[Federal Register Volume 91, Number 156 (Friday, August 14, 2026)]
[Rules and Regulations]
[Pages 52508-52528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-16576]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
RIN 1506-AB67
Beneficial Ownership Information Reporting Requirement Revision
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Final rule.
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SUMMARY: FinCEN is issuing this final rule to adopt as final and with
certain limited changes the interim final rule issued on March 26,
2025, which narrowed beneficial ownership information (BOI) reporting
requirements under FinCEN's regulations implementing the Corporate
Transparency Act (CTA). In particular, this final rule not only
continues to exempt reporting companies from having to report the BOI
of U.S. person beneficial owners and U.S. person beneficial owners from
having to provide BOI to reporting companies; it also exempts reporting
companies from having to submit information about their U.S. person
company applicants to FinCEN and exempts U.S. person company applicants
from any obligation to provide their information. In addition, the
final rule exempts all U.S. persons from the requirement to update
information already provided to FinCEN in connection with obtaining a
FinCEN identifier (FinCEN ID).
DATES: This rule is effective August 14, 2026.
FOR FURTHER INFORMATION CONTACT: FinCEN's Regulatory Support Section by
submitting an inquiry at www.fincen.gov/contact.
SUPPLEMENTARY INFORMATION:
I. Background
A. The Corporate Transparency Act
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.\2\ This section establishes new BOI reporting requirements for
many corporations, limited liability companies, and other similar
entities operating in the United States, but it excludes specified
categories of businesses from the reporting requirements. 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.'' \3\ In addition, the BSA provides that the Secretary
may make appropriate exemptions from a requirement in the BSA or
regulations prescribed under the BSA.\4\ Taken together, these
provisions authorize the issuance of regulations that may establish
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\ Certain parts of the Currency and Foreign Transactions
Reporting Act, its amendments, and the other statutes relating to
the subject matter of that Act, have come to be referred to as the
BSA. These statutes are codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-
1960, and 31 U.S.C. 5311-5314 and 5316-5336 and notes thereto, with
implementing regulations at 31 CFR chapter X.
\3\ 31 U.S.C. 5336(a)(11)(B)(xxiv).
\4\ 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.\5\ The Secretary has
delegated these and other CTA-implementing responsibilities to FinCEN,
a bureau of the Department of the Treasury (Treasury).\6\
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\5\ 31 U.S.C. 5336(b)(4).
\6\ 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), 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 shall
``[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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[[Page 52509]]
B. Issuance of the Reporting Rule and Subsequent Developments
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)).\7\
The Reporting Rule, codified at 31 CFR 1010.380, became effective on
January 1, 2024. It required reporting companies to report certain
identifying information about 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.\8\
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\7\ FinCEN, Beneficial Ownership Information Reporting
Requirements (the Reporting Rule), 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 (the Deadline Extension Rule), 88 FR
83499 (Nov. 30, 2023).
\8\ See Reporting Rule, 87 FR at 59498-99; 31 CFR
1010.380(b)(2)(iv).
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The Reporting Rule originally required domestic reporting companies
and foreign reporting companies \9\ 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.\10\ In a
subsequent rulemaking, FinCEN set separate deadlines for reporting
companies created or registered to do business in calendar year
2024.\11\
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\9\ 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 previously
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.''
\10\ 31 CFR 1010.380(a)(1)(iii).
\11\ See, e.g., Deadline Extension Rule, 88 FR at 83504.
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Litigation challenging the CTA, however, disrupted the
implementation of section 1010.380 and affected these filing deadlines.
Specifically, in late 2024 and early 2025, district courts in two cases
issued nationwide orders that preliminarily enjoined FinCEN from
implementing and enforcing the Reporting Rule and stayed the effective
date of section 1010.380.\12\ Recognizing that the reporting deadlines
that had been 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.\13\ 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
require BOI reporting by foreign companies only.\14\
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\12\ On December 3, 2024, 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. See Texas
Top Cop Shop, Inc. v. Garland, No. 4:24-cv-00478, 2024 WL 4953814
(E.D. Tex. Dec. 3, 2024), amended and superseded by Texas Top Cop
Shop, Inc. v. Garland, 758 F. Supp. 3d 607 (E.D. Tex. 2024). On
January 23, 2025, the U.S. Supreme Court issued an order granting
the government's application for a stay of the preliminary
injunction pending appeal. See McHenry v. Texas Top Cop Shop, Inc.,
145 S. Ct. 1 (2025). On January 7, 2025, in Smith v. U.S. Dep't 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. See Smith v. U.S.
Dep't of the Treasury, 761 F. Supp. 3d 952 (E.D. Tex. 2025). The
government appealed and sought a stay of this order, which the
district court granted on February 17, 2025. In addition to these
cases, two other district courts had 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), rev'd and remanded sub nom. Nat'l Small Bus.
United v. U.S. Dep't of the Treasury, 161 F.4th 1323 (11th Cir.
2025); Small Bus. Ass'n of Michigan v. Yellen, 769 F. Supp. 3d 722
(W.D. Mich. 2025). Secretary Bessent was substituted as the
defendant in those cases.
\13\ See FinCEN, FIN-2025-CTA1, FinCEN Extends Beneficial
Ownership Information Reporting Deadline by 30 Days; Announces
Intention to Revise Reporting Rule, (Feb. 18, 2025), https://www.fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf.
\14\ Treasury, Treasury Department Announces Suspension of
Enforcement of Corporate Transparency Act Against U.S. Citizens and
Domestic Reporting Companies (Mar. 2, 2025), https://home.treasury.gov/news/press-releases/sb0038.
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C. The Interim Final Rule
1. Immediate Effect
FinCEN then issued an interim final rule (IFR) on March 26, 2025,
which became effective upon publication.\15\ The IFR provided for two
primary exemptions from the original Reporting Rule's BOI reporting
requirements.
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\15\ FinCEN, Beneficial Ownership Information Reporting
Requirement Revision and Deadline Extension (the IFR), 90 FR 13688
(Mar. 26, 2025).
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First, the IFR exempted all entities previously defined as
``domestic reporting companies'' from the requirement to file initial
BOI reports or to update or correct previously filed BOI reports. The
IFR did so by excluding all domestic entities from 31 CFR 1010.380's
definition of ``reporting company'' pursuant to the Secretary's
authority under 31 U.S.C. 5336(a)(11)(B)(xxiv) of the CTA, discussed
above in Section I.A., to exempt ``class[es] of entities'' from BOI
reporting obligations if the Secretary determines that collecting this
BOI ``would not serve the public interest'' and ``would not be highly
useful in national security, intelligence, and law enforcement agency
efforts.'' \16\
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\16\ Id. at 13691. Although not specifically addressed in the
IFR, the entities that the IFR exempted from BOI reporting
requirements are intended to include ERISA-covered defined-benefit
pension plans and their underlying participants.
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Second, the IFR exempted foreign reporting companies from the
requirement to provide the BOI of any U.S. persons who are their
beneficial owners, and exempted such U.S. person beneficial owners from
the requirement to provide BOI for the purpose of filing such reports--
consistent with the Secretary's decision under the general exemptive
authority of 31 U.S.C. 5318(a)(7), discussed in Section I.A.\17\ Under
the IFR, foreign reporting companies that only have U.S. person
beneficial owners are still obligated to file reports, but those
reports do not have to include any BOI about their beneficial
owners.\18\ Related to this second exemption, the IFR revised the
special rule associated with foreign pooled investment vehicles at 31
CFR 1010.380(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. Specifically, FinCEN revised this reporting
obligation to require foreign pooled investment vehicles to report the
BOI of an individual who exercises substantial control over the entity
(or the individual who exercises the greatest authority over the
strategic management of the entity) and who is not a U.S. person.\19\
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\17\ Id. at 13692.
\18\ Id. at 13690.
\19\ The preamble to the IFR explained that 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. Id.
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The IFR retained the requirement for foreign reporting companies to
report BOI about their beneficial owners (excluding U.S. persons) to
FinCEN, while extending the deadline for those companies to file
initial BOI reports, or update or correct previously filed BOI reports,
to the later of 30 days after the date of the publication of the IFR
(i.e.,
[[Page 52510]]
to April 25, 2025) or 30 days after their registration to do business
in the United States.
FinCEN solicited comments from the public on the IFR and stated
that it would assess the effect of the IFR, as appropriate, in light of
comments received.\20\
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\20\ Id. at 13689.
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2. Relief of Burden on Small Businesses
The IFR's changes relieved U.S. small businesses of burdens imposed
by the Reporting Rule, which the Secretary determined were not
justified by the usefulness of the reports generated and the
information they made available.\21\
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\21\ See id. at 13691.
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This determination was consistent with the CTA. The CTA directs the
Secretary to ``minimize burdens on reporting companies associated with
the collection of [beneficial ownership] information . . . in light of
the private compliance costs placed on legitimate businesses.'' \22\ As
discussed above in Section I.A., the CTA also authorizes the Secretary
to entirely exempt ``class[es] of entities'' from BOI reporting via 31
U.S.C. 5336(a)(11)(B)(xxiv) under certain appropriate
circumstances.\23\
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\22\ See 31 U.S.C. 5336(b)(1)(F)(iii).
\23\ See id., at (b)(1)(A)(xxiv).
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FinCEN has long recognized the burdens imposed by BOI reporting.
For example, when originally issuing the Reporting Rule in 2022, FinCEN
responded to multiple commenters who stated that the rule would pose an
undue financial burden on many small businesses.\24\ FinCEN explained
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.'' \25\ FinCEN also stated that
achieving the CTA's goal of collecting information that is ``highly
useful'' while ``minimiz[ing] burden on reporting companies'' requires
a ``delicate balance.'' \26\
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\24\ Reporting Rule, 87 FR at 59550.
\25\ Id.
\26\ Id.
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On January 20, 2025, there was a change in presidential
administrations, which 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.'' \27\ Consistent with the exemptive authority
provided in the CTA and the direction of the President, the IFR
reflected the Secretary's reassessment of the balance between the
usefulness of collecting BOI and the regulatory burdens imposed by the
scope of the Reporting Rule. The Secretary determined, for purposes of
the IFR, 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.'' \28\ The Attorney General and the
Secretary of Homeland Security concurred in writing with this
determination, as required by the CTA.\29\
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\27\ Executive Order 14192 of January 31, 2025, Unleashing
Prosperity Through Deregulation, 90 FR 9065 (Feb. 6, 2025).
\28\ IFR, 90 FR at 13691; see 31 U.S.C. 5336(a)(11)(B)(xxiv).
\29\ IFR, 90 FR at 13691.
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At the same time, the IFR acknowledged that foreign reporting
companies present heightened national security and illicit finance
risks and that they also present different concerns about regulatory
burdens. Consistent with the CTA's stated purposes, the CTA's exclusion
of foreign reporting companies from certain other exemptions,\30\ and a
weighing of the risks identified against the relative burdens, the
Secretary determined in the IFR that exempting foreign reporting
companies would not serve the public interest. The IFR, therefore,
continued to require foreign reporting companies to report their BOI,
except with respect to U.S. person beneficial owners.\31\ The IFR also
provided foreign companies with an additional 30 days to comply with
its reporting requirements.\32\
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\30\ As the IFR notes, the CTA excluded foreign reporting
companies from certain exemptions it provided to domestic entities.
For instance, the CTA limited the exemption for entities assisting a
tax-exempt entity to domestic entities ``beneficially owned or
controlled exclusively by 1 or more United States persons that are
United States citizens or lawfully admitted for permanent
residence,'' as provided by 31 U.S.C. 5336(a)(11)(B)(xx). The CTA
also limited the inactive entity exemption for entities that are not
``owned by a foreign person, whether directly or indirectly, wholly
or partially.'' 31 U.S.C. 5336(a)(11)(B)(xxiii).
\31\ Furthermore, as noted in the IFR, foreign reporting
companies that only have beneficial owners that are U.S. persons
must still submit reports to FinCEN but are not required to report
information about these beneficial owners. 90 FR at 13692.
\32\ Id. at 13690.
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3. Comments Received
FinCEN received 118 comment letters in response to the IFR.
Commenters included, among others, small business owners, industry
trade groups, law firms, law enforcement agencies, transparency
organizations, the secretary of state of a U.S. state, and several
United States senators. Of these comment letters, 40 were clearly
supportive of FinCEN's decision to narrow the BOI reporting
requirements, 28 were strongly opposed, and 50 comment letters did not
clearly support or oppose the IFR.
Many commenters wrote that they agreed with FinCEN's decision to
exempt domestic entities and U.S. persons from the BOI reporting
requirements of the original Reporting Rule. These commenters included
individual small business owners, associations representing small
businesses, service providers (such as accountants and lawyers), and
the secretary of state of a U.S. state. Many of these commenters
praised the IFR for taking what they considered a pragmatic and risk-
based approach to compliance that addresses the need to combat
financial crimes while allowing the vast majority of businesses in the
United States to focus on growing their businesses rather than
navigating what these commenters viewed as government red tape. Some
noted that the Internal Revenue Service (IRS) already collects
information about certain beneficial owners of some businesses and
expressed support for what they perceive as the removal of a redundant
requirement. Some commenters also expressed the hope that Congress
would adopt the IFR as legislation in order to ensure FinCEN could not
later reinstate reporting requirements for U.S. companies.
Beyond their general support for the IFR, the clearly supportive
commenters asked FinCEN to make changes to the reporting requirements
in the final rule to reduce burden on U.S. persons even more. In
particular, many of these commenters requested that FinCEN remove the
requirement that foreign reporting companies report information about
U.S. person company applicants,\33\ as well as the requirement
[[Page 52511]]
that U.S. persons indefinitely update the information they had provided
in order to obtain a FinCEN ID.\34\ Some of these commenters also
suggested that FinCEN exempt specific types of entities from the
reporting requirements, such as homeowners' associations, regardless of
their nationality. Finally, and most prominently among the issues they
raised, these commenters requested that FinCEN delete the BOI of U.S.
persons that already has been reported and is maintained in the
beneficial ownership IT system (the ``BO IT System''). These issues are
discussed in greater detail in Sections II.C. and III.A. below.
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\33\ The term ``company applicant'' includes both the individual
who directly files the document that first registers a reporting
company and 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. See 31 CFR 1010.380(e).
\34\ A FinCEN ID is a unique identifying number that FinCEN will
issue to an individual or reporting company upon request after the
individual or reporting company provides certain information to
FinCEN. See id. at 1010.380(f)(2).
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Commenters critical of the IFR, including corporate transparency
advocacy organizations, think tanks, organizations representing law
enforcement, and four U.S. senators, fell into two camps: those who
essentially urged FinCEN to withdraw the IFR and reinstate the original
Reporting Rule, and those with more targeted or incremental criticisms
of the IFR.
Commenters who urged FinCEN to withdraw the IFR raised a variety of
specific objections that broadly fell into two categories.
Specifically, one set of commenters disputed FinCEN's determination
that the IFR was consistent with Congress's intent in enacting the CTA,
and the other set disputed FinCEN's conclusion that the benefit of BOI
reporting as required by the Reporting Rule did not justify its burden.
Both of these categories of objections are discussed in greater detail
in Section II.B. below.
Other commenters urged narrowing the exemptions put forth in the
IFR but not to abandon them entirely. Some commenters also suggested
alternative ways to reduce burden on domestic entities--ways that the
commenters suggested might be preferable to the IFR's broad exemptions
from the BOI reporting requirements for domestic entities and U.S.
persons. These comments are discussed in greater detail in Section
II.C. below, in connection with the parts of the IFR that they
suggested should be changed.
Commenters also raised various other issues tangentially relating
to the IFR that would not involve changes to the rule itself. These
included issues arising from the relationship between the IFR and the
2016 Customer Due Diligence (CDD) Rule,\35\ such as expectations for
financial institutions to access the BO IT System, FinCEN's plans to
revise the CDD Rule as required by the CTA, and steps that could be
taken to reduce the burden of the CDD Rule on covered financial
institutions. These comments also raise issues relating to overall
implementation of the CTA and the Reporting Rule, including issues
raised in response to FinCEN's Frequently Asked Questions (FAQs), and
FinCEN's general approach to enforcement of BOI reporting requirements.
These comments are discussed in greater detail in Sections III.B.,
III.C., and III.D. below.
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\35\ FinCEN, Customer Due Diligence Requirements for Financial
Institutions, 81 FR 29398 (May 11, 2016).
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II. The Final Rule
A. Overview
In light of this background and having evaluated both the comments
it received and the actual effects of the IFR, FinCEN is now issuing a
final rule to modify the BOI Reporting Rule permanently, rather than on
an interim basis. FinCEN is adopting the following revisions to the BOI
Reporting Rule set forth in the IFR, with certain modifications and
expansions in response to comments received and with the overarching
intent to minimize unnecessary burdens on U.S. persons:
exercising authority under 31 U.S.C. 5336(a)(11)(B)(xxiv)
of the CTA to exempt domestic reporting companies from any BOI
reporting requirements. This affirms the same action taken in the IFR.
exercising authority under 31 U.S.C. 5318(a)(7) to exempt
reporting companies (called foreign reporting companies in the
Reporting Rule) from having to report the BOI of any U.S. person who is
a beneficial owner or company applicant of the foreign reporting
company, and to exempt U.S. persons from having to provide such
information to a reporting company for which the U.S. person is a
beneficial owner or company applicant. This follows the approach set
forth in the IFR but expands the exemption to include not only U.S.
person beneficial owners but also U.S. person company applicants.
Furthermore, the final rule places the exemption in a different
subsection of 31 CFR 1010.380 than the IFR did to avoid confusion.
exercising authority under 31 U.S.C. 5318(a)(7) to revise
the special rule for foreign pooled investment vehicles to exempt any
such entity from having to report the BOI of any U.S. person who
exercises substantial control over the entity. This affirms the same
action taken in the IFR.
exercising authority under 31 U.S.C. 5336(b)(4)(A)--which
authorizes the Secretary to ``prescribe procedures and standard
governing . . . any FinCEN identifier''--to eliminate the requirement
for any U.S. person to update or correct information that the U.S.
person provided in order to obtain a FinCEN ID, whether as beneficial
owner or company applicant. This action responds to comments on the
IFR, which urged FinCEN to make this change as a complement to the
modifications to the reporting requirements.
The final rule does not make any further changes to the IFR or
Reporting Rule. The main points listed above are discussed in Section
II.B. and section-by-section in Section II.C., both below. Other issues
related to but not affecting the language of the rule, including the
status of BOI submitted to FinCEN by domestic entities that are no
longer reporting companies under FinCEN regulations, are discussed in
Section III below.
B. General Criticism of the IFR
As noted in Section I.C.3. above, some comment letters were
critical of the IFR. Those commenters raised a combination of legal and
policy arguments against the IFR as a whole and urged FinCEN to
withdraw the rule and revert to the original Reporting Rule with, at
most, only modest changes to relieve burden on small businesses. FinCEN
addresses the global concerns raised by those commenters here, and
their specific concerns in the section-by-section discussion at Section
II.C. below.
1. Constitutionality
Several commenters characterized the IFR as ``nullifying'' the CTA,
which they argued was a violation of the general constitutional
principle of the separation of powers. One commenter argued that
FinCEN's disregard of the CTA's requirements was so extreme that it
amounted to a violation of the Take Care Clause of the U.S.
Constitution--i.e., the President's constitutional duty to ``take Care
that the Laws be faithfully executed.'' \36\ FinCEN disagrees with the
characterization of the IFR as a ``nullification'' of the CTA. The CTA
expressly gives the Secretary broad authority to exempt entities from
its reporting requirements under specified circumstances. Moreover, the
IFR--and this final rule--continue to require reporting of BOI by
foreign-based entities registered to do business in the United States,
which will be highly useful to law enforcement and national security
agencies. Even if this method of implementation differs from the
commenters' preferred approach,
[[Page 52512]]
disagreements over the specifics of executive branch implementation of
legislative mandates are not evidence of unconstitutional behavior.
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\36\ See U.S. Const. art. II, sec. 3.
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2. Consistency With Statute
Some commenters asserted that the IFR created a regulatory
framework that was fundamentally inconsistent with the reporting
requirements envisioned and described in the CTA. These commenters,
including four U.S. senators, tended to stress the differences between
the IFR and the asserted intent of Congress as found in the legislative
history and specific provisions of the CTA. One commenter claimed that
it had never been Congress's intent to allow for the exemption of all
domestic entities and their beneficial owners from the CTA's reporting
requirements, and stated that no evidence for anyone taking such a
position could be found in the twelve years of discussion and debate
between Congress, Treasury, and other stakeholders that preceded the
enactment of the CTA. Most commenters' arguments pointed to section
6402 of the CTA--the CTA's ``Sense of Congress'' section--and noted its
language specifically identifying the need for federal legislation
``providing for the collection of beneficial ownership information for
corporations, limited liability companies, or other similar entities
formed under the laws of the States'' to counter money laundering, the
financing of terrorism, or other illicit activity.\37\ One commenter
also stated that the IFR conflicted with the sense of Congress that
federal legislation to require BOI reporting from entities ``formed
under the laws of the States'' is needed to ``bring the United States
into compliance with international anti-money laundering and countering
the financing of terrorism standards.'' \38\ Another commenter
concluded that the IFR's exemption of domestic reporting companies
deviated enough from the explicit language of the CTA such that it
would fail the test set forth in the Supreme Court's decision in Loper
Bright Enterprises v. Raimondo.\39\
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\37\ See Section 6402(3) and (5) of Public Law 116-283 (Jan. 1,
2021), 134 Stat. 4604.
\38\ Public Law 116-283, sec. 6402(5)(E).
\39\ Loper Bright Enterprises v. Raimondo, 603 U.S. 369, 395
(2024).
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Treasury disagrees with this characterization of the IFR as
contrary to the intent of the CTA and its specific provisions. These
comments fail to give due weight to statutory language that places the
importance of minimizing burden at the center of the statutory scheme.
There are two key places where the CTA emphasizes the priority of this
factor. Section 6402's aforementioned ``Sense of Congress'' section of
the statute states that in prescribing regulations to collect BOI, the
Secretary shall ``to the greatest extent practicable'' and consistent
with the purposes of the CTA, ``seek to minimize burdens on reporting
companies associated with the collection of beneficial information''
and ``collect information in a form and manner that is reasonably
designed to generate a database that is highly useful to national
security, intelligence, and law enforcement agencies and Federal
functional regulators.'' The statute repeats this directive nearly
verbatim in section 6403, the operational part of the statute, when
describing BOI reporting requirements: in promulgating a regulation,
the Secretary shall ``to the greatest extent practicable . . . minimize
burdens on reporting companies associated with the collection'' of BOI
``in light of the private compliance costs placed on legitimate
businesses, including by identifying any steps taken to mitigate the
costs relating to compliance with the collection'' of BOI.\40\
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\40\ 31 U.S.C. 5336(b)(1)(F)(iii), added by CTA section 6403(a).
---------------------------------------------------------------------------
The repetition of this ``minimize burden'' language in the
operational text of the CTA--codified as part of the BSA--gives it
significantly more weight than other language in the ``Sense of
Congress'' section of the CTA. Indeed, this ``minimize burden''
language is now a statutory requirement in the BSA rather than a guide
to interpretation of the CTA. Accordingly, Treasury views the comments
arguing that the IFR is contrary to congressional intent as simply
expressing disagreement as to the proper balance to strike when
engaging in a legally mandated balancing test between generating highly
useful information, countering illicit activity, or complying with
international standards on the one hand, and minimizing burden on the
other. Thus, while Treasury's chosen approach to striking this balance
differs from the commenters' preferred approach, it is nonetheless
consistent with the CTA's legal framework, especially when the
statutory directive to ``minimize burden'' is accorded its proper
weight.
Some commenters also asserted that certain aspects of the IFR are
inconsistent with the CTA in other ways. Specifically, some commenters
cited the sense of Congress that ``Federal legislation providing for
the collection of beneficial ownership information for corporations,
limited liability companies, or other similar entities formed under the
laws of the States is needed'' to accomplish specified goals as
evidence that Congress specifically intended the CTA to require
reporting by most domestic entities--what the Reporting Rule originally
called ``domestic reporting companies.''
However, the statute must be considered in its entirety. The
statute gives the Secretary significant discretion to determine what
entities, if any, must report BOI. As noted, 31 U.S.C.
5336(a)(11)(B)(xxiv) of the CTA provides the Secretary with very broad
exemption authority: the Secretary may exempt ``any entity or class of
entities'' (emphasis added) from that definition when the Secretary,
with the written concurrence of the Attorney General and the Secretary
of Homeland Security, determines by regulation 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.'' This provision of the CTA places no explicit limits on
the Secretary's exemption authority beyond these requirements.
Therefore, contrary to commenters' assertions, the IFR's exemptions are
well within the statutory framework provided by the CTA.
Similarly, commenters have not made a compelling argument that the
legal basis for the specific exemption of U.S. person beneficial owners
of reporting companies (under the original Reporting Rule, ``foreign
reporting companies'') from BOI reporting requirements is inadequate.
Section 5318(a)(7) of the BSA clearly provides the Secretary with the
authority to make any ``appropriate exemption'' from any ``requirement
of this subchapter''--i.e., 31 U.S.C. 5311-5336--or from a regulation
issued pursuant to these provisions. As noted in Section I.A., the
CTA's BOI reporting requirements are codified in 31 U.S.C. 5336, and
thus 31 U.S.C. 5318(a)(7) authorizes the Secretary to grant exemptions
for its requirements. As the IFR explained, the Secretary has made the
determination that exempting U.S. persons in this way is appropriate:
it ensures that the Reporting Rule is tailored to advance the public
interest by eliminating burdens that are not outweighed by the
benefits. This is consistent with E.O. 14192, which directs the
Executive branch in general to ``alleviate unnecessary regulatory
burdens placed on the American
[[Page 52513]]
people.'' \41\ As explained, 31 U.S.C. 5318(a)(7) provides sufficient
legal authority for the Secretary to act on that determination.
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\41\ See E.O. 14192, Unleashing Prosperity Through Deregulation,
90 FR 9065.
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3. Consistency With Prior Statements and the Factual Record
Some commenters criticized the IFR in general, and specific
positions in the IFR, for allegedly lacking factual support or
contradicting earlier statements by Treasury supporting and defending
robust BOI reporting by domestic entities. The commenters asserted that
the IFR did not adequately explain what appeared to be a significant
change in the agency's position in light of those prior statements.
Among the statements in the IFR that commenters, including four U.S.
Senators, criticized were the IFR's assessment that domestic entities
met the standard for an exemption from the definition of reporting
company, and its justification for exempting U.S. persons from
reporting requirements.
At least one commenter argued that this lack of factual support
caused the IFR to be ``arbitrary, capricious, [or] an abuse of
discretion'' and therefore in violation of the Administrative Procedure
Act (APA).\42\ The commenter argued that the IFR did not provide
sufficient evidence to justify the exemptions and did not provide
sufficient explanations of the Secretary's reasoning that served as the
basis for the exemptions. Specifically, the commenter claimed that the
IFR failed to explain why BOI reporting from domestic reporting
companies ``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.'' \43\
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\42\ See 5 U.S.C. 551-559.
\43\ See 31 U.S.C. 5336(a)(11)(B)(xxiv).
---------------------------------------------------------------------------
The IFR provided ample rationale for exempting domestic entities
and U.S. persons from the reporting requirements. Indeed, in exempting
domestic entities from the reporting requirements, the Secretary
recognized 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 that fact'' and that the
``vast majority of small businesses are legitimate and owned by hard-
working American taxpayers who are not engaged in illicit activity.''
\44\ No commenters disagreed with this assessment of the small business
community. However, critical commenters argued that because criminals
and bad actors use some domestic corporate entities for illicit
activity, all or nearly all law-abiding American small businesses
should comply with the BOI requirements. Treasury respectfully
disagrees. The IFR took the position that the requirement in the
original Reporting Rule for all U.S. businesses to file BOI reports,
unless they qualified for one of the original 23 exemptions was, in
retrospect, an unnecessarily broad approach to achieving the purposes
of the CTA. Treasury reaffirms that position in this final rule. Based
on a reasonable assumption that the great majority of small businesses
are law-abiding and do not pose a risk of money laundering or illicit
finance, the Secretary has determined, and the Departments of Justice
and Homeland Security have concurred in writing, that the original
Reporting Rule's indiscriminate collection of BOI from these entities
would not provide law enforcement with highly valuable information.
Considering the costs of time and money that the BOI requirements would
place on law-abiding American small businesses, Treasury concluded in
the IFR, and continues to maintain, that requiring BOI reporting from
these entities is not in the public interest. While critical of this
conclusion, comment letters presented no compelling evidence
contradicting it.
---------------------------------------------------------------------------
\44\ IFR, 90 FR at 13691.
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Treasury's own prior statements about the value of BOI do not
contradict this conclusion. Treasury has on several occasions assessed
that BOI reporting had intrinsic value, but it has done so outside the
CTA rulemaking context.\45\ These assessments, therefore, have not had
to take into account business cost, as they would have to within the
CTA rulemaking context. It remains true that if FinCEN received more
BOI reporting, this additional reporting likely would be somewhat
useful in addressing the misuse of shell companies. However, this does
not imply that benefits of collecting BOI on the great majority of
American small businesses in order to attempt to collect BOI about
shell companies would be worth the large cost doing so imposes.
Treasury's statements in the context of earlier legislative or
rulemaking activity, such as the Reporting Rule, were prepared under an
evaluation framework that, while nominally aware of trade-offs,
Treasury now assesses to have been inadequately appreciative of
business burden. As the IFR noted, on January 20, 2025, there was a
change in presidential administrations, which has resulted in a
reassessment of the balance struck in the original Reporting Rule
between collecting information that is ``highly useful'' for law
enforcement and minimizing burdens on reporting companies. Thus, the
fact that Treasury has changed positions does not, in and of itself,
cast doubt on the reasonableness of the new positions or the legal
adequacy of the rulemaking it undertakes on the basis of the new
positions.
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\45\ See, e.g., FinCEN, FIN-2010-G001, Guidance on Retaining and
Obtaining Beneficial Ownership Information (Mar. 5, 2010), https://www.fincen.gov/resources/statutes-regulations/guidance/guidance-obtaining-and-retaining-beneficial-ownership; FinCEN, FIN-2017-A003,
Advisory to Financial Institutions and Real Estate Firms and
Professionals (Aug. 22, 2017), https://www.fincen.gov/sites/default/files/advisory/2017-08-22.
---------------------------------------------------------------------------
4. Soundness of Policy
Some critical commenters argued that, even if the IFR met legal
requirements, it was nonetheless unwise as a matter of policy. For
instance, commenters argued that the IFR would weaken the ability of
law enforcement to investigate money laundering and other illicit
activity that relies on the use of anonymous corporate structures. Some
of these commenters expressed the view that requiring domestic entities
to report BOI is critical for law enforcement to effectively
investigate criminality that is hidden behind layers of anonymous
corporate ownership. These commenters pointed to examples of illicit
activity involving domestic shell or front companies as evidence of the
threats to public safety and national security created by such
activity. Some commenters provided numerous examples of criminals using
domestic shell companies to engage in money laundering, fraud, or other
criminal conduct. A few commenters, for example, cited a recent
publication by the Government Accountability Office on fraud in federal
programs involving the anonymous ownership of shell companies, and they
argued that the IFR undermined the government's ability to detect such
fraud.\46\ These commenters claimed that the IFR would make it harder
for law enforcement to uncover basic BOI in investigations because law
enforcement would have to continue to
[[Page 52514]]
rely on time-consuming subpoenas or international legal assistance.
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\46\ See Government Accountability Office, Fraud in Federal
Programs: FinCEN Should Take Steps to Improve the Ability of
Inspectors General to Determine Beneficial Owners of Companies (Apr.
8, 2025), https://www.gao.gov/products/gao-25-107143.
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Many commenters also expressed concern with the IFR's impact on
national security. One commenter cited several examples where U.S.-
based companies were used to launder millions of dollars for foreign
criminal networks. Another commenter stated that BOI for U.S. companies
would help limit sanctions evasion and weapons proliferation by U.S.
adversaries and maintain the security of the U.S. defense supply chain.
Multiple commenters expressed concerns regarding the IFR's impact on
the ability of the United States to combat Chinese operatives who use
U.S. companies to conduct money laundering, fentanyl trafficking
organizations, and tariff evasion. Along similar lines, some commenters
urged Treasury to reconsider its position on BOI reporting at least
with respect to foreign-owned domestic entities, pointing to national
security risks. These commenters claimed that foreign persons could
easily evade the IFR's requirement for foreign reporting companies to
report BOI by forming an entity in the United States, and that this
would enable hostile states, corrupt foreign officials, and foreign
criminal organizations to misuse domestic entities for nefarious
purposes.
Some commenters also argued that the IFR would make it more
difficult for law-abiding small businesses to operate on an even
playing field with entities operating illegally. One commenter
representing small businesses criticized the IFR and requested its
withdrawal because, the commenter claimed, the IFR would harm law-
abiding small businesses by making it easier for criminal enterprises
to compete against them. The commenter cited examples of fraudsters who
have harmed small businesses and used anonymous domestic shell
companies to hide their criminal activity. This commenter also argued
that the benefits of domestic BOI reporting for legitimate small
businesses would outweigh any costs, which this commenter viewed as
insignificant for most small businesses.
A few commenters also criticized the IFR as being contrary to the
international standards set by the Financial Action Task Force (FATF)
such as FATF Recommendation 24.\47\ These commenters argued that the
IFR could cause FATF to place the United States on the list of
Jurisdictions under Increased Monitoring, also known as the ``grey
list.'' Another commenter stated that the IFR would make the United
States an outlier as countries increasingly adopt corporate
transparency measures that require broad BOI reporting from entities,
and that this result would make the United States a more attractive
place for illicit financial activity compared with other countries.
---------------------------------------------------------------------------
\47\ FATF Recommendation 24 states, ``Countries should ensure
that there is adequate, accurate and up-to-date information on the
beneficial ownership and control of legal persons that can be
obtained or accessed rapidly and efficiently by competent
authorities, though either a register of beneficial ownership or an
alternative mechanism.'' FATF, International Standards on Combating
Money Laundering and the Financing of Terrorism & Proliferation: The
FATF Recommendations (updated Oct. 2025), https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatf-recommendations.html.
---------------------------------------------------------------------------
Treasury recognizes that there are numerous, varied, and compelling
reasons to support broad reporting of legal entity BOI. Treasury has,
in the past, made the case for such a reporting requirement, appealing
to many of the same law enforcement, national security, and
international cooperation interests that commenters have cited.
However, in issuing the IFR and this final rule, Treasury is required
to consider the constraints imposed by the CTA in tailoring the scope
of the BOI reporting requirements; in particular, the cost
considerations must be balanced against other factors.
The goal of the IFR and this final rule is to collect BOI that will
comprise a database highly useful to national security, intelligence,
law enforcement, federal functional regulators, and financial
institutions, while complying with the CTA's directive to minimize
burdens. Instead of collecting of BOI from nearly all American small
businesses--the vast majority of which are legitimate and owned by
hard-working American taxpayers who are not engaged in illicit
activity--the IFR focused BOI collection where the greatest risk
mitigation-to-burden ratio lies. A focus on foreign legal entities--
what the IFR redefined the term ``reporting company'' exclusively to
mean--is the proper focus of BOI collection to create a ``highly
useful'' BOI database that minimizes burden on businesses. In that
respect, Treasury assesses that the targeted, risk-based approach to
BOI collection set out in the IFR and in this final rule would not--
despite commenters' concerns--undermine law enforcement and national
security, as it ensures the collection of BOI that is highly useful to
law enforcement while minimizing burden on the business community to
the greatest extent possible.
Finally, Treasury disagrees with commenters who argued that the
IFR's reporting exemptions would significantly and unjustifiably harm
law enforcement and national security. First, the IFR's requirement for
foreign reporting companies to report BOI of their foreign beneficial
owners means that intelligence, law enforcement, and national security
agencies will continue to have access to BOI concerning foreign
entities operating in the United States. Second, as a pre-requisite to
exercising the exemptive authority under the CTA, the statute requires
the Secretary to obtain the written concurrence of the Attorney General
and the Secretary of Homeland Security in affirming the Secretary's
assessment 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.'' \48\ The Department of Justice
and the Department of Homeland Security would be unlikely to affirm the
Secretary's exemptions in the IFR if the IFR would seriously harm law
enforcement and national security activities.
---------------------------------------------------------------------------
\48\ See 31 U.S.C. 5336(b)(1)(A)(xxiv).
---------------------------------------------------------------------------
Finally, exempting domestic entities from BOI reporting and
exempting reporting companies from reporting the BOI of U.S. persons
means that the methods for addressing certain existing illicit finance
risks return to the status quo ante before the Reporting Rule, not to a
worse situation. As noted in the IFR, these methods include taking
advantage of the continuing obligation for covered financial
institutions to conduct customer due diligence pursuant to the 2016 CDD
Rule, which significantly mitigates illicit finance risks posed by both
domestic entities and foreign entities with U.S. person beneficial
owners and company applicants. Section III.C. below discusses this
point in greater detail.
C. Section-by-Section Response to IFR Comments
In addition to the general issues raised, commenters made a number
of points addressing specific aspects of the IFR. FinCEN responds to
these points on a section-by-section basis in the context of the
specific provisions of the IFR to which they relate.
1. Timing of Reports, 31 CFR 1010.380(a)
The IFR extended the deadline for reporting companies (``foreign
reporting
[[Page 52515]]
companies'' under the Reporting Rule) to file their initial BOI
reports. For entities that became reporting companies before the
publication date of the IFR (March 26, 2025), the IFR provided 30 days
after that date to file initial BOI reports, or to update or correct
previously filed BOI reports. The IFR required an entity that became a
reporting company after March 26, 2025, to file its initial BOI report
within 30 days of the date on which it received actual notice that it
was registered to do business in the United States, or the date on
which a secretary of state or similar office first provided public
notice, whichever date was earlier. The IFR required such an entity to
update or correct its BOI report within 30 days of any change to the
required information previously reported. In addition, the IFR made
technical revisions to section 1010.380(a) to align the term
``reporting company'' with the revision to the definition of that term
in section 1010.380(c)(1) to mean only those entities previously
referred to as ``foreign reporting companies.'' This entailed removing
the terms ``domestic'' and ``foreign.''
Several commenters stated that FinCEN should amend the timeframe
that the IFR provided to file initial BOI reports. One commenter
suggested extending the filing deadline from 30 to 90 days. Several
commenters stated that for newly created foreign entities, there is a
disconnect between the time period required to file a BOI report and a
foreign entity's receipt of its employer identification number (EIN).
These commenters explained that if individual beneficial owners or the
entity itself have not yet received an EIN or other required
identification number, there is no way for the reporting company to
file a BOI report in a timely manner. These commenters suggested that
the filing period should align with the receipt of other information
(i.e., EIN), or FinCEN should allow an ``in process'' response option
that can be updated once the information has been obtained. Another
commenter recommended that in general FinCEN should align its reporting
deadlines with timelines that apply in foreign jurisdictions.
The final rule adopts the timing provisions of the IFR without
change. Treasury was not persuaded by commenters' arguments that a 30-
day filing period was unreasonably short or overly difficult to comply
with. Generally, a reporting company must devote attention and effort
to registering with a State or Indian tribe as a foreign business and,
thus, it is reasonable for a reporting company to devote a small
additional increment of effort to registering with FinCEN at roughly
the same time. Similarly, Treasury does not view the request to align
the BOI reporting timeframe with certain reporting deadlines in foreign
jurisdictions as practicable. For instance, different countries have
different regulatory or tax deadlines, and it would not be practicable
to create a system of varying deadlines. Furthermore, such a system
would be extremely challenging, if not impossible, to enforce. Finally,
the EIN issue raised by commenters has already been addressed in
FinCEN's Frequently Asked Questions to the BOI Reporting Rule (BOI
FAQs), which proposed a practical work-around for filers contending
with the problem of delayed provision of new EINs.\49\
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\49\ See FinCEN, Beneficial Ownership Information Frequently
Asked Questions, FAQ G.3 (updated July 24, 2024) (``How can I obtain
a tax identification number for a new company quickly so that I can
file an initial beneficial ownership information report on time? . .
. A reporting company must report its tax identification number when
reporting beneficial ownership information to FinCEN and, indeed,
will be unable to submit its BOI report without including a tax
identification number. In such circumstances, in addition to making
all reasonable efforts to file its BOI report in a timely manner
(including requesting all necessary information as early as
practicable), the reporting company should file its report as soon
as it receives its EIN. As a best practice, the reporting company
may consider retaining documentation associated with its efforts to
comply with the BOI reporting requirements in a timely manner.''),
https://www.fincen.gov/boi-faqs#G_3.
---------------------------------------------------------------------------
2. Reports by Foreign Pooled Investment Vehicles, 31 CFR
1010.380(b)(2)(iii)
The IFR created a new special rule for foreign pooled investment
vehicles. Under the Reporting Rule's original special rule, a foreign
pooled investment vehicle that would be a reporting company but for the
exemption at 31 CFR 1010.380(c)(2)(xviii), and that was formed under
the laws of a foreign country, was required to report BOI with respect
to a single individual who exercised substantial control over the
entity. If more than one individual exercised substantial control over
the entity, the entity was required to report information with respect
to the individual who has the greatest authority over the strategic
management of the entity. In the IFR, FinCEN revised this rule such
that foreign pooled investment vehicles would have to report the BOI of
an individual who exercises substantial control over the entity if that
individual was not a U.S. person. If more than one individual exercised
substantial control over the entity and at least one of those
individuals was not a U.S. person, the entity would have to report
information with respect to the non-U.S. person individual with the
greatest authority over the strategic management of the entity. If
there was no individual with substantial control who was not a U.S.
person, the foreign pooled investment vehicle would not be required to
report any beneficial owners.
Treasury did not receive any comments specifically addressing this
provision. In the absence of comments and consistent with the general
approach to the exemption of U.S. beneficial owners from reporting
obligations, the final rule affirms this provision without change.
3. FinCEN ID, 31 CFR 1010.380(b)(4)
The IFR did not revise the Reporting Rule's requirements in
connection with FinCEN IDs. In the Reporting Rule, FinCEN set forth
parameters for obtaining and using a FinCEN ID. These included the
requirement that a person that had obtained a FinCEN ID was required to
update or correct the underlying information in the original
application within 30 days after such a change became necessary,
without qualification or limitation. Because the IFR did not change
this requirement, legal and natural U.S. persons that had obtained
FinCEN IDs prior to the issuance of the IFR, under the expectation that
BOI associated with those U.S. persons would have to be reported to
FinCEN and with the desire to streamline such reporting, remained
subject to this permanent update/correction requirement even though
there was no longer an obligation to report those U.S. persons'
BOI.\50\
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\50\ Consistent with the Secretary's announcement on March 2,
2025, related to BOI reporting requirements, Treasury has not
enforced any BOI reporting deadlines against U.S. citizens, domestic
reporting companies, or their beneficial owners--including deadlines
concerning updates and corrections of FinCEN ID information.
---------------------------------------------------------------------------
Many commenters asked to eliminate some elements of the FinCEN ID
update and correction provisions of the Reporting Rule. Some commenters
requested that FinCEN remove the update/correct requirement
specifically for individual U.S. person beneficial owners of reporting
companies as defined in the IFR. Some commenters also urged FinCEN to
remove the requirement to update or correct the information associated
with FinCEN IDs that had been obtained for domestic entities that are
no longer considered reporting companies under the IFR. Finally, some
commenters urged the limitation or abolition of the update/correction
requirement as it applied to FinCEN IDs held by company applicants.
[[Page 52516]]
Most commenters urging removal of the update/correction requirement
for individual beneficial owners and legal entities made broadly the
same point: that it would be inconsistent and unfair for FinCEN to
require U.S. persons--both individuals and legal persons--to report BOI
in their capacity as FinCEN ID holders when FinCEN was no longer
requiring the same information to be reported about them as beneficial
owners and reporting companies. Many commenters urging removal of the
update/correction requirement for company applicants made a similar
argument: for example, one commenter stated that individuals who formed
domestic reporting companies are no longer company applicants, and if
they obtained FinCEN IDs in order to report their company applicant
status they should not have to keep this information up to date.
Additionally, this third set also includes commenters who renewed
criticisms that had been leveled at this provision of the Reporting
Rule: what they characterized as the intrinsic unfairness or
unreasonableness of holding individual company applicants to a lifetime
update/correction requirement. One commenter noted that reporting
companies are not required to update company applicant information on
BOI reports (BOIRs), yet company applicants that have obtained a FinCEN
ID are required to keep their information up to date. Another commenter
raised fundamental concerns about privacy, information security,
identity theft, and fraud in connection with the blanket, open-ended
requirement to disclose personal information, particularly by persons
who might no longer be involved with a reporting company and whose
personal information was therefore irrelevant to the company's current
operations. This commenter also noted that continuous updating imposes
a significant administrative burden, and an unnecessary one if an
individual does not intend to be a company applicant or beneficial
owner going forward.
Several commenters pointed to the broad language of the CTA
authorizing the Secretary ``by regulation [to] prescribe procedures and
standards governing . . . any FinCEN identifier'' in 31 U.S.C.
5336(b)(4)(A) as giving authority to provide the sort of relief being
urged for FinCEN ID holders. Commenters who did not advocate outright
abolition of the update/correction requirement suggested creating a
method for deactivating FinCEN IDs and proposed several deactivation
schemes. A few commenters who did not propose specific schemes
nonetheless asked when FinCEN would make a deactivation scheme
available, consistent with its statement in FAQ M.6 that it has been
assessing options to allow individuals to deactivate FinCEN IDs.\51\ At
least one commenter also urged FinCEN to destroy FinCEN ID information
connected with individuals and entities no longer subject to the
reporting requirements.
---------------------------------------------------------------------------
\51\ See FinCEN, Beneficial Ownership Information Frequently
Asked Questions, FAQ M.6 (issued on September 29, 2023) (``Is there
any way to deactivate an individual's FinCEN identifier that is no
longer in use so that the individual no longer has to update the
information associated with it? FinCEN is actively assessing options
to allow individuals to deactivate a FinCEN identifier so that they
do not need to update the underlying personal information on an
ongoing basis. FinCEN will provide additional guidance on this
functionality upon completion of that process.''), https://www.fincen.gov/boi-faqs#M_6.
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Treasury fundamentally agrees with the tenor of the comments it
received on this subject, and the final rule therefore amends
1010.380(b)(4)(iii)(A) to remove the requirement for U.S. persons who
are individuals to update or correct information previously submitted
in their application for such FinCEN ID. Because the IFR has already
changed the definition of ``reporting company'' to exclude domestic
legal entities, the overall effect will be to eliminate the update and
correction obligations for all U.S. persons that currently have FinCEN
IDs. For information about the disposition of information associated
with FinCEN IDs no longer subject to update and correction
requirements, see Section III.B.
No useful purpose is served by requiring the holder of a FinCEN ID
to update the information associated with that FinCEN ID if it is not
currently in use and clearly will not need to be used in the near
future. As this final rule eliminates all requirements for reports
about U.S. persons--beneficial owners, company applicants, and legal
entities alike--there is thus no longer a justification for imposing
the requirement on U.S. person FinCEN ID holders to update or correct
the information associated with their FinCEN IDs.
The same logic does not apply to FinCEN ID holders that are not
U.S. persons. Such FinCEN ID holders fall into one of two categories:
either the BOI associated with their FinCEN IDs currently must be
reported to FinCEN because they are currently reporting companies or
foreign beneficial owners or company applicants of a reporting company;
or the BOI associated with their FinCEN IDs was--or was expected to
be--subject to a reporting requirement in the past (otherwise, they
would had no reason to obtain FinCEN IDs) and accordingly is more
likely to be again in the reasonably near future. In either case,
FinCEN has good reason to continue requiring foreign FinCEN ID holders
to update and correct information provided to FinCEN as originally
required under the Reporting Rule.
4. Reporting Company, 31 CFR 1010.380(c)
Redefining the term ``reporting company'' was perhaps the single
most important change that the IFR made. Under the original Reporting
Rule, reporting companies comprised domestic reporting companies and
foreign reporting companies. The former was any corporation, LLC, or
other entity 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,
subject to certain exemptions.\52\ The latter was any entity formed
under the law of a foreign country and 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 a State or
Indian tribe, likewise with certain exemptions.\53\ The IFR eliminated
domestic entities from the definition of a reporting company.\54\ It
also added language under which any entity that fit the old definition
of a domestic reporting company would now be exempted from the new
definition.\55\ This exemption implemented Treasury's conclusion that
the reporting of BOI by domestic 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.'' \56\
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\52\ 31 CFR 1010.380(c)(1)(i) (2023).
\53\ 31 CFR 1010.380(c)(1)(ii) (2023).
\54\ 31 CFR 1010.380(c)(1).
\55\ 31 CFR 1010.380(c)(2)(xxiv).
\56\ These are the criteria that the CTA established for the
creation of a new exemption from the definition of reporting
company. See 31 U.S.C. 5336(a)(11)(B)(xxiv). The written concurrence
of the Attorney General and the Secretary of Homeland Security in
these statements was noted in the Interim Final Rule. See IFR, 90 FR
at 13691.
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Many commenters, including several who criticized the IFR as a
whole, suggested more targeted carve-outs as alternatives to the
blanket exemption of domestic entities from the definition of
``reporting company.'' One commenter suggested a tiered system for BOI
[[Page 52517]]
reporting that focuses on the highest risk entities while maintaining a
broad exemption from reporting for most domestic entities. Another
commenter specifically requested that FinCEN require domestic shell
companies to report BOI and expressed a desire that domestic front
companies also be required to report BOI. Other commenters suggested
other narrower exemptions, such as for one- or two-person businesses or
for homeowners' associations. Even a comment that was generally
supportive of the IFR strongly urged FinCEN not to exempt from the
reporting requirement domestic tax-exempt nonprofit entities that
receive foreign funding.
Under the evaluation framework imposed by the CTA, Treasury is not
persuaded that any of the targeted approaches that commenters have
proposed are as effective at obtaining useful BOI on a benefit-to-
burden ratio basis. The final rule therefore adopts the blanket
exemption approach of the IFR. This approach obviates any need to
create additional exemptions applicable to subcategories of U.S.
entities, such as homeowners' associations.
5. U.S. Person Beneficial Owners, 31 CFR 1010.380(d)
The IFR aimed to relieve burden on individual U.S. persons as well
as U.S. legal entities. It did so for individuals by introducing an
exemption from the requirement for reporting companies to report BOI of
any beneficial owner who was a U.S. person. It took this action relying
on the Secretary's authority under the BSA to ``prescribe an
appropriate exemption from a requirement under [subchapter II of
chapter 53 of title 31, U.S. Code] and regulations prescribed under
this subchapter.'' \57\ Given the IFR's redefinition of ``reporting
company,'' the exemption from reporting BOI of U.S. persons applied to
all U.S. person beneficial owners of foreign legal entities registered
to do business in the United States.
---------------------------------------------------------------------------
\57\ 31 U.S.C. 5318(a)(7).
---------------------------------------------------------------------------
Commenters that were critical of the IFR as a whole tended to see
this exemption as a part of the much broader exemption of domestic
reporting companies, rather than as a separate exemption that could be
applicable to different reporting circumstances.
Such a perspective, however, misreads this exemption. The
definition of ``beneficial owner'' is secondary to that of ``reporting
company.'' Thus, the scope of an exemption from the reporting of
information about beneficial owners can only be evaluated after the
scope of the reporting company category has been considered. Seen in
that light, the exemption from reporting BOI of U.S. person beneficial
owners is limited, applying in thousands of instances not tens of
millions.\58\ Nothing raised by commenters in connection with this
exemption gives any reason to think that such a focused exemption is
not ``appropriate,'' as 31 U.S.C. 5318(a)(7) requires it to be.
---------------------------------------------------------------------------
\58\ See infra, Section V.E.
---------------------------------------------------------------------------
FinCEN does acknowledge, however, that its choice to place the
exemption language so close to the familiar language defining
beneficial owners may have contributed to this misunderstanding. In
addition, FinCEN's placement of this exemption in the section defining
beneficial owners inadvertently created the possibility of
misunderstandings in other contexts that borrowed the Reporting Rule's
definition of beneficial owner, such as the Real Estate Reporting
Rule.\59\ To avoid confusion and misunderstanding, FinCEN is
repositioning the beneficial owner reporting exemption language in the
section on the content, form, and manner of reports, 31 CFR
1010.380(b), where its significance is clearer.
---------------------------------------------------------------------------
\59\ See FinCEN, Anti-Money Laundering Regulations for
Residential Real Estate Transfers, 89 FR 70258, 70273 (Aug. 29,
2024) (noting the Real Estate Reporting Rule ``largely defined
beneficial owners of transferee entities through a reference to
regulations in the BOI Reporting Rule, specifically 31 CFR
1010.380(d)''); see also 31 CFR 1031.32(n)(1) (codifying Real Estate
Reporting Rule's definition of ``beneficial owner''). On March 19,
2026, a federal district court vacated the Real Estate Reporting
Rule. See Flowers Title Co. v Bessent, No. 6:25-CV-127-JDK, 2026 WL
782283 (E.D. Tex. Mar. 19, 2026), appeal docketed, 26-40285 (5th
Cir. May 13, 2026). Even so, FinCEN thinks that the possible
misunderstanding that the interaction of the exemption language and
the cross-reference in the Real Estate Reporting Rule identified is
worth addressing.
---------------------------------------------------------------------------
In addition to this repositioning, FinCEN has expanded this
exemption to apply to U.S. person company applicants. This addresses a
point raised by commenters on the IFR, which is that the IFR retained
the requirement from the Reporting Rule for certain reporting companies
to report information about their company applicants. Because the IFR
redefined the term ``reporting company,'' domestic entities were no
longer required to report information about their company applicant(s),
regardless of whether those individuals were or were not U.S. persons.
But the IFR retained the reporting obligation for foreign entities
registered in the United States, including the requirement for such
entities to report company applicant information if the foreign entity
was registered on or after January 1, 2024.\60\ Because 31 CFR
1010.380's definition of ``company applicant'' did not exclude U.S.
persons, this requirement continued to apply to both U.S. person and
non-U.S. person company applicants.\61\ Thus, under the IFR, a foreign
entity first registered in the United States on or after January 1,
2024, still had to report any U.S. person who qualified as the foreign
entity's company applicant, even though it would not have to report
U.S. person beneficial owners.
---------------------------------------------------------------------------
\60\ See 31 CFR 1010.380(b)(1)(ii), (2)(iv).
\61\ Id. at 1010.380(e).
---------------------------------------------------------------------------
Several commenters suggested exempting U.S. persons from having to
provide information if they are company applicants, just as they are
already exempted if they were beneficial owners. These commenters
argued that, for consistency, the two sets of persons should be treated
alike. Commenters specifically noted that since the Secretary made the
determination that the burden of reporting outweighed the benefits for
U.S. person beneficial owners, the same determination should be made
for U.S. person company applicants.
Treasury agrees that the logic of exempting U.S. person beneficial
owners applies with equal weight to U.S. person company applicants.
Treasury also agrees that any relief from the requirement to update
FinCEN IDs should extend to U.S. persons obtaining FinCEN IDs to use in
place of reporting company applicant BOI, as well as U.S. persons
obtaining FinCEN IDs to use in place of reporting beneficial owner BOI.
The final rule reflects these extensions of the exemption from
reporting BOI and from updating and correcting FinCEN IDs to U.S.
person company applicants as well as U.S. person beneficial owners.
III. Other Issues Raised in Comments to the Interim Final Rule
In addition to the issues that commenters raised that directly
affect provisions of this final rule, commenters also addressed several
topics that are related to the IFR but do not involve revisions to the
Reporting Rule or the IFR itself. These include the issue most commonly
raised by commenters: how FinCEN should treat the BOI reports already
in the BO IT System that contain data of U.S. persons and domestic
entities that are, as a result of the IFR, no longer subject to the BOI
reporting requirements. Commenters also raised questions about the
enforcement of the IFR, as well as the status of the CDD Rule in light
of the changes being made to the Reporting
[[Page 52518]]
Rule. This section addresses these and a few miscellaneous issues.
A. Disposition of BOI in the Database
The IFR revised the Reporting Rule by removing the requirements for
domestic entities and U.S. persons to report BOI. It did not address
what FinCEN would do with information that had already been reported
under the Reporting Rule and stored in FinCEN's BO IT System, but was
no longer required to be reported under the IFR itself. FinCEN did not
consider the disposition of that information to be a matter best
addressed at the same time that it was making changes to the Reporting
Rule.
Numerous commenters urged FinCEN to announce a disposition of the
BOI of U.S. persons that has remained stored in the BO IT System since
the IFR relieved domestic entities of the reporting requirements and
exempted U.S. persons from providing BOI to foreign entities still
required to report. These commenters noted that millions of reporting
companies reported BOI to FinCEN prior to the IFR in accordance with
the original Reporting Rule, and that now, because of the IFR, much of
this information is no longer required to be reported.
A large number of commenters requested that FinCEN either delete
all the BOI that is no longer required to be reported or provide a
mechanism for such deletion. A common suggestion was to allow U.S.
persons to contact FinCEN and request that FinCEN delete their BOI from
the BO IT System. In urging deletion, either en masse or upon request,
commenters cited privacy considerations and concerns about potential
misuse of sensitive data relating to individuals and legal entities.
Several commenters also expressed cybersecurity concerns, with some
stating that the database presents a risk of being hacked or otherwise
misused if left intact. Many of the commenters concerned about
individuals' BOI repeated their concerns and their suggestions with
respect to information provided by and about domestic entities prior to
the issuance of the IFR. One commenter also reminded FinCEN that any
decision should take into account information provided by individuals
and entities in connection with obtaining FinCEN IDs that would now no
longer be needed.
Commenters agreeing that the final rule should explain FinCEN's
disposition of this information, were divided on the subject of what,
beyond explanation and actual deletion, FinCEN should do in this
regard.
Some commenters asked that FinCEN allow small business
owners to confirm that their data has been deleted.
One commenter requested that Treasury confirm to the
public when data has been deleted.
One commenter recommended that the final rule include a
provision that explicitly prohibits FinCEN from disseminating BOI
received from a domestic reporting company. This commenter also
requested that FinCEN report monthly in writing to the Secretary on
FinCEN's implementation of this provision until destruction of all such
BOI is complete.
One commenter stated that appropriate protocols governing
the destruction of BOI should be memorialized in the final rule
together with an annual audit process administered by the Comptroller
General of the United States to verify the proper destruction of this
information.
One commenter stated that to complete the destruction
process transparently FinCEN should issue an electronic notice of
deletion to each domestic filer confirming that its BOI record has been
removed and is no longer accessible to any agency or financial
institution. This commenter suggested further that FinCEN publish its
retention schedule and purge methodology so stakeholders could
understand how ``domestic'' and ``foreign'' records will henceforth be
separated.
Summing up the issues at stake, one commenter stated that, whatever
mode of disposal FinCEN adopted, securely disposing of this BOI would
strengthen trust with the public and protect sensitive information that
is no longer needed.
FinCEN agrees that the values of privacy, information security, and
the trust of the public all argue for the removal from the BO IT
System, as much as practicable, of information that would not have been
reported if the reporting requirements of this final rule had been in
place starting on January 1, 2024. To facilitate the deletion of U.S.
person information from the BO IT System that is no longer required to
be reported, FinCEN expects to rely upon information provided in
previously filed BOIRs to identify all domestic reporting companies,
company applicants, and beneficial owners associated with domestic
reporting companies. FinCEN anticipates working with the National
Archives and Records Administration (NARA) and implementing a process
to delete information about any individuals--company applicants,
beneficial owners, or recipients of a FinCEN ID--in the BO IT System
who reported an identifying document that FinCEN reasonably believes
was provided by a U.S. person (e.g., U.S. passport, U.S. driver's
license). At this time, FinCEN does not anticipate requiring or
requesting that U.S. companies or U.S. persons contact FinCEN
requesting that their BOI be removed. Additionally, FinCEN does not
intend to provide any acknowledgement or confirmation of the deletion
of a U.S. company or U.S. person's BOI. FinCEN will provide notice to
the public on its website when it has completed the deletion process.
To accomplish this deletion efficiently, FinCEN anticipates
undertaking the project in one sweep of the database, not as a regular,
periodic sweep. To that end, while FinCEN intends to implement a
process to remove BOI of U.S. companies and U.S. persons who are now
exempt from the Reporting Rule by virtue of the IFR and this final
rule, FinCEN only intends to complete this process one time. If BOI
relating to a U.S. company or a U.S. person is included--inadvertently
or intentionally--in a filing made after February 10, 2027, FinCEN does
not anticipate deleting that information.
FinCEN considers it inadvisable as well as unnecessary to add to
the time and expense of the deletion project by committing to the more
elaborate notice and reporting requirements urged by various
commenters. While all aimed at fostering public trust, none of these
proposed requirements further the core mission of protecting privacy
and information security by deleting information that FinCEN should not
retain.
B. Reporting Violations, 31 CFR 1010.380(g)
The IFR did not alter the provisions in the Reporting Rule
concerning reporting violations. By exempting domestic entities and
U.S. persons from the reporting requirements, the IFR relieved domestic
entities and U.S. persons from potential liability under the Reporting
Rule. However, the penalty provisions in the CTA, as interpreted by the
reporting violations provisions of the rule, continue to apply to
foreign reporting companies and foreign persons.
Several commenters stated that the penalties for noncompliance with
the reporting requirements are disproportionately harsh for what one
commenter labeled a ``paperwork violation.'' These commenters suggested
revising the penalties, with some suggesting a scaled system, reserving
the harshest penalties for the most severe
[[Page 52519]]
violations. A few commenters suggested that Congress and Treasury
pursue a ``risk based'' enforcement posture that focuses on data
patterns consistent with financial crimes and then prioritizes
enforcement of BOI reporting on these risk patterns. A few of these
commenters explained that by prioritizing entities that pose genuine
risks of illicit activities, the rule enhances national security while
respecting the privacy and rights of law-abiding business owners.
Another commenter suggested guidance to businesses that makes it clear
that it will only penalize companies that ``willfully'' fail to file or
provide false information.
The final rule does not alter the reporting violations provisions
of the Reporting Rule. FinCEN views the standard of ``willful''
violations in the CTA and the Reporting Rule as a sufficiently clear
basis to apply civil or criminal penalties. As FinCEN noted in the
original Reporting Rule, willfulness is a well-established legal
concept in existing caselaw.\62\ Therefore and particularly given how
``willfully'' is expressly defined by the relevant provision of the
enacting statute, enforcement actions would not be based on inadvertent
mistakes or a lack of awareness of the reporting requirements.
Furthermore, since the IFR and this final rule narrow the scope of BOI
reporting to focus on those entities that pose the greatest national
security risks, namely foreign reporting companies, the approach to
enforcing BOI reporting violations will be sufficiently targeted based
on risk.
---------------------------------------------------------------------------
\62\ Reporting Rule, 87 FR at 59546.
---------------------------------------------------------------------------
C. The Customer Due Diligence Rule
The IFR did not revise FinCEN's CDD Rule. The preamble to the IFR
noted how the CDD Rule sought to increase transparency by requiring
covered financial institutions to collect BOI from their legal entity
customers at account opening, whereas the Reporting Rule focused on the
collection of BOI at the time of an entity's creation.\63\ The preamble
also discussed how the continuing obligations of financial institutions
under the CDD Rule would serve to mitigate certain potential illicit
finance risks created by the IFR's exemptions of domestic entities and
U.S. persons from BOI reporting.\64\
---------------------------------------------------------------------------
\63\ IFR, 90 FR at 13691.
\64\ Id.
---------------------------------------------------------------------------
Several commenters criticized this rationale as insufficient and
requested that FinCEN draw an explicit conclusion about the fate of the
CDD Rule from the IFR's modifications to the Reporting Rule. Some
commenters criticized FinCEN for requiring, even after the changes
created by the IFR, that financial institutions collect BOI from both
domestic and foreign legal entity customers. Another commenter stated
that the fact that, in the aftermath of the IFR, financial institutions
are not able to check BOI against a national database for accuracy, and
law enforcement has no efficient way to access BOI information
collected by financial institutions, means that financial institutions'
collection of BOI is of no real value. One commenter recommended that
FinCEN remove or revise the CDD Rule requirement for financial
institutions to obtain BOI from their customers. In much the same vein,
several commenters expressed confusion about the relationship between
the IFR and the CDD Rule, asking why they must provide BOI to financial
institutions after the issuance of the IFR. One commenter questioned
why financial institutions are still required to collect BOI on
domestic reporting companies under the CDD rule, even though the IFR
stated that this information does not provide highly useful information
for law enforcement or advance national security interests. In short,
these commenters wanted FinCEN to dismantle the CDD Rule, arguing that
this would only be consistent with the IFR's implicit acknowledgement
that collection of BOI was of little or no value.
In response to these commenters, FinCEN reiterates that the
Reporting Rule (as modified by the IFR and again by this final rule)
and the CDD Rule serve different purposes and arise under different
legal authorities. Compliance with the CDD Rule is an important part of
covered financial institutions' overall anti-money laundering and
countering the financing of terrorism programs, as it provides covered
financial institutions valuable information about their legal entity
customers. The revisions reflected in the IFR and this final rule
should not be interpreted as diminishing the value of BOI in general
but instead reflects a decision that is mindful of the cost to business
that results from information collected under the CTA. That message, of
course, can always be made more clearly and in greater detail. FinCEN
takes seriously commenters' recommendation that it should clarify a
number of CDD Rule-related points:
FinCEN's intention to adopt a policy or engage in
rulemaking concerning the CDD Rule;
The IFR's affirmation of the value of the CDD Rule's
original timing requirement, about which FinCEN itself has since issued
modifying guidance;
The expectations on financial institutions with regard to
the use of FinCEN's still-extant BO IT System for CDD compliance (or
the affirmation that verification under the CDD Rule need not involve
the BO IT System);
The expectations on financial institutions with respect to
reconciling disparities between BOI obtained under the CTA and
information collected by the financial institution itself;
The possibility that the diminution of BOI collection
under the IFR and this final rule might imply an actual increase in
financial institutions' CDD obligations; and
How the federal functional regulators' guidance on CDD
Rule compliance expectations might itself change in light of the IFR.
FinCEN is considering whether and, if so, how best to clarify these
points. FinCEN is still legally required to modify the CDD Rule in
light of the Reporting Rule, and now that FinCEN has completed its
changes to the Reporting Rule, it can refocus on the CDD Rule. When
FinCEN does so, it intends to address the CDD Rule-related issues
identified by commenters to the IFR.
D. Miscellaneous Issues
A few commenters attempted to address the burden arguments of the
IFR by suggesting reporting mechanisms that they argued would decrease
burden without requiring significant changes to the Reporting Rule's
core regulatory obligations. These suggestions included a postcard
filing option for the smallest businesses, otherwise shortening the
BOIR to collect only the most critical data, and creating a streamlined
form for entities with simple ownership structures. FinCEN appreciates
the suggestions for streamlining reporting mechanics but does not
consider such changes to be sufficient to address the magnitude of the
burden of BOI reporting that the Reporting Rule presented.
IV. Effective Date
This final rule does not impose any new obligations but rather
extends the IFR's exemption on the reporting of U.S. person information
to company applicants as well as beneficial owners of 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 final rule exempts
[[Page 52520]]
reporting companies and U.S. person company applicants from certain
reporting requirements, rather than imposes obligations, the public
does not need time to prepare to comply with it. Delaying the effective
date of this rule would be 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. Regulatory Impact Analysis
FinCEN has analyzed this rule as required under Executive Order
(E.O.) 12866,\65\ E.O. 13563,\66\ E.O. 14192,\67\ the Regulatory
Flexibility Act (RFA),\68\ the Unfunded Mandates Reform Act of 1995
(UMRA),\69\ and the Paperwork Reduction Act (PRA).\70\ The final rule
has been determined to be economically significant because it makes the
changes introduced by the IFR permanent \71\ and introduces additional
provisions that would enhance the multi-billion dollar average annual
savings initially projected under the IFR.\72\
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\65\ E.O. 12866, Regulatory Planning and Review, 58 FR 51735
(Oct. 4, 1993).
\66\ E.O. 13563, Improving Regulation and Regulatory Review, 76
FR 3821 (Jan. 21, 2011).
\67\ See E.O. 14192, Unleashing Prosperity Through Deregulation,
90 FR 9065 (Feb. 6, 2025); Office of Management and Budget (OMB),
Guidance Implementing Section 3 of Executive Order 14192, Titled
``Unleashing Prosperity Through Deregulation,'' M-25-20 (Mar. 26,
2025), https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-20-Guidance-Implementing-Section-3-of-Executive-Order-14192-Titled-Unleashing-Prosperity-Through-Deregulation.pdf.
\68\ 5 U.S.C. 601 et seq.
\69\ 2 U.S.C. 1532.
\70\ 44 U.S.C. 3501 et seq.
\71\ See Section II.A.
\72\ See Section V.A.2.b.ii.
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A. Analysis of Impact
1. Broad Economic Considerations
As discussed in Section I.C.2., FinCEN remains mindful of the
``delicate balance'' \73\ that exists between the anticipated benefits
and the costs imposed by requirements to report BOI. In promulgating
this final rule, FinCEN anticipates certain changes, of varying
magnitude, to both expected benefits and costs--with some easier to
quantify than others. Each anticipated change is discussed in turn
below.
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\73\ See supra note 26.
---------------------------------------------------------------------------
FinCEN further notes that, because portions of its regulatory
impact analysis (RIA) consider economic benefits and costs across all
the various parties it can reasonably expect to be affected by the
rule,\74\ whereas other portions limit the analysis of costs incurred
to specific regulatory stakeholders,\75\ certain differences in the
accounting treatment of costs may arise.\76\ Where relevant to the
analysis, the discussion below makes note of the distinctions in
treatment of costs.
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\74\ See infra Sections V.A.4.i and ii and V.E.
\75\ See infra Section V.E.
\76\ For example, to the extent that the costs to collect U.S.
person company applicant information that would have been borne by a
reporting company would be forgone, but the information would
nevertheless need to be collected for business purposes (such as the
opening of a bank account or other financial transactions), 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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2. Institutional Baseline and Affected Parties
a. Regulatory Baseline
Because the final rule introduces additional modifications to the
Reporting Rule, the most appropriate counterfactual scenario used to
assess the incremental economic impact of the rule varies by provision.
In cases where the final rule has not further amended the IFR, this RIA
treats the Reporting Rule as the regulatory baseline against which to
analyze regulatory impact. In cases where the provisions in the final
rule differ from those in the IFR, the RIA treats the IFR as the
regulatory baseline. Where useful for tractability in the analysis,
this distinction is noted throughout the remainder of Section V.
b. Baseline of Affected Parties
The revised baseline employed in the RIA reflects two types of
changes since the IFR. First, FinCEN updated its baseline population
estimates, generally, to enhance the accuracy in light of additional
data and analysis performed since the IFR. Secondly, as this final rule
further exempts certain parties that were still subject to Reporting
Rule obligations under the IFR, the baseline of affected parties in
this impact analysis was revised to account for these newly exempt
persons.
i. Revised Estimates of Previously Affected Parties
In the IFR, FinCEN estimated the total population of foreign
reporting companies to be approximately 25,000 in the first year as
benchmarked against the analysis in the Reporting Rule RIA.\77\ This
estimate was derived by applying the observed proportion of foreign
companies in FinCEN's internal data at that point in time, which was
approximately 0.06 percent of all reporters, to the total estimated
reporting company population of 32,556,929 from the 2022 Reporting
Rule.\78\ This resulted in an estimate of approximately 20,000 expected
reporting companies already in existence, plus an additional 5,000 new
reporting companies registered in the first year of the IFR, or 25,000
foreign reporting companies in 2025.
---------------------------------------------------------------------------
\77\ See FinCEN, Beneficial Ownership Information Reporting
Requirement Revision and Deadline Extension, 90 FR at 13695.
\78\ See Reporting Rule, 87 FR at 59568.
---------------------------------------------------------------------------
Following the promulgation of the IFR, FinCEN conducted additional
analysis to update its population estimates to account for the passage
of time since the benchmark original analysis in the Reporting Rule.
This included a re-evaluation of updated IRS tax data.\79\ On the basis
of this analysis FinCEN has revised its IFR initial population estimate
of approximately 25,000 expected reporting companies in the first
effective year of a rule upward to 28,000.\80\ Given that as of the end
of 2025 FinCEN had received approximately 13,000 reports from foreign
reporting companies, this implies that, of the initial expected
population of existing reporting companies, approximately 15,000
existing foreign companies would still need to newly report.\81\
Relying on the same sources of IRS tax data, FinCEN
[[Page 52521]]
further anticipates that approximately 1,800 new foreign reporting
companies per year would additionally be required to report, including
in year one.\82\
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\79\ Specifically, FinCEN reviewed (1) foreign corporations
filing IRS Form 1120-F (``U.S. Income Tax Return of a Foreign
Corporation'') and (2) partnership tax returns filed by foreign
partnerships (IRS Form 1065).
\80\ FinCEN's review of updated IRS tax data resulted in a count
of approximately 63,000 possible reporting companies at the end of
2025. However, FinCEN estimates that a significant number of these
entities will be exempt from filing due to meeting one or more
reporting exemptions. Specifically, based on IRS tax filing data,
FinCEN estimates that as many as 25 percent of corporations that are
reporting companies may meet the large operating company exemption.
In addition, FinCEN estimates that approximately 18,450 foreign
corporations registered to do business in the United States may be
operated or advised by an entity that is both described in section
203(l) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(l))
and has filed Item 10, Schedule A, and Schedule B of Part 1A of Form
ADV (or any successor thereto) with the SEC, or is an SEC-registered
securities reporting issuer, exempting them from filing. Finally,
FinCEN estimates that approximately 1,000 foreign companies
registered to do business in the United States are registered with
FinCEN as money services businesses. This results in a total
population of non-exempt reporting companies numbering approximately
28,000, of which approximately 13,000 have already reported as of
December 31, 2025. FinCEN acknowledges uncertainty around this
estimate, particularly as it does not have data to estimate every
category of possible exemption or to estimate the exact number of
parties in all the exemption categories discussed above. However,
FinCEN expects the number of additional exemptions to be less than
five percent of the total estimated population and retains this
higher estimate out of a desire to avoid underestimating the number
of possible reporting companies.
\81\ 28,000 expected reporting companies minus 13,000 reporting
companies that have already reported = 15,000 remaining reporting
companies.
\82\ As described above, FinCEN expects approximately 28,000
total non-exempt reporting companies to report out of a total
population of approximately 63,000 possible reporting companies at
the end of 2025--approximately 45 percent. Based on 4,000 new
companies annually based on IRS tax data, this results in
approximately 1,800 new reporting companies annually.
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ii. Estimates of Newly Affected Parties
The final rule includes new provisions pertaining to U.S. holders
of FinCEN IDs, including U.S. company applicants, and additional
provisions applicable to U.S. company applicants.
As of the end of calendar year 2025, FinCEN identified
approximately 760,000 U.S. person FinCEN ID holders (approximately 97
percent of all holders) that the new provisions in the final rule would
exempt from update requirements. While the vast majority of these
FinCEN IDs were obtained before the IFR was issued, FinCEN has
continued to receive additional FinCEN ID applications from both
foreign and U.S. persons. However, a number of these applications
appear to have been pursued voluntarily, as the number of U.S. person
FinCEN ID applications submitted has exceeded the concurrent number of
U.S. person company applicants (who were not exempted from reporting
requirements by the IFR) that were reported in association with newly
filing reporting companies. FinCEN has received approximately one U.S.
person company applicant for every BOIR received since the IFR.
FinCEN's estimate of the population of newly affected U.S. company
applicants includes both (1) U.S. company applicants that have already
obtained a FinCEN ID and will no longer be required to provide updated
information (approximately 270,000, a subpopulation of the 760,000
FinCEN ID holders no longer required to provide updates), and (2)
prospective future U.S. company applicants associated with future new
reporting companies to which they will not be required to provide their
BOI (approximately 760 associated with the estimated 1,800 new
reporting companies per year). FinCEN estimates that this could be no
more than approximately 760,300 persons in a given year and will likely
be a much smaller population closer to one-third of this estimated
upper bound.
c. Current Market Practices
i. BOIR Filings Since the IFR
Although FinCEN received the majority of BOIRs before the IFR was
published, since the IFR was published, FinCEN has nevertheless
continued to receive a steady inflow of reports from reporting
companies at an average rate of approximately 100 reports per month. On
average, these reports have contained 1.2 beneficial owners. About half
of the new reports have disclosed one beneficial owner, and a further
25 percent did not report any beneficial owner (meaning there was no
non-U.S. person beneficial owner to report). The remaining reports
contained two or more beneficial owners, with the average number
disclosed being three.
ii. U.S. Person Holders of FinCEN IDs
Since the publication of the IFR, FinCEN has continued to receive
applications for FinCEN IDs from U.S. persons. FinCEN has received
approximately six U.S. person FinCEN ID applications per BOIR received
since the IFR. As discussed above, this exceeds the number of U.S.
person company applicants, and therefore is assumed to contain a number
of voluntary applications. In the two years following the opening of
the BOI reporting portal, FinCEN also received approximately 38,000
updates and corrections associated with a total of 780,000 active
FinCEN IDs, which corresponds to approximately 2.5 percent of the
active FinCEN IDs being updated or corrected per year.
iii. U.S. Company Applicants
Prior to the IFR, FinCEN received fewer than one U.S. person
company applicant for every two reports by a foreign reporting company.
However, since the IFR, this ratio has increased, and FinCEN has
received about one U.S. person company applicant for every BOIR
received since the IFR. The likely reason for this increase is that
company applicants are only required to be reported for companies
formed after January 1, 2024. Most newly reporting companies since the
IFR were formed after this date, whereas prior to the IFR, a greater
proportion of reports were filed by companies that had registered to do
business in the United States prior to this date.
3. Description of Final Amendments
The final amendments to the Reporting Rule are as described above
in Section II.A. Table 1 presents a summary of these provisions.
Table 1--Overview/Mapping of Regulatory Text and Analyses
----------------------------------------------------------------------------------------------------------------
The Final Rule will . Section II Considered in RIA Regulatory text
Scope of affected entities . . analysis subsection(s) location
----------------------------------------------------------------------------------------------------------------
Reporting companies............ Exempt them from any II.A............. V.A.4.i and ii... 31 CFR
requirements under 31 1010.380(b)(5)(i
U.S.C. 5336 and ).
section 1010.380 to
report BOI of any
U.S. persons who are
beneficial owners or
company applicants.
Remove 31 CFR N/A.............. n/a.............. n/a, text
1010.380(d)(4)(i), removed.
which exempted them
from reporting the
BOI of any U.S.
persons who are
beneficial owners.
U.S. persons................... Exempt them from any II.A............. V.A.4.i and ii... 31 CFR
requirement under 31 1010.380(b)(5)(i
U.S.C. 5336 and i).
section 1010.380 to
provide BOI with
respect to any
reporting company for
which they are
beneficial owners or
company applicants.
[[Page 52522]]
Remove 31 CFR N/A.............. n/a.............. n/a, text
1010.380(d)(4)(ii), removed.
which exempted them
from providing BOI
with respect to any
reporting company for
which they are a
beneficial owner.
U.S. persons who obtained a Remove the prior II.A............. V.A.4.i and ii... 31 CFR
FinCEN ID. requirement to update 1010.380(b)(4)(i
or correct ii)(A).
information
previously submitted
to FinCEN in an
application for a
FinCEN ID.
----------------------------------------------------------------------------------------------------------------
4. Anticipated Economic Effects
a. Expected Benefits
i. Changes in Benefits Relative to the Reporting Rule
While the IFR introduced significant exemptions for domestic
reporting companies and many U.S. persons, many of the benefits
outlined in the original Reporting Rule continued to apply under the
IFR and subsequently will apply under this final rule. The final rule
will help address the lack of BOI critical for money laundering
investigations involving foreign entities. Improved visibility into the
identities of the foreign individuals who own or control foreign
entities operating in the United States will enhance law enforcement's
ability to investigate, prosecute, and disrupt the financing of
international terrorism, other transnational security threats, and
other types of domestic and transnational financial crime when foreign
entities are used to engage in such activities. Other authorized users
in the national security and intelligence fields will likewise benefit
from the use of these data. The BO IT System will also increase
investigative efficiency and thus decrease the cost to law enforcement
of investigations that require or benefit from identifying the foreign
owners of foreign entities operating in the United States.
These anticipated benefits are supported by a number of public
comments received on the IFR from those that represent the law
enforcement community, some of whom expressed the opinion that the
availability of BOI, albeit with a more limited scope, would still
provide law enforcement at every level with an important tool to
investigate the misuse of foreign shell companies and other foreign
entities used for criminal activity. To the extent these investigations
become more effective, money laundering in the United States will
become more difficult. Making any method of money laundering more
difficult in the United States will improve the national security of
the United States by increasing barriers for illicit actors to covertly
enter and to act within the U.S. financial system. This may serve to
deter the use of foreign entities for money laundering purposes in the
United States.
ii. Changes in Benefits Relative to the IFR
This final rule does not introduce any additional information
collection requirements beyond what was required under the IFR.
Therefore, this final rule does not add any incremental benefits
associated with such information, which was discussed as the primary
benefit under the original Reporting Rule.\83\ However, FinCEN has
historically considered the benefits of BOI reporting to a variety of
affected parties, including law enforcement, other users of BOI, and
the general macroeconomy,\84\ and has taken into consideration the
extent to which benefits may change as a consequence of the final
rule's reduction in scope, which relate primarily to updates associated
with company applicant reporting and FinCEN ID updates.\85\
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\83\ See Reporting Rule, 87 FR at 59562.
\84\ Id. at 59682; see also FinCEN, Beneficial Ownership
Information Access and Safeguards, and Use of FinCEN Identifiers for
Entities, 87 FR 77404, 77425 (Dec. 16, 2022).
\85\ To the extent that certain parties would have incurred
direct costs in connection with reporting their U.S. person company
applicants and would no longer be required to do so under the 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.E.
---------------------------------------------------------------------------
FinCEN acknowledges that, while more information about U.S. person
company applicants in BOIRs, or about U.S. persons who might have
periodically provided updated information associated with their FinCEN
IDs, would be collected in the absence of changes made in this final
rule, the marginal benefits of this reduction in information reporting
is unclear. As FinCEN has not yet been able to conduct the kinds of
robust quantitative analysis necessary to estimate the incremental
value of such information, 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 some parties may experience reduced
benefits as a consequence of the changes introduced in this final rule
but expects these to be relatively minor. This would include parties,
such as law enforcement, financial institutions, and other affected
parties whose access to BOI would consequently provide information
about fewer U.S. person company applicants. The extent to which
reducing the scope of reported information about company applicants
would reduce the benefits of access to BOI would, to some extent,
depend on the relative informational value of the U.S. person company
applicants that would be newly exempted from inclusion in BOIRs 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 information (e.g.,
commercially available information) to the extent that such sources can
be treated as substitutes as opposed to complements.\86\
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\86\ The original Reporting Rule did not provide an estimate of
the relative value of alternative sources relative to the BOI
required to be reported by the Reporting Rule.
---------------------------------------------------------------------------
b. Expected Costs
i. Changes in Costs Relative to the Reporting Rule
This final rule affirms the permanence of the significant
reductions in costs the IFR introduced relative to the Reporting Rule.
The IFR narrowed the Reporting
[[Page 52523]]
Rule's BOI reporting requirement where domestic entities previously
defined as ``domestic reporting companies'' were excluded, and foreign
entities were no longer required to report the BOI of any U.S. persons
who are beneficial owners of a foreign reporting company. The IFR
substantially decreased the scope and number of reporting companies,
particularly with respect to domestic and foreign entities previously
subject to the Reporting Rule. This scope reduction is being retained
by the final rule and entails significant regulatory cost savings.
In the original rule, FinCEN's analysis estimated that there would
be 32,556,929 total reporting companies in 2024, and 4,998,468 new
entities per year that met the previous definition of reporting
company, not including exempted parties.\87\ In the period before the
IFR was issued, FinCEN received approximately 15 million reports from
domestic reporting companies, leaving an estimated 17.5 million
outstanding reports, plus an estimated additional 10 million expected
reports in 2025 and 2026, meaning that approximately 27.5 million
reporting companies have been relieved of reporting obligations since
the IFR. Using the estimated weighted average of $665.71 per report
contemplated in the original rule,\88\ this is equivalent to
approximately $18 billion dollars in savings for entities formerly
classified as domestic reporting companies since the IFR was issued.
---------------------------------------------------------------------------
\87\ See Reporting Rule, 87 FR at 59568.
\88\ See id at 59573.
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The estimated change in total reporting burden hours resulting from
the IFR is a reduction from the previous annual burden estimate by
approximately 53 million burden hours per year, on average, rounded to
the nearest million.\89\ The estimated change in total reporting cost
is a reduction by approximately $9 billion dollars per year, on
average, rounded to the nearest billion.\90\ The changes introduced by
the IFR also decreased the estimated annual cost to the Federal
government by approximately $8 million, which is in addition to the
$21.5 million dollar cost reduction resulting from additional changes
and data deletion being implemented with this final rule.
---------------------------------------------------------------------------
\89\ This estimate represents the difference between the three-
year average burden in the IFR (approximately 86,000) and the five-
year average burden presented in the original Reporting Rule
(approximately 53 million). This expected change in reporting burden
is broadly consistent with the change in burden hours presented in
the IFR (approximately 91 million), which used a looking-backward
method of estimation. These methods only differ in the assignment of
when estimated annual burdens are considered to have effectively
been realized.
\90\ This figure is the difference between the three-year
average cost presented in the IFR (approximately $22 million) and
the five-year average cost presented in the Reporting Rule issued in
2022 (approximately $9 billion).
---------------------------------------------------------------------------
ii. Changes in Costs Relative to the IFR
This final rule does not introduce any additional requirements
beyond what was required under the IFR. Therefore, this final rule does
not add any incremental costs. However, this final rule does introduce
additional exemptions, namely by removing the requirement for (1) U.S.
person holders of a FinCEN ID to update or correct the information
provided in their application, and (2) reporting companies to report
information on U.S. person company applicants. Therefore, FinCEN
expects the primary value of the additional exemptions provided by this
final rule to be realized in the form of reduced costs, and the final
incremental cost of this rule to be significantly less than zero. As
described below, FinCEN estimates the incremental cost savings
associated with the final rule are approximately $233,439 in the first
year and approximately $209,105 in each subsequent year.
The final rule will exempt approximately 760,000 U.S. person FinCEN
ID holders from update and correction requirements. In the two years
following the opening of the BO IT System, FinCEN has received
approximately 38,000 updates and corrections associated with a total of
780,000 active FinCEN IDs--approximately 2.5 percent per year. Assuming
each update would have taken approximately 10 minutes (0.17 hours) and
an hourly cost of $65.09,\91\ these FinCEN ID update and correction
requirement exemptions would result in an incremental cost savings of
approximately $206,000 as presented in Table 2.
---------------------------------------------------------------------------
\91\ FinCEN applies a similar hourly wage rate to that used in
the IFR, but which has been updated using recently released data.
FinCEN estimated an average base wage rate of $45.77 per hour. This
estimate is based on U.S. Bureau of Labor Statistics (BLS) May 2024
wage estimates and represents the average reported hourly wage rates
of three occupational groups assessed to be most likely responsible
for executing filings on behalf of reporting companies (11-000:
Management; 13-000: Business and Financial Operations; and 43-000:
Office and Administrative Support). See BLS, Occupational Employment
and Wage Statistics: May 2024 Occupation Profiles, available at
https://www.bls.gov/oes/2024/may/overview_2024.htm. Given that many
occupations provide benefits beyond wages (e.g., insurance and paid
leave), FinCEN applies the private industry benefits factor of 1.42
to the unloaded wage rate to reflect the total cost the employer.
The benefit factor is the ratio of total compensation (which
includes wages and benefits) to wages. Total compensation = 43.94
and Wages and salaries = 30.90 (1.42 = 43.94 / 30.90) as of June
2024, based on the private industry workers series data downloaded
from the BLS, Employer Costs for Employee Compensation data,
available at https://www.bls.gov/news.release/archives/ecec_09102024.pdf. Therefore, the fully loaded wage rate is $65.09
per hour.
---------------------------------------------------------------------------
In addition to the annual savings associated with the existing
760,000 U.S. person FinCEN ID holders, there is a small additional cost
savings associated with U.S. persons who would otherwise have continued
to be required to obtain FinCEN IDs in association with reporting
company submissions of BOI, for instance as company applicants, though
the updating costs associated with these additional FinCEN IDs are
expected to be relatively small. As detailed in the following
discussion on the cost savings associated with the exemption of U.S.
person company applicants from being included in BOIRs,\92\ absent the
final rule, FinCEN expects approximately 270 U.S. person company
applicants to have been reported annually. If virtually all of these
individuals applied for FinCEN IDs, this would result in an additional
annual cost savings of about $73 per year going forward.\93\
---------------------------------------------------------------------------
\92\ See infra note 95.
\93\ Updating 2.5 percent of 270 FinCEN IDs results in seven
annual updates, which at 10 minutes (0.17 hours) each and an hourly
wage rate of $65.09 is $73 annually.
[[Page 52524]]
Table 2--Estimated Incremental Annual Cost Savings Associated With New FinCEN ID Update and Correction
Requirement Exemptions
----------------------------------------------------------------------------------------------------------------
Percentage
of Number of
exempted updates Hours Total Hourly Total cost
Number of exempted parties parties from saved per hours wage rate savings
making exempted update saved
updates parties
----------------------------------------------------------------------------------------------------------------
760,000................................. 2.5 19,000 0.17 3,167 $65.09 $206,103
----------------------------------------------------------------------------------------------------------------
Hourly savings figures are rounded to the nearest hundredth of an hour for presentation purposes. Total savings
figures are produced using unrounded figures for accuracy.
FinCEN's final rule also exempts reporting companies from including
U.S. person company applicants in their BOIRs. This new exemption
relieves reporting companies from needing to collect information on
their U.S. person company applicants and submit that information in
connection with their BOIR. Based on data from foreign reporting
company BOIRs received since the IFR, FinCEN estimates that most
foreign reporting companies include one company applicant on average
with their BOIR. While companies sometimes use the same applicant,
FinCEN estimates that most of these company applicants are unique.
Using the same reporting data, FinCEN further estimates that about 15
percent of these company applicants are U.S. persons, which will now be
exempt from inclusion.
As described in Section V.A.ii.2.a, FinCEN anticipates
approximately 16,800 reporting companies in the first year, and 1,800
reporting companies in each subsequent year. Based on this information,
FinCEN estimates that as many as 2,520 U.S. person company applicants
will not need to be included with reporting company BOIRs in the first
year,\94\ and an additional 27 will be excluded in each subsequent
year.\95\ FinCEN estimates that it takes approximately 10 minutes (0.17
hours) to identify and collect information about a company applicant.
Table 3 presents a summary of the anticipated cost savings associated
with these new exemptions for U.S. persons to be included as company
applicants.
---------------------------------------------------------------------------
\94\ If each of 16,800 BOIRs received in year one (15,000
existing reporting companies plus 1,800 new reporting companies) is
expected to include one company applicant on average, this results
in 16,800 company applicants. 15 percent of 16,800 company
applicants is 2,520 U.S. person applicants.
\95\ If each of the 1,800 new BOIR expected to be received in
subsequent years is expected to include one company applicant on
average, this results in 1,800 company applicants. 15 percent of
1,800 company applicants is 270 U.S. person company applicants per
year.
Table 3--Estimated Incremental Cost Savings Associated With New FinCEN Company Applicant Exemptions
----------------------------------------------------------------------------------------------------------------
Number of
exempted Hours saved Total hours Hourly wage Total cost
Year company per applicant saved rate savings
applicants
----------------------------------------------------------------------------------------------------------------
1............................... 2,520 0.17 420 $65.09 $27,336
2+.............................. 270 0.17 45 65.09 2,929
----------------------------------------------------------------------------------------------------------------
Hourly savings figures are rounded to the nearest hundredth of an hour for presentation purposes. Total savings
figures are produced using unrounded figures for accuracy.
5. Alternatives Considered
FinCEN took into consideration all potential policy alternatives
proposed by commenters in response to the IFR. The description of these
alternatives and the discussion of FinCEN's reasons for not pursuing
those alternatives not incorporated into the final rule as set forth in
Section II.C. are incorporated here by reference.
B. Executive Orders 12866, 13563, and 14192
E.O. 12866 and E.O. 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). E.O. 13563
emphasizes the importance of quantifying both costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility. E.O.
13563 also recognizes that some benefits are difficult to quantify and
provides that, where appropriate and permitted by law, agencies may
consider and discuss qualitatively values that are difficult or
impossible to quantify.
This rule has been designated a ``significant regulatory action''
under section 3(f) of E.O. 12866; accordingly, it has been reviewed by
OMB.
This action is expected to be considered an E.O. 14192 deregulatory
action.
C. Regulatory Flexibility Act
The RFA, Public Law 96-354, applies only to rules for which an
agency publishes a general notice of proposed rulemaking pursuant to 5
U.S.C. 553(b).\96\ This rule is being immediately published as a final
rule following an IFR; it was not preceded by a notice of proposed
rulemaking. Therefore, the RFA does not apply to it.
---------------------------------------------------------------------------
\96\ See generally 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
Furthermore, because this rule exempts certain U.S. persons who
otherwise would have been required to be reported as company applicants
or to update information provided to FinCEN, there are no new
compliance burdens imposed on a substantial number of U.S. businesses
\97\ or to U.S. persons in their capacities as beneficial owners or
company applicants of foreign reporting companies. In addition, the RFA
does
[[Page 52525]]
not apply to regulatory burdens incurred by U.S. persons in their
capacity as natural persons and would therefore not apply to amendments
to the IFR adopted in this final rule that affect such parties as
individuals.\98\
---------------------------------------------------------------------------
\97\ 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.
\98\ 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.
---------------------------------------------------------------------------
D. Unfunded Mandates Reform Act
Section 202 of the UMRA,\99\ Public Law 104-4, requires that an
agency prepare a budgetary impact statement before promulgating a rule
that may result in new, incremental expenditures by State, local, and
Tribal governments, in the aggregate, or by the private sector, of $193
million or more in any one year ($100 million in 1995, adjusted for
inflation).\100\ If a budgetary impact statement is required, section
202 of the UMRA also requires an agency to identify and consider a
reasonable number of regulatory alternatives before promulgating a
rule. FinCEN has determined that this rule will not result in increased
expenditures by State, local, and Tribal governments, or by the private
sector, of $193 million or more. Accordingly, FinCEN has not prepared a
budgetary impact statement. Additionally, while not required for UMRA
purposes, FinCEN believes its consideration of policy alternatives in
Sections II.C. and V.A.5. provide a sufficiently specific description
of regulatory alternatives and incorporates that here by reference.
---------------------------------------------------------------------------
\99\ 2 U.S.C. 1532.
\100\ The U.S. Bureau of Economic Analysis reports the annual
value of the gross domestic product implicit price deflator for
calendar year 1995 (the year UMRA was enacted) as 66.939, and as
128.974 for calendar year 2025 (the most recent available). Thus,
the inflation-adjusted estimate for $100 million is 128.974 / 66.939
x $100 million, or $192.7 million. See U.S. Bureau of Economic
Analysis, Table 1.1.9. Implicit Price Deflators for Gross Domestic
Product, available at https://apps.bea.gov/iTable/?reqid=19&step=3&isuri=1&1921=survey&1903=13#eyJhcHBpZCI6MTksInN0ZXBzIjpbMSwyLDMsM10sImRhdGEiOltbIk5JUEFfVGFibGVfTGlzdCIsIjEzIl0sWyJDYXRlZ29yaWVzIiwiU3VydmV5Il0sWyJGaXJzdF9ZZWFyIiwiMTk5NSJdLFsiTGFzdF9ZZWFyIiwiMjAyNSJdLFsiU2NhbGUiLCIwIl0sWyJTZXJpZXMiLCJBIl1dfQ==.
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E. Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1995 (PRA) \101\
and its implementing regulations, 5 CFR part 1320, impose 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 control number assigned by OMB.\102\
---------------------------------------------------------------------------
\101\ 44 U.S.C. 3506(c)(2)(A), 3507(a)(1)(D).
\102\ 44 U.S.C. chapter 35; 5 CFR part 1320.
---------------------------------------------------------------------------
The reporting requirements contained in the Reporting Rule, which
qualify as ``collections of information'' under the PRA, were approved
by OMB in accordance with the PRA under OMB control number 1506-0076.
In this 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 or company applicants 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 beneficial owners or company applicants. 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
IFR based on the changes made by this final rule, as well as updated
reporting information received in the time since the IFR was published.
Changes to estimates for requirements contained in the IFR, where not
related to additional exemptions made in this final rule, are the
result of changes to pro forma accounting estimates based on updated
reporting information and should not be interpreted as a reduction in
regulatory requirements.
1. Beneficial Ownership Information 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.\103\ 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.
---------------------------------------------------------------------------
\103\ 31 U.S.C. 5336(b); 31 CFR 1010.380(b).
---------------------------------------------------------------------------
Frequency: As required.\104\
---------------------------------------------------------------------------
\104\ 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 the 24 specific exemptions to file BOIRs.
i. Initial BOIRs
Estimated Number of Responses: 6,800 initial BOIRs per year, on
average.
FinCEN anticipates 16,800 BOIRs by reporting companies in the first
year, and 1,800 in each subsequent year, which results in a three-year
annual average of 6,800.
Estimated Time per Response: As discussed in the IFR, the time
burden for filing initial BOIRs will vary depending on the complexity
of the reporting company's structure. FinCEN therefore estimates a
range of time burdens associated with filing an initial BOIR to account
for the likely variance among reporting companies based on two
categories: simple and complex beneficial ownership structures. FinCEN
evaluated data on reports filed by reporting companies since the IFR
was published and found that in most cases (approximately 75 percent of
the total received), reports had one or no foreign beneficial owners to
report. For the minority of reports (approximately 25 percent of the
total received) which reported more than one foreign beneficial owner,
the average was approximately three foreign beneficial owners. For the
purpose of this analysis, FinCEN therefore assumes that 75 percent of
reporting companies would have simple beneficial ownership structures
and 25 percent would have complex beneficial ownership structures.
FinCEN estimates an average burden of reporting BOI for companies
with simple beneficial ownership structures as 60 minutes (one hour)
per response, which includes 30 minutes to read the form and understand
the requirement; 10 minutes to identify and collect
[[Page 52526]]
information about beneficial owners and company applicants; and 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 120 minutes
(two hours) per response for reporting companies that filed reports
with two or more foreign beneficial owners (i.e., those with complex
beneficial ownership structures). This includes 30 minutes to read the
form and understand the requirement; 30 minutes to identify and collect
information about beneficial owners and company applicants; and 60
minutes to fill out and file the report, including attaching an image
of an acceptable identification document for each beneficial owner and
company applicant.
Estimated Aggregate Reporting Burden Hours: 8,500 hours per year,
on average.
FinCEN estimates that during Year One, filing initial BOIRs will
result in approximately 21,000 burden hours for reporting
companies.\105\ In each subsequent year, FinCEN estimates filing
initial BOIRs will result in 2,250 burden hours annually for new
reporting companies.\106\ This results in a three-year average annual
burden for initial BOIRs of 8,500 hours.
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\105\ 16,800 total reporting companies, with 75 percent (12,600)
taking one hour, and 25 percent (4,200) taking two hours, results in
a total of 21,000 hours in the first year.
\106\ 1,800 new reporting companies per year, with 75 percent
(1,350) taking one hour, and 25 percent (450) taking two hours,
results in a total of 2,250 hours in Year Two and beyond.
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Estimated Aggregate Reporting Cost: $1,913,225 per year, on
average.
FinCEN estimated a range of costs associated with filing an initial
BOIR to account for the likely variance among reporting companies.
Using the hourly wage rates presented in the IFR, FinCEN estimates the
average cost of filing an initial BOIR per reporting company to range
from $65.09 (for companies with simple foreign beneficial ownership
structures) \107\ to $930.17 (for companies with complex foreign
beneficial ownership structures).\108\ Applying the reporting
companies' structure distribution explained above, the estimated total
cost of initial BOIRs is $4.7 million in Year One \109\ and $506
thousand in each subsequent year.\110\ This results in a three-year
average cost for initial BOIRs of $1.9 million.
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\107\ For companies with simple foreign beneficial ownership
structures, FinCEN estimated one hour of labor at a rate of $65.09
per hour. See supra note 91.
\108\ For companies with complex foreign beneficial ownership
structures, FinCEN estimated two hours of labor at a rate of $65.09
per hour, plus two hours of professional assistance from an attorney
or accountant at a rate of approximately $400 per hour. Professional
assistance rates are derived from the original Reporting Rule. See
Reporting Rule, 87 FR at 59498.
\109\ 16,800 total reports, with 75 percent (12,600) costing
$65.09 and 25 percent (4,200) costing $930.17, results in a total
cost of $4,726,790 in the first year.
\110\ 1,800 new reports per year, with 75 percent (1,350)
costing $65.09 and 25 percent (450) costing $930.17, results in a
total cost of $506,442 in each subsequent year.
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ii. Updated BOIRs
Estimated Number of Responses: 1,106 reporting company updates per
year, on average.
In the two-year period following the opening of the BO IT System,
FinCEN received approximately 900 updates and corrections for a total
of approximately 13,000 foreign reporting company BOIRs, that is, for
approximately 3.5 percent. If FinCEN receives 15,000 reports in Year
One, this will result in a total of 28,000 total reports by reporting
companies.\111\ Including the 1,800 new reports expected in Year One,
results in 29,800 expected reports. Assuming 3.5 percent of these
29,800 reports will be updated results in 1,043 updates in Year One. In
Year Two, if FinCEN receives 1,800 new reports, this will result in a
total of 31,600 reports. Assuming 3.5 percent of these 31,600 reports
will be updated results in 1,106 updates in Year Two. In Year Three, if
FinCEN receives 1,800 new reports, this will result in a total of
33,400 reports. Assuming 3.5 percent of these 33,400 reports are
updated results in 1,169 updates in Year Three. Together, these figures
result in 1,106 updates per year on average over a three-year period.
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\111\ See supra Section V.A.2.ii.a.
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Estimated Time per Response: FinCEN estimates the average burden of
updating BOIRs for reporting companies with simple foreign beneficial
ownership structures as 30 minutes (0.5 hours) per update, which
includes ten 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 foreign beneficial ownership
structures as 90 minutes (1.5 hours) per update, which includes 30
minutes to identify and collect information about beneficial owners or
company applicants and 60 minutes to fill out and file the update.
Estimated Aggregate Reporting Burden Hours: 830 hours per year, on
average.
Using the burden hour estimates described above, FinCEN estimates
that filing updated BOIRs will result in approximately 782 burden hours
for reporting companies in Year One,\112\ 830 burden hours in Year
Two,\113\ and 877 burden hours in Year Three.\114\ The three-year
average annual burden for updated BOIRs is 830 hours.
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\112\ 1,043 total reporting company updates, with 75 percent
(782) taking 0.5 hours and 25 percent (261) taking 1.5 hours,
results in a total of 782 hours in the first year.
\113\ 1,106 total reporting company updates, with 75 percent
(830) taking 0.5 hours and 25 percent (277) taking 1.5 hours,
results in a total of 830 hours in the second year.
\114\ 1,169 total reporting company updates, with 75 percent
(877) taking 0.5 hours and 25 percent (292) taking 1.5 hours,
results in a total of 877 hours in the third year.
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Estimated Aggregate Reporting Cost: $164,588 per year, on average.
FinCEN estimated a range of costs associated with filing an updated
BOIR to account for the likely variance among reporting companies.
Using the hourly wage rates presented in the IFR and discussed
above,\115\ FinCEN estimates the average cost of filing an updated BOIR
per reporting company to range from $32.54 (for companies with simple
foreign beneficial ownership structures) \116\ to $497.63 (for
companies with complex foreign beneficial ownership structures).\117\
Applying the reporting companies' structure distribution explained in
Section V.E.1.a, the estimated total annual cost of updated BOIRs is
$155,213 in Year One,\118\ $164,588 in Year Two,\119\ and $173,963 in
Year Three.\120\ This results in a three-year average annual cost for
updated BOIRs of $164,588.
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\115\ See supra notes 91 and 108.
\116\ For companies with simple foreign beneficial ownership
structures, FinCEN estimated 0.5 hours of labor at a rate of $65.09
per hour.
\117\ For companies with complex foreign beneficial ownership
structures, FinCEN estimated 1.5 hours of labor at a rate of $65.09
per hour, plus one hour of professional assistance from an attorney
or accountant at a rate of approximately $400 per hour.
\118\ 1,043 total reporting company updates, with 75 percent
(782) costing $32.54 and 25 percent (261) costing $497.63, results
in a total of $155,213 in the first year.
\119\ 1,106 total reporting company updates, with 75 percent
(830) costing $32.54 and 25 percent (277) costing $497.63, results
in a total of $164,588 in the second year.
\120\ 1,169 total reporting company updates, with 75 percent
(877) costing $32.54 and 25 percent (292) costing $497.63, results
in a total of $173,963 in the third year.
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2. Individual FinCEN IDs
OMB Control Number: 1506-0076.
Reporting Requirements: The rule continues to require the
collection of information from individuals in order to
[[Page 52527]]
issue them a FinCEN ID.\121\ This is a voluntary collection. The rule
requires individuals to report to FinCEN certain information about
themselves to receive a FinCEN ID, in accordance with the CTA.\122\ 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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\121\ FinCEN is not separately calculating a cost estimate for
entities requesting a FinCEN ID because FinCEN assumes this would
already be accounted for in the process and cost of submitting the
BOI reports.
\122\ 31 U.S.C. 5336(b)(3)(A)(i); 31 CFR 1010.380(b)(4).
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Frequency: As required.
Description of Affected Public: Individuals associated with foreign
reporting companies that elect to request an identifier independent of
the FinCEN ID requested by the associated company as part of its BOIR
submission.
For individuals requesting FinCEN IDs, FinCEN acknowledges that
anyone who meets the statutory criteria could apply for a FinCEN ID
under the rule. However, the primary incentives for individual
beneficial owners to apply for a FinCEN ID 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 who are responsible for registering many
foreign reporting companies may have a similar incentive to request a
FinCEN ID 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.
i. Individual FinCEN ID Applications
Estimated Number of Responses: 4,080 per year, on average.
Based on data from foreign reporting company BOIRs received since
the IFR, FinCEN estimates that there have been an average of six
personal FinCEN IDs associated with each new (foreign) reporting
company. However, FinCEN estimates that approximately only ten percent
of FinCEN ID applications since the IFR have been associated with
foreign persons (as opposed to U.S. persons, who are now exempted from
being reported as company applicants). Based on this data, FinCEN
estimates 10,080 expected FinCEN ID applications in Year One,\123\ and
1,080 in each subsequent year.\124\ This results in a three-year
average of 4,080 applications per year.
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\123\ Six FinCEN ID applications for every BOIR implies 100,800
FinCEN ID applications for the 16,800 BOIRs in Year One. Ten percent
of 100,800 is 10,080.
\124\ Six FinCEN ID applications for every BOIR implies 10,800
FinCEN ID applications for the 1,800 BOIRs in each subsequent year.
Ten percent of 10,800 is 1,080.
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Estimated Time per Response: As discussed in the Reporting
Rule,\125\ FinCEN anticipates that each initial FinCEN ID application
will require approximately 20 minutes (ten minutes to read the form and
understand the information required and ten 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 will be readily available to the person requesting the FinCEN
ID.
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\125\ See Reporting Rule, 87 FR at 59498-99.
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Estimated Aggregate Reporting Burden Hours: 1,360 hours per year,
on average.
Using the estimates described above, FinCEN estimates that filing
FinCEN ID applications in Year One will result in approximately 3,360
burden hours for applicants in Year One,\126\ and 360 burden hours in
each subsequent year.\127\ The three-year average of burden hours for
filing FinCEN ID applications is 1,360 hours.
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\126\ 10,080 total applications, each taking 20 minutes, results
in a total of 3,360 hours in the first year.
\127\ 1,080 total applications, each taking 20 minutes, results
in a total of 360 hours in each subsequent year.
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Estimated Aggregate Reporting Cost: $88,516 per year, on average.
Using the wage rates presented in the IFR and discussed above,
FinCEN estimates the average cost of filing a FinCEN ID application to
be $21.70.\128\ For 10,080 applications in Year One, this results in a
cost of $218,686. For 1,080 applications in each subsequent year, this
results in a cost of $23,431. Thus, FinCEN estimates a three-year
average cost for FinCEN ID applications of $88,516.
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\128\ 20 minutes of labor at a rate of $65.09 per hour. See
supra note 91.
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ii. Individual FinCEN ID Updates
Estimated Number of Responses: 804 per year, on average.
In the two years following the opening of the BO IT System, FinCEN
received approximately 38,000 updates and corrections for a total of
approximately 780,000 active FinCEN IDs--approximately 2.5 percent. As
discussed in Section V.E.2.a, in Year One, FinCEN expects 10,080 total
applications, plus a total of approximately 21,000 existing FinCEN IDs
associated with foreign persons. Assuming 2.5 percent of the
applications are updated, this results in an estimated 777 updates in
Year One.\129\ In each subsequent year, FinCEN expects 1,080
applications. This results in an estimated 804 updates in Year Two and
831 in Year Three.\130\ Thus, FinCEN estimates an average of 804
updates per year.
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\129\ 31,080 applications x 2.5 percent = 777 updates in Year
One.
\130\ 1,080 applications x 2.5 percent = 27 additional updates
in each subsequent year.
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Estimated Time per Response: As discussed in the Reporting
Rule,\131\ FinCEN estimates that updates and corrections will require
10 minutes (approximately 0.17 hours), which includes time to fill out
and file the update, given that the information to be submitted to
FinCEN will be readily available to the person requesting the FinCEN
ID.
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\131\ See supra note 125.
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Estimated Aggregate Reporting Burden Hours: 134 hours per year, on
average.
Using the estimates described above, FinCEN estimates that updating
or correcting FinCEN ID application information will result in
approximately 129.5 burden hours for applicants in Year One,\132\ 134
burden hours in Year Two,\133\ and 138.5 burden hours in Year
Three.\134\ Thus, the three-year average annual burden for updates and
corrections is 134 hours.
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\132\ 777 total updates, each taking 0.17 hours, results in a
total of 129.5 hours in the first year.
\133\ 804 total updates, each taking 0.17 hours, results in a
total of 134 hours in the second year.
\134\ 831 total updates, each taking 0.17 hours, results in a
total of 138.5 hours in the third year.
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Estimated Aggregate Reporting Cost: $8,721 per year, on average.
Using the wage rates presented in the IFR and discussed above,\135\
FinCEN estimates the average cost of filing a FinCEN ID update to be
$10.85.\136\ For 777 updates in Year One, this results in a cost of
$8,429. For 804 updates in Year Two, this results in a cost of $8,721.
For 831 updates in Year Three, this results in a cost of $9,014. Thus,
FinCEN estimates a three-year average cost for updates and corrections
of $8,721.
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\135\ See supra note 108.
\136\ 10 minutes (0.17 hours) of labor at a rate of $65.09 per
hour.
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3. Totals
Estimated Total Reporting Burden Hours: 10,824 hours per year, on
average.
Estimated Total Reporting Cost: $2,175,050 per year, on average.
[[Page 52528]]
No non-labor cost estimates are assigned to these collections of
information because FinCEN assumes that reporting companies already
have the necessary equipment and tools to comply with the regulatory
requirements.
F. 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.\137\
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\137\ 5 U.S.C. 804(2).
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Under the CRA, such a rule generally may take effect no earlier
than 60 days after the rule is published in the Federal Register.\138\
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.\139\ Pursuant to
section 808(2), for the reasons discussed in Section IV: Effective Date
above, FinCEN for good cause finds that providing public notice or
allowing for public comment before this final rule takes effect is
impracticable, unnecessary, and contrary to the public interest.
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\138\ 5 U.S.C. 801(a)(3).
\139\ 5 U.S.C. 808(2).
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G. Executive Order 14294
Section 5 of Executive Order 14294 directs that all future notices
of proposed rulemaking and final rules published in the Federal
Register, the violation of which may constitute criminal regulatory
offenses, should include a statement identifying that the rule or
proposed rule is a criminal regulatory offense and the authorizing
statute.\110\ Executive Order 14294 directs agencies to draft this
statement in consultation with the Department of Justice.
Executive Order 14294 further directs that the regulatory text of
all notices of proposed rulemaking and final rules with criminal
consequences published in the Federal Register after May 9, 202 should
explicitly state a mens rea requirement for each element of a criminal
regulatory offense, accompanied by citations to the relevant provisions
of the authorizing statute.
Willful violations of the regulations set forth in this final rule
may be subject to criminal penalties pursuant to 31 U.S.C. 5336(h) and
regulations promulgated 31 CFR 1010.380(g). The statutory authority for
criminal liability requires a mens rea of willfulness as an element
under 31 U.S.C. 5336(h). In drafting this statement, FinCEN has
consulted with the Department of Justice.
VI. Severability
If any of the provisions of this rule, or the application thereof
to any person or circumstance, is held to be invalid, such invalidity
shall not affect other provisions or application of such provisions to
other persons or circumstances that can be given effect without the
invalid provision or application.
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, Law enforcement, Penalties, Reporting and
recordkeeping requirements, Savings associations, Securities, Small
business, Terrorism, Time.
Amendment to FinCEN Regulations
For the reasons set forth in the preamble, the interim rule
amending 31 CFR part 1010 that was published at 90 FR 13688 on March
26, 2025, is adopted as final with the following changes.
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,
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 (b)(4)(iii)(A);
0
b. Adding paragraph (b)(5); and
0
c. Removing paragraph (d)(4).
The revision and addition read as follows:
Sec. 1010.380 Reports of beneficial ownership information.
* * * * *
(b) * * *
(4) * * *
(iii) * * *
(A) Any individual that has obtained a FinCEN identifier and is not
a United States person shall update or correct any information
previously submitted to FinCEN in an application for such FinCEN
identifier.
(1) If there is any change with respect to required information
previously submitted to FinCEN in such application, the individual that
is not a United States person shall file an updated application
reflecting such change within 30 calendar days after the date on which
such change occurs.
(2) If such application was inaccurate when filed and remains
inaccurate, the individual that is not a United States person shall
file a corrected application correcting all inaccuracies within 30
calendar days after the date on which the individual that is not a U.S.
person becomes aware or has reason to know of the inaccuracy. A
corrected application filed under this paragraph within this 30-day
period will be deemed to satisfy 31 U.S.C. 5336(h)(3)(C)(i)(I)(bb) if
filed within 90 calendar days after the date on which the inaccurate
application was submitted.
* * * * *
(5) Special exemptions. (i) Reporting companies are exempt from any
requirement under 31 U.S.C. 5336 and this section to report the
beneficial ownership information of any United States persons who are
beneficial owners or company applicants.
(ii) United States persons are exempt from any requirement under 31
U.S.C. 5336 and this section to provide beneficial ownership
information with respect to any reporting company for which they are
beneficial owners or company applicants.
* * * * *
Andrea M. Gacki,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2026-16576 Filed 8-13-26; 8:45 am]
BILLING CODE 4810-02-P