FinCEN Beneficial Ownership Reporting: Where the CTA Stands in 2026

The original CTA framework (as operational from 1 January 2024 until the March 2025 interim final rule) required:

• Reporting companies. Corporations, limited liability companies and other entities created by filing a document with a US state secretary of state, plus foreign entities registered to do business in any US state. The definition was broad — most US corporate forms were in scope.
• Exemptions. 23 categories of exempt entities, including SEC-reporting public companies, regulated financial institutions, large operating companies (over 20 full-time employees in the US and over $5 million in US-source revenue), tax-exempt entities, and dormant entities. Exempt entities did not have to file BOI reports.
• Beneficial owner identification. Natural persons exercising 'substantial control' over the reporting company (senior officers, directors with meaningful authority, persons with significant decision-making power) and natural persons owning or controlling 25% or more of the ownership interests. Both categories had to be identified and reported.
• Reportable information. Full legal name, date of birth, current residential address, and unique identifying number from an acceptable identity document (typically passport or driver's license), with a scan of the document. Reported through FinCEN's BOI E-Filing System.
• Reporting timeline. Entities existing before 1 January 2024 had until 1 January 2025 to file initial reports. Entities formed on or after 1 January 2024 had 30 days from formation to file. Updates to reported information required within 30 days of any change.
• Penalties. Civil penalties up to $500 per day for willful violations; criminal penalties up to $10,000 and two years' imprisonment for fraudulent reporting. Substantial penalties drove material compliance investment by reporting entities.

The framework was designed to align US beneficial ownership transparency with FATF Recommendation 24 expectations. FATF's Mutual Evaluation of the US had specifically identified the absence of a beneficial ownership register as a deficiency; the CTA was the policy response.

The March 2025 interim final rule (formally 'Beneficial Ownership Information Reporting Requirements; Interim Final Rule' published at 90 Fed. Reg. 13,688) made the following substantive changes:

• US-formed entities removed from scope. Reporting companies as defined in the original rule no longer include US-formed entities. Domestic corporations, LLCs and similar entities created in US states are not subject to BOI reporting obligations under the current regime.
• Foreign-formed entities remain in scope where registered to do business in US. Entities formed outside the US that register to do business in any US state (typically through filing a certificate of authority or equivalent) are reporting companies. The scope captures the foreign-entity-doing-US-business pattern that was a substantive concern in the original framework.
• Non-US-person beneficial owners only. Of the beneficial owners of in-scope foreign entities, only those who are not US persons are required to be reported. US-person beneficial owners (US citizens, US residents) are excluded from the reporting obligation even when they are beneficial owners of in-scope foreign entities.
• Continued reporting obligations for in-scope entities. Where an entity remains in scope, the previously-established reporting obligations continue — initial reports within 30 days of registration to do business in the US, updates within 30 days of changes.
• Existing reports preserved. Entities that filed BOI reports prior to the March 2025 rule are not required to take action to withdraw the reports; FinCEN maintains the data subject to the access framework that applies to the registry.

The operational impact is substantial. The original CTA was projected to require reports from approximately 32 million US-formed entities. The narrowed regime applies to a much smaller population — foreign-formed entities doing business in US states, estimated at a small fraction of the original scope.

Five operational priorities for compliance teams navigating the current state:

• Update KYC/KYB beneficial ownership methodology. Where workflows had been designed around BOI registry verification, they should now revert to the established methodology of self-declaration plus independent verification against state-level corporate records, commercial UBO databases, and public sources. The verification rigour expected of regulated firms is unchanged; the source mix has changed.
• Track regulatory developments closely. The litigation is ongoing and the regime is subject to further change. Compliance teams should monitor FinCEN announcements, federal court rulings and Treasury Department guidance, with the operational implications integrated into the firm's policy and procedure updates promptly.
• Maintain BOI reporting for in-scope foreign entities. Foreign-formed entities doing business in US states should continue to file BOI reports as required. The reporting infrastructure, the 30-day timelines, and the penalty framework remain operational for in-scope entities.
• Document the policy basis for KYB approach. Where regulated firms are operating KYB workflows on US corporate customers, the documentation should reflect the current state of the BOI regime and the firm's approach to beneficial ownership verification. Inspections will likely focus on whether the methodology is appropriate given the regulatory environment.
• Engage with industry forums on emerging guidance. The ACAMS, BAFT and ABA AML compliance forums have been actively tracking the CTA developments. Engagement through industry bodies provides early visibility into emerging FinCEN positions and supervisory expectations.

For broader regulatory context across major jurisdictions see our MAS Notice 626, 6AMLD, and FATF Grey List 2026 guides — and for KYB platform context our KYB solution overview.