The U.S. Treasury Department’s financial crimes unit, FinCEN, has issued a new rule limiting a key provision of the 2021 Corporate Transparency Act, a law designed to combat illicit financial activity.
According to a notice in the Federal Register, the rule, which takes effect immediately, exempts domestic companies from the requirement to report beneficial ownership data to the government. However, foreign reporting companies must still comply, with most facing a reporting deadline of March 21.
This decision marks a shift in policy under the administration of Republican President Donald Trump, which has moved to scale back anti-corruption measures. Earlier this month, the Treasury Department announced that it would not enforce penalties under the 2021 law against U.S. citizens or domestic firms.
The original reporting requirement was introduced under former President Joe Biden as part of broader efforts to crack down on corruption and money laundering. FinCEN had previously outlined plans to collect beneficial ownership data from certain companies to enhance financial transparency.
In defense of the exemption, U.S. Treasury Secretary Scott Bessent stated, “It is important to rein in burdensome regulations to the benefit of hard-working American taxpayers and small businesses.”
Under the original rule, a beneficial owner is defined as any individual who owns at least 25% of a company, holds a majority of voting power, or exercises “substantial control” over the entity.
FinCEN is now accepting public comments on the revised rule, with a deadline set for May 27.
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