Treasury suspends enforcement of beneficial ownership requirements for US businesses

The US Treasury Department has suspended enforcement of the Corporate Transparency Act (‘CTA’) beneficial ownership reporting requirements for US citizens and domestic companies, according to a 2 March announcement.

‘The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either,’ the department stated.

Treasury will issue a proposed rulemaking to narrow the scope of the rule to foreign reporting companies only, describing the move as supporting ‘hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.’

Treasury had previously set a 21 March deadline for businesses to report beneficial ownership information or risk civil and criminal penalties.

‘This is a victory for common sense,’ US Secretary of the Treasury Scott Bessent said about the suspension. ‘Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy.’

Trump celebrated the decision on his Truth Social atform, writing: ‘Exciting news! The Treasury Department has announced that they are suspending all enforcement of the outrageous and invasive Beneficial Ownership Information (BOI) reporting requirement for U.S. Citizens. This Biden rule has been an absolute disaster for Small Businesses Nationwide.’

The CTA was enacted in January 2021 to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific US businesses operating in or accessing the country’s market, according to the US Chamber of Commerce.

Moody’s had previously noted: ‘BOI helps you establish trust with legitimate businesses and business owners; contributes to understanding risk exposure in relation to, for example, higher risk jurisdictions, sanctioned individuals, or politically exposed persons; and it can help reveal when an entity sits outside risk-tolerance, so the relationship can be ended.’

https://home.treasury.gov/news/press-releases/sb0038

https://truthsocial.com/@realDonaldTrump/posts/114096106742782827

https://www.uschamber.com/co/start/strategy/small-business-corporate-transparency-act#:~:text=The%20CTA%20was%20enacted%20in,or%20accessing%20the%20country’s%20market

https://www.moodys.com/web/en/us/kyc/resources/insights/7-things-to-know-about-us-beneficial-own ership-information-boi-reporting.html