As discussed in our last Corporate Transparent Act (CTA) update, the U.S. Treasury Department announced on March 2 that it planned to issue an interim rule excluding U.S. companies and citizens from CTA reporting obligations. The Financial Crimes Enforcement Network (FinCEN) has now done so, limiting the scope of the CTA to non-U.S. parties. This will dramatically reduce the operational burdens and costs of the CTA for registered investment advisers.

We noted in our last Corporate Transparent Act (CTA) update that on February 27, 2025, the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department, announced that it would not take any enforcement actions against any company that does not file or update beneficial ownership information required under the CTA until after FinCEN issued a new interim rule.  The Treasury Department announced yesterday that it will not enforce any penalties or fines against “U.S. citizens or domestic reporting companies or their beneficial owners” for not filing this information even after the new interim rule.  Instead, the Treasury Department said that it will issue a proposed rulemaking “that will narrow the scope of the rule to foreign reporting companies only.” 

Amid various ongoing litigation concerning the constitutionality of the Corporate Transparency Act (CTA), the U.S. Financial Crimes Enforcement Network (FinCEN) had announced on February 19, 2025, that it was extending the CTA beneficial ownership information filing deadline for most companies to March 21, 2025 (see Client Alert here).  Now, FinCEN has taken a step further, announcing yesterday “that it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update” any reports mandated by the CTA.  According to FinCEN, “no enforcement actions will be taken, until a forthcoming interim final rule becomes effective.”  FinCEN states that it will issue the interim rule no later than March 21, 2025, and the new rule will establish new CTA filing deadlines. 

As previously reported (see CTA client alert), on January 23, 2025, in Texas Top Cop Shop v. Bondi, the U.S. Supreme Court stayed an injunction barring enforcement of the Corporate Transparency Act (CTA), but a different Texas trial court’s injunction remained in place.  On February 18, that second court, in Smith v. United States Department of the Treasury, lifted its injunction against CTA enforcement, relying on the Supreme Court ruling.  Oral argument in Texas Top Cop Shop remains scheduled before the Fifth Circuit on April 1, 2025.

As of our last client update on the Corporate Transparency Act (CTA) litigation (see CTA client alert), the U.S. Supreme Court, in an 8-1 ruling, lifted a nationwide injunction issued by a Texas trial court in Texas Top Cop Shop v. Bondi that had blocked CTA enforcement, but another nationwide injunction issued by another Texas trial court in Smith v. United States Department of the Treasury continued to stall CTA implementation. Now, the new Trump Administration, in its first formal actions related to the CTA litigations, (i) on February 5, filed a notice of appeal and motion to stay the injunction in Smith, and (ii) on February 7, filed a brief supporting the constitutionality of the CTA in Texas Top Cop Shop. Given the Supreme Court’s decision in Texas Top Cop Shop to lift the injunction against CTA enforcement, we believe the government’s effort to stay the injunction in Smith is likely to succeed.