Treasury Pauses Enforcement of Corporate Transparency Act for U.S. Companies

This article is from The National Law Review: https://ow.ly/v8ie50ViuIB

In a major development for American businesses, the U.S. Treasury Department announced on March 2, 2025, that it will temporarily suspend enforcement of penalties related to the Beneficial Ownership Information (BOI) reporting rule under the Corporate Transparency Act (CTA). This decision comes after a series of legal challenges and regulatory confusion, ultimately offering relief to millions of small and midsize U.S. businesses.

What This Means for Domestic Companies

Under the original CTA framework, most domestic companies—particularly those with fewer than 20 full-time employees and less than $5 million in revenue—were required to submit detailed ownership information to the Financial Crimes Enforcement Network (FinCEN). The rule was designed to enhance corporate transparency and deter illicit financial activities.

However, amid legal uncertainty and a nationwide injunction (later stayed), the Treasury’s latest move effectively pauses the reporting obligation for now. According to the press release, no fines or penalties will be imposed on U.S. citizens or domestic reporting companies, giving companies additional time to understand the rules and prepare for future requirements.

This pause is expected to provide significant breathing room for businesses struggling with the complexity and cost of compliance.

Foreign Companies in the Spotlight

While U.S. businesses receive a temporary reprieve, the Treasury signaled a clear shift in focus: enforcement will now be concentrated on foreign reporting companies. New regulations are expected in the coming months to formally narrow the scope of the CTA, with a renewed emphasis on international entities that pose higher transparency risks.

This shift suggests that while domestic companies can relax—for now—foreign businesses should brace for increased scrutiny under FinCEN’s evolving enforcement approach.

What’s Next?

The future of the Corporate Transparency Act is still unfolding. While domestic companies are temporarily off the hook, the CTA is still law, and the Treasury’s current stance could change. Businesses should continue to monitor regulatory updates and be prepared to comply once new guidance is issued.

For now, however, this announcement brings a welcome pause—and a chance for businesses to reassess their compliance strategy without the immediate threat of penalties.