The Corporate Transparency Act (CTA) has undergone significant changes since its implementation in January 2024. On March 26, 2025, the U.S. Department of the Treasury (Treasury) and the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that narrowed the scope of entities subject to beneficial ownership information (BOI) reporting requirements. This revision aims to reduce compliance burdens on U.S. businesses while maintaining national security and law enforcement objectives.
Key Changes in 2025
- Narrowing of Scope: The interim final rule explicitly exempted "domestic reporting companies" from the term "reporting company," effectively limiting reporting obligations to foreign entities formed under foreign laws and registered to do business in the U.S.
- Exemptions: The rule maintained several exemptions, including the large operating company exemption (entities employing more than 20 full-time employees in the U.S., maintaining a physical operating presence, and reporting gross receipts over $5 million), U.S. Securities and Exchange Commission (SEC)-regulated and investment adviser exemptions, and pooled investment vehicle exemptions.
- Legislative Efforts: Congress proposed legislation (S.4419 and H.R. 425) to repeal or limit CTA reporting obligations for many privately held entities, though the outcome remains uncertain.
- OMB Review: On June 5, 2026, the Office of Management and Budget (OMB) received FinCEN’s final rule for review.
Who Must Report?
- Foreign Reporting Company: An entity that is formed under foreign laws and registered to do business in a U.S. state or tribal jurisdiction.
- Exemptions: The 23 exemptions remain in place and continue to play a crucial role in determining reporting obligations. Relevant exemptions for family offices include the large operating company exemption, SEC-regulated and investment adviser exemptions, and pooled investment vehicle exemptions.
Examples of Structures Potentially Subject to Reporting
- Foreign Holding Companies: A Cayman Islands holding company registering in Delaware to manage U.S. real estate investments.
- Foreign Investment Vehicles: A Luxembourg investment vehicle registering to conduct business activities in the U.S.
- Foreign Operating Companies: A foreign operating company owned by a family trust registering in Texas to conduct business operations.
Examples Generally Outside the Reporting Regime
- Tax-Exempt Entity Exemption: Private foundations and certain charitable organizations may qualify.
- Subsidiary Exemption: Certain entities wholly-owned or controlled by exempt entities may also qualify.
Information Must Be Reported
- Company Information: Legal name, jurisdiction of formation, U.S. registration information, principal business address, and tax identification information.
- Beneficial Owners: Information about beneficial owners who are not U.S. persons, including full legal name, date of birth, residential address, and a unique identifying number.
Why This Matters for Family Offices
- Family offices frequently utilize international structures that may remain within the CTA’s scope, such as offshore holding companies, foreign family investment vehicles, and cross-border real estate structures.
- The assessment now focuses on whether a foreign entity has registered or may be required to register to do business in the U.S., as the revised reporting framework is tied to registration status.
Conclusion
The revised CTA reporting framework significantly narrows the scope of entities subject to BOI reporting, primarily targeting foreign entities operating in the U.S. Family offices should carefully evaluate whether their foreign entities meet the criteria for "foreign reporting companies" and remain aware of the exemptions that may apply.
