reporting requirements still apply. As FinCEN has not yet been able to
conduct the kinds of robust quantitative analysis necessary to estimate
the incremental value of such intelligence, it recognizes that its
estimated values to date have been partially speculative, albeit
informed by feedback from both domestic and international partners in
law enforcement and national security.
FinCEN anticipates that other parties may experience reduced
benefits as a consequence of the change in scope. This would include
parties, such as financial institutions and other affected parties \41\
whose access to BOI data would consequently provide information about
fewer legal entities. The extent to which reducing the scope of
reporting companies would reduce the benefits of access to BOI data
would, to some extent, depend on the relative informational value of
the companies that would be newly exempt from reporting versus the
informational value that would continue to be reported. Similarly, the
reduction in expected benefits may, in some cases, be attenuated by the
availability of alternative sources of similar beneficial ownership
information (e.g., commercially available information) to the extent
that such sources can be treated as substitutes as opposed to
complements.\42\ FinCEN invites comments, particularly those including
data, descriptions of costs and business practices, and studies, that
would facilitate quantitative estimates of these economic benefits.
---------------------------------------------------------------------------
\41\ See FinCEN, Notice of Proposed Rulemaking, Beneficial
Ownership Information Access and Safeguards, and Use of FinCEN
Identifiers for Entities, 87 FR 77404, 77425 (Dec. 16, 2022).
\42\ The Reporting Rule did not provide an estimate of the
relative value of alternative sources relative to the BOI data
required to be reported by the Reporting Rule.
---------------------------------------------------------------------------
2. Anticipated Changes to Expected Costs
By reducing the number of companies that would be required to
report their BOI to FinCEN, the corresponding costs associated with
original reports, associated applications for FinCEN identifiers (both
company and personal), and subsequent revisions or updates would be
significantly reduced. FinCEN expects the primary value of the
modification in scope provided by this interim final rule to be
realized in the form of reduced costs.
As noted above, the expected costs of the rule originally included,
but were not limited to: $21.7 billion in initial reporting costs in
year 1 ($3.3 billion annually on average in each subsequent year) and
$1.0 billion in year 1 updating costs ($2.3 billion expected to be
incurred for similar activities in each subsequent year).
Correspondingly, estimates for the five-year average cost per year were
$6,996,732,512 for initial reports and $2,033,391,518 for updated
reports. Because these costs applied a different framework under which
pro forma accounting costs were expected to accrue, it is therefore
necessary for FinCEN to account for the sunk costs of companies that
have already reported their BOI when estimating the expected reduction
in future costs. Based on calendar year 2024 data, FinCEN estimates
that approximately 40 percent of expected year 1 costs have already
accrued; therefore, the maximum reduction in costs that the interim
final rule would enable is approximately $13.6 billion associated with
first year activities of coming into reporting compliance. On a going-
forward basis, FinCEN estimates that, on average the costs associated
with the interim final rule would be approximately $9 billion lower per
year.\43\
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\43\ See Section V.D.
---------------------------------------------------------------------------
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), Public Law 96-354, applies
only to rules for which an agency publishes a general notice of
proposed rulemaking (NPRM) pursuant to 5 U.S.C. 553(b).\44\ This rule
is being immediately published as an interim final rule; it was not
preceded by an NPRM. Therefore, the RFA does not apply to it.
---------------------------------------------------------------------------
\44\ See generally 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
Furthermore, because this rule exempts legal entities that would
otherwise have been domestic reporting companies and U.S. persons who
otherwise would have been required to report BOI, the compliance
burdens originally estimated in connection with BOI reporting
requirements will no longer apply to a substantial number of U.S.
businesses \45\ or to certain U.S. persons in their individual
capacities as beneficial owners of foreign reporting companies. The RFA
would not apply to regulatory burdens incurred in this capacity.\46\
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\45\ RFA analysis is only required if a regulation meets both of
two criteria: (1) the impact of the rule must be economically
significant; and (2) the rule must affect a substantial number of
small U.S. entities.
\46\ The RFA applies to regulatory effects on only three types
of entities: (1) small businesses; (2) small nonprofits; and (3)
small governmental jurisdictions. Individuals impacted in their
capacity as natural persons are not included in these categories.
---------------------------------------------------------------------------
C. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA),
Public Law 104-4, requires that an agency prepare a budgetary impact
statement before promulgating a rule that includes a Federal mandate
that may result in new, incremental expenditures by State, local, and
Tribal governments, in the aggregate, or by the private sector, of $184
million or more in any one year.\47\ FinCEN has
[[Page 13695]]
determined that this rule will not result in increased expenditures by
State, local, and Tribal governments, or by the private sector, of $184
million or more. Accordingly, FinCEN has not prepared a budgetary
impact statement or specifically addressed regulatory alternatives.
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\47\ The U.S. Bureau of Economic Analysis reported the annual
value of the gross domestic product deflator in 1995 (the year in
which UMRA was enacted) as 66.939; and in 2023 as 123.273. See U.S.
Bureau of Economic Analysis, ``Table 1.1.9. Implicit Price Deflators
for Gross Domestic Product'' (accessed Sept. 16, 2024). Thus, the
inflation adjusted estimate for $100 million is 123.273 divided by
66.939 and then multiplied by 100, or $184.157 million.
---------------------------------------------------------------------------
D. Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1995 (PRA), Public
Law 104-13, and its implementing regulations imposes certain
requirements on federal agencies in connection with their conducting or
sponsoring any collection of information as defined by the PRA. Under
the PRA, an agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a valid OMB control number.\48\
---------------------------------------------------------------------------
\48\ 44 U.S.C. Chapter 35; 5 CFR part 1320.
---------------------------------------------------------------------------
The reporting requirements contained in the Reporting Rule were
approved by OMB in accordance with the PRA under OMB control number
1506-0076. In this interim final rule, FinCEN is exercising the
authority under 31 U.S.C. 5336(a)(11)(B)(xxiv) to exempt domestic
reporting companies from BOI reporting requirements 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 owners. Related to the second
exemption, FinCEN is also exercising the authority under 31 U.S.C.
5318(a)(7) to revise the special rule associated with foreign pooled
investment vehicles to exempt such entities from having to report the
BOI of U.S. persons who exercise substantial control over the entity.
FinCEN has revised estimates for the reporting requirements in the
Reporting Rule based on the changes made by this interim final rule.
1. BOI Reports
OMB Control Number: 1506-0076.
Reporting Requirements: In accordance with the CTA, the rule
retains a reporting requirement on foreign reporting companies to file
with FinCEN reports that identify the entities' beneficial owners, and
in certain cases their company applicants.\49\ The report must also
contain information about the entity itself. The reporting company must
certify that the report is true, correct, and complete. The rule also
continues to require foreign reporting companies to update the
information in these reports as needed, and correct any previous
incorrectly reported information, within specific timeframes. The
collected information will be maintained by FinCEN and made accessible
to authorized users.
---------------------------------------------------------------------------
\49\ 31 U.S.C. 5336(b); 31 CFR 1010.380(b).
---------------------------------------------------------------------------
Frequency: As required.\50\
---------------------------------------------------------------------------
\50\ For BOI reports, there is an initial filing and subsequent
filings; the latter are required as information changes or if
previously reported information was incorrect.
---------------------------------------------------------------------------
Description of Affected Public: Entities that are: (1)
corporations, limited liability companies, or other entities; (2)
formed under the law of a foreign country; and (3) registered to do
business in any State or Tribal jurisdiction by the filing of a
document with a secretary of state or any similar office under the laws
of a State or Indian tribe. The rule does not require corporations,
limited liability companies, or other entities that are described in
any of 24 specific exemptions to file BOI reports.
Estimated Number of Respondents: 11,667 reporting companies per
year, on average.\51\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
Estimated Time per Respondent: As discussed in the Reporting Rule,
the time burden for filing initial BOI reports will vary depending on
the complexity of the reporting company's structure. FinCEN therefore
estimates a range of time burden associated with filing an initial BOI
report to account for the likely variance among reporting companies.
FinCEN estimates the average burden of reporting BOI as 90 minutes per
response for reporting companies with simple beneficial ownership
structures (40 minutes to read the form and understand the requirement,
30 minutes to identify and collect information about beneficial owners
and company applicants, 20 minutes to fill out and file the report,
including attaching an image of an acceptable identification document
for each beneficial owner and company applicant). FinCEN estimates the
average burden of reporting BOI as 650 minutes per response for
reporting companies with complex beneficial ownership structures (300
minutes to read the form and understand the requirement, 240 minutes to
identify and collect information about beneficial owners and company
applicants, 110 minutes to fill out and file the report, including
attaching an image of an acceptable identification document for each
beneficial owner and company applicant). FinCEN estimates the average
burden of updating such reports for reporting companies with simple
beneficial ownership structures as 40 minutes per update (20 minutes to
identify and collect information about beneficial owners or company
applicants and 20 minutes to fill out and file the update). FinCEN
estimates the average burden of updating such reports for reporting
companies with complex beneficial ownership structures as 170 minutes
per update (60 minutes to identify and collect information about
beneficial owners or company applicants and 110 minutes to fill out and
file the update). FinCEN also assesses that reporting companies with
intermediate beneficial ownership structures will have a time burden
that is the average of the time burden for reporting companies with
simple and complex structures.
Estimated Aggregate Reporting Burden Hours: 51,569 hours per year,
on average.
FinCEN estimates that during Year 1, the filing of initial BOI
reports will result in approximately 91,050 burden hours for reporting
companies. In Year 2 and beyond, FinCEN estimates that the filing of
initial BOI reports will result in 18,210 burden hours annually for new
reporting companies. The three-year average of burden hours for initial
BOI reports is 42,490 hours. FinCEN estimates that filing BOI updated
reports in Year 1 would result in approximately 5,814 burden hours for
reporting companies. In Year 2 and beyond, the estimated number of
burden hours is 10,711. The three-year average of burden hours for
updated BOI reports is 9,079 hours. The total three-year average of
burden hours for BOI reports is 51,569.
Estimated Aggregate Reporting Cost: $20,735,713.46 per year, on
average.
FinCEN estimated a range of costs associated with filing an initial
BOI report to account for the likely variance among reporting
companies. FinCEN estimates the average cost of filing an initial BOI
report per reporting company to be a range of $82.06-$2,592.67. FinCEN
estimates the average cost of filing an updated BOI report per
reporting company to be $36.47-$155.01.
[[Page 13696]]
For initial BOI reports, the range of total costs in Year 1,
assuming for the lower bound that all reporting companies are simple
structures and assuming for the upper bound that all reporting
companies are complex structures, is $2.5 million-$64.8 million.
Applying the distribution of reporting companies' structure explained
in connection with Table 1 of the original rule, FinCEN calculates
total costs in Year 1 of initial BOI reports to be $16.4 million. In
Year 2 and onwards, in which FinCEN assumes that initial BOI reports
will be filed by newly created entities, the range of total costs is
$410 thousand-$12.9 million annually. Applying the reporting companies'
structure distribution explained in the original rule, the estimated
total cost of initial BOI reports annually in Year 2 and onwards is
$22.1 million.
For updated BOI reports, the range of total costs in Year 1,
assuming for the lower bound that all reporting companies are simple
structures and assuming for the upper bound that all reporting
companies are complex structures is $173 thousand-$736 thousand.
Applying the distribution of reporting companies' structure, FinCEN
calculates total costs in Year 1 of updated BOI reports to be $318
thousand. In Year 2 and onwards, the range of total costs is $319
thousand-$1.35 million annually. Applying the reporting companies'
structure distribution, the estimated total cost of updated BOI reports
annually in Year 2 and onwards is $585 thousand. The three-year average
cost for initial reports is $20,239,042 and $496,672 for updated
reports.
There are no non-labor costs associated with these collections of
information because FinCEN assumes that reporting companies already
have the necessary equipment and tools to comply with the regulatory
requirements.
2. Individual FinCEN Identifiers
OMB Control Number: 1506-0076.
Reporting Requirements: The rule continues to require the
collection of information from individuals in order to issue them a
FinCEN identifier.\52\ This is a voluntary collection. The rule
requires individuals to report to FinCEN certain information about
themselves to receive a FinCEN identifier, in accordance with the
CTA.\53\ An individual is also required to submit updates of their
identifying information as needed. FinCEN stores such information in
its BOI database for access by authorized users.
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\52\ FinCEN is not separately calculating a cost estimate for
entities requesting a FinCEN identifier because FinCEN assumes this
would already be accounted for in the process and cost of submitting
the BOI reports.
\53\ 31 U.S.C. 5336(b)(3)(A)(i); 31 CFR 1010.380(b)(4).
---------------------------------------------------------------------------
Frequency: As required.
Description of Affected Public: Individuals associated with foreign
reporting companies that elect to request an identifier independent of
the FinCEN identifier requested by the associated company as part of
its BOIR submission.
For individuals requesting FinCEN identifiers, FinCEN acknowledges
that anyone who meets the statutory criteria could apply for a FinCEN
identifier under the rule. However, the primary incentives for
individual beneficial owners to apply for a FinCEN identifier are
likely data security (an individual may see less risk in submitting
personal identifiable information to FinCEN directly and exclusively
than doing so indirectly through one or more individuals at one or more
foreign reporting companies) and administrative efficiency (where an
individual is likely to be identified as a beneficial owner of numerous
foreign reporting companies). Company applicants that are responsible
for registering many foreign reporting companies may have a similar
incentive to request a FinCEN identifier in order to limit the number
of companies with access to their personal information. This reasoning
assumes that there is a one-to-many relationship between the company
applicant and foreign reporting companies.
Estimated Number of Respondents: 123,733 filers per year, on
average.\54\
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\54\ This estimate is based on a three-year average that
assumes, based on data from foreign reporting company BOIRs received
in calendar year 2024, that there would be eight personal FinCEN
identifiers associated with each new reporting company, and that
updates would accrue at the same rate as estimated in the previous
final Reporting Rule.
---------------------------------------------------------------------------
Estimated Time per Respondent: As discussed in the Reporting Rule,
FinCEN anticipates that initial FinCEN identifier applications would
require approximately 20 minutes (10 minutes to read the form and
understand the information required and 10 minutes to fill out and file
the request, including attaching an image of an acceptable
identification document), given that the information to be submitted to
FinCEN would be readily available to the person requesting the FinCEN
identifier. FinCEN estimates that updates would require 10 minutes (10
minutes to fill out and file the update).
Estimated Aggregate Reporting Burden Hours: 32,3802 hours per year,
on average.
Estimated Aggregate Reporting Cost: $1,771,465.04 per year, on
average.
3. Totals
Estimated Total Reporting Burden Hours: 83,949 hours per year, on
average.
Estimated Total Reporting Cost: $22,507,178.50 per year, on
average.
Estimated Change in Total Reporting Burden Hours: -91,538,379 hours
per year, on average.
Estimated Change in Total Reporting Cost: $(9,011,817,866.50) per
year, on average.
E. Congressional Review Act
Pursuant to Subtitle E of the Small Business Regulatory Enforcement
and Fairness Act of 1996 (also known as the Congressional Review Act or
CRA), OMB's Office of Information and Regulatory Affairs has designated
this rule a ``major rule,'' for purposes of the CRA.\55\
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\55\ 5 U.S.C. 804(2).
---------------------------------------------------------------------------
Under the CRA, such a rule generally may take effect no earlier
than 60 days after the rule is published in the Federal Register.\56\
Notwithstanding this requirement, the CRA allows agencies to dispense
with the requirements of section 801 when the agency for good cause
finds that ``notice and public procedure'' regarding the rule would be
impracticable, unnecessary, or contrary to the public interest. If the
agency finds such good cause, the rule shall take effect at such time
as the agency promulgating the rule determines.\57\ Pursuant to section
808(2), for the reasons discussed above, FinCEN for good cause finds
that providing public notice or allowing for public comment before this
interim final rule takes effect is impracticable, unnecessary, and
contrary to the public interest.
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\56\ 5 U.S.C. 801(a)(3).
\57\ 5 U.S.C. 808(2).
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List of Subjects in 31 CFR Part 1010
Administrative practice and procedure, Aliens, Authority
delegations (Government agencies), Banks, banking, Brokers, Business
and industry, Citizenship and naturalization, Commodity futures, Crime,
Currency, Electronic filing, Federal savings associations, Federal-
State relations, Fiduciaries, Foreign banking, Foreign currencies,
Foreign persons, Gambling, Holding companies, Indians, Indians--law,
Indians--tribal government, Insurance companies, Investigations,
Investment companies,
[[Page 13697]]
Law enforcement, Penalties, Reporting and recordkeeping requirements,
Savings associations, Securities, Small business, Terrorism, Time.
For the reasons set forth in the preamble, the Department of
Treasury and Financial Crimes Enforcement Network amend 31 CFR part
1010 as follows:
PART 1010--GENERAL PROVISIONS
0
1. The authority citation for part 1010 continues to read as follows:
Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314
and 5316-5336; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307;
sec. 2006, Pub. L. 114-41, 129 Stat. 457; sec. 701 Pub. L. 114-74,
129 Stat. 599; sec. 6403, Pub. L. 116-283, 134 Stat. 3388.
0
2. Section 1010.380 is amended by:
0
a. Revising paragraph (a)(1)(i) and (ii);
0
b. Removing paragraph (a)(1)(iii);
0
c. Redesignating paragraph (a)(1)(iv) as (a)(1)(iii);
0
d. Adding paragraph (a)(2)(vi);
0
e. Redesignating paragraph (a)(3) as (a)(3)(i) and adding paragraph
(a)(3)(ii);
0
f. Revising paragraph (b)(1)(i)(D) through (F);
0
g. Revising paragraph (b)(2)(iii);
0
h. Revising paragraph (c)(1);
0
i. Adding paragraph (c)(2)(xxiv);
0
j. Revising paragraph (d)(3)(i);
0
k. Adding paragraph (d)(4); and
0
l. Reserving paragraph (e)(1) and revising paragraphs (e)(2) and (3).
The revisions and additions read as follows::
Sec. 1010.380 Reports of beneficial ownership information.
(a) * * *
(1) * * *
(i) Any entity that becomes a reporting company on or after March
26, 2025 shall file a report within 30 calendar days of the earlier of
the date on which it receives actual notice that it has been registered
to do business or the date on which a secretary of state or similar
office first provides public notice, such as through a publicly
accessible registry, that the reporting company has been registered to
do business.
(ii) Any entity that became a reporting company before March 26,
2025 shall file a report no later than April 25, 2025.
* * * * *
(2) * * *
(vi) Paragraphs (a)(2)(i) through (v) of this section shall only
apply to reporting companies after March 26, 2025.
(3)(i) * * *
(ii) Paragraph (a)(3)(i) of this section shall only apply to
reporting companies after March 26, 2025.
* * * * *
(b) * * *
(1) * * *
(i) * * *
(D) The foreign jurisdiction of formation of the reporting company;
(E) The State or Tribal jurisdiction where the reporting company
first registers; and
(F) The Internal Revenue Service (IRS) Taxpayer Identification
Number (TIN) (including an Employer Identification Number (EIN)) of the
reporting company, or where a reporting company has not been issued a
TIN, a tax identification number issued by a foreign jurisdiction and
the name of such jurisdiction;
* * * * *
(2) * * *
(iii) Foreign pooled investment vehicle. If an entity would be a
reporting company but for paragraph (c)(2)(xviii) of this section, and
is formed under the laws of a foreign country, such entity shall be
deemed a reporting company for purposes of paragraphs (a) and (b) of
this section, 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. If more than one individual
exercises substantial control over the entity and at least one of those
individuals is not a United States person, the entity shall report
information with respect to the individual who is not a United States
person who has the greatest authority over the strategic management of
the entity.
* * * * *
(c) Reporting company--(1) Definition of reporting company. For
purposes of this section, the term ``reporting company'' means:
(i) [Reserved]
(ii) Any entity that is:
(A) A corporation, limited liability company, or other entity;
(B) Formed under the law of a foreign country; and
(C) Registered to do business in any State or tribal jurisdiction
by the filing of a document with a secretary of state or any similar
office under the law of that State or Indian tribe.
(2) * * *
(xxiv) Domestic entity. Any 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.
(d) * * *
(3) * * *
(i) A minor child, as defined under the law of the State or Indian
tribe in which a reporting company is first registered, provided the
reporting company reports the required information of a parent or legal
guardian of the minor child as specified in paragraph (b)(2)(ii) of
this section;
* * * * *
(4) Exemptions. (i) Reporting companies are exempt from the
requirement in 31 U.S.C. 5336 and this section to report the beneficial
ownership information of any United States persons who are beneficial
owners.
(ii) United States persons are exempt from the requirements in 31
U.S.C. 5336 and this section to provide beneficial ownership
information with respect to any reporting company for which they are a
beneficial owner.
(e) * * *
(1) [Reserved]
(2) The individual who directly files the document that first
registers the reporting company as described in paragraph (c)(1)(ii) of
this section; and
(3) The individual who is primarily responsible for directing or
controlling such filing if more than one individual is involved in the
filing of the document.
* * * * *
Andrea M. Gacki,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2025-05199 Filed 3-25-25; 8:45 am]
BILLING CODE 4810-02-P