FinCEN BOI Reporting and Texas Court Decision

There has been an important development that concerns business owners in the USA. A federal court in Texas has ruled that the Corporate Transparency Act (CTA) is unconstitutional, allowing businesses to stop filing anti-money laundering (AML) reports to the Treasury Department's Financial Crimes Enforcement Network (FinCEN) scheduled for 2025 .

CTA and BOI Reporting Requirement

The Corporate Transparency Act, which took effect in 2021, required all businesses operating in the United States to report company beneficiary ownership information (BOI) to FinCEN. In this context:

• Businesses had to share information about people with 25% or more ownership.
• The information to be reported included people's name, date of birth, address, and copies of their identification documents (driver's license or passport).
• An estimated 37 million businesses were expected to file these reports.
• The deadline was December 31, 2024, and the reporting requirement would continue for companies to be formed subsequently.

Texas Court Decision

Growing opposition to the rule reached a major turning point with a Texas court decision to halt it. The court ruled that the regulation was unconstitutional and prevented this obligation, which is a serious administrative burden for businesses, from coming into force.

ruled that the CTA and BOI Reporting Rule
likely Judge Mazzant added that he has not yet “made an affirmative finding that the CTA and [BOI] Reporting Rule are unlawful or violate the Constitution.” However, based on his finding that the CTA and the Reporting Rule were likely unconstitutional, District Judge Mazzant ruled that FinCEN should be enjoined from enforcing the BOI Reporting Rule and that the January 1, 2025 compliance deadline under the BOI Reporting Rule should be postponed.

Future Processes

For detailed information about the court decision, you can review the following sources:

1. https://www.sidley.com/
2. winston.com

Following this decision, uncertainty remains for compliance professionals and business owners. The Treasury Department and FinCEN are expected to appeal the decision to the Supreme Court. If the decision is not overturned during this process, the CTA's BOI reporting requirement may become completely invalid. In this context, taking into account the warning on Fincen's website, reporting is no longer necessary; it can still be done optionally, but there is no reporting requirement until the court process is completed.

Recommendations for Businesses

Although the Texas court's decision provides relief for business owners, it is important to wait for the legal processes to be completed. The following steps are recommended for business owners:

1. Follow Developments: Regularly monitor FinCEN and courts' statements.
2. Seek Counsel: Engage with compliance and legal professionals.
3. Keep Your Documents Ready: Be prepared for possible new regulations and follow the finden website

This important development should be monitored carefully not only for businesses operating in the United States, but also for international compliance standards.

Message on Fincen website about the issue

In summary, according to the information from Fincen;

In light of the recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so as long as the order remains in effect. However, reporting companies may continue to voluntarily provide useful proprietary information reports.

Source: https://fincen.gov/boi

You can follow the information we will provide about the developments on the subject.