U.S. corporate beneficial ownership reporting rollback

The U.S. Treasury Department has finalized a rule to eliminate beneficial ownership reporting requirements for domestic companies and U.S. persons, rolling back a central component of the 2021 Corporate Transparency Act. Under the new regulations, the Financial Crimes Enforcement Network (FinCEN) will no longer require U.S. businesses to disclose owners’ names, addresses, or identifying documents, and will delete previously collected information belonging to U.S. business owners from its database.

Treasury Secretary Scott Bessent described the move as a way to “eliminate burdensome red tape” and fulfill a promise to reduce regulatory costs for small businesses. While U.S.-created companies are now generally exempt, foreign companies registered to do business in the United States must still disclose beneficial ownership information for foreign individuals. Additionally, foreign entities are exempt from reporting information regarding U.S. citizens who assist with registration, and foreign pooled investment vehicles are exempt from disclosing ownership details of U.S. persons in control.

The decision has faced criticism from lawmakers, including Senators Chuck Grassley and Sheldon Whitehouse, who argue the rollback undermines the law’s intent to help investigators track human trafficking, terrorist financing, drug distribution, and sanctions evasion. As of March, the FinCEN database contained approximately 16.4 million reports.