U.S.-FORMED ENTITIES ARE EXEMPT FROM BUSINESS OWNERSHIP INTEREST REPORTS UNDER CORPORATE TRANSPARENCY ACT

Since the 2021 adoption of the Corporate Transparency Act (CTA) to improve enforcement of laws on money laundering, the beneficial owners of U.S. and foreign business entities doing business in the U.S. have been subject to “beneficial ownership interest reporting” (“BOIR”) requirements.  Happily, as of August 14, 2026, final rules have been narrowly limited. 

What is the U.S. Corporate Transparency Act?

Enacted in 2021, the Corporate Transparency Act (CTA) was intended to help administer anti-money laundering (AML) laws.  Instead, it became a potential nightmare for over 32 million U.S. small businesses and their owners. The CTA is administered by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

After litigation challenging its rules, on March 21, 2025, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) adopted an interim final rule that all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners are now exempt from the Corporate Transparency Act (CTA) requirement to report beneficial ownership information (BOI) to FinCEN. 

This interim final rule retained the requirement for foreign reporting companies, and their beneficial owners (excluding U.S. persons), to report their BOI to FinCEN.  Reporting must be filed 30 days after their registration to do business in the United States.  Foreign companies are subject to the CTA Reporting Rule only if they register to do business in the United States.   As finalized as of August 14, 2026, the interim final rule exempted foreign reporting companies from having to report the BOI of any U.S. persons who are beneficial owners of a foreign reporting company.

Exemptions from BOI reporting are now applicable to:

  • All U.S.-organized legal entities, regardless whether owned by U.S. or foreign shareholders.
  • U.S. persons who are beneficial owners of U.S. legal entities.
  • U.S. shareholders of foreign-organized legal entities registered to do business in the U.S.
  • Foreign reporting companies who have U.S. person beneficial owners. 

Under the final rule adopted as of August 14, 2026, only the following persons must file BOI reports:

  • Foreign business entities that register to do business in the U.S. (“any entity formed under the law of a foreign country and registered to do business in any State or tribal jurisdiction by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe”).
  • Foreign owners of foreign  business entities registered to do business in the U.S.

Plan ahead.  If your foreign business wants to sell goods or services to the United States, you can establish a new subsidiary that will be exempt from BOI reporting.  Instead of registering your foreign legal entity in the U.S. with a state government or Indian tribe, you can incorporate a U.S. legal entity in any state.  The new legal entity and its U.S. shareholders will be exempt from BOI reporting as from August 14, 2026.

Effective January 1, 2026, non-exempt limited liability companies that were formed under the law of a foreign country and which are authorized to do business in New York, are required to file beneficial ownership interest reports with the New York Department of State.  Such initial and annual disclosure statements must disclose the names and other personal identifying information of those who own 25% or more and/or “substantial control” the foreign limited liability company.  This includes dates of birth, personal address and identifying numbers from passports, driver’s licenses or other governmental ID card. See NYS LLC Act 1106-08.

Such requirements apply to foreign limited liability companies, such as an SaRL, GmbH, SRL or godo kaisha (合同会社.)

If you have any questions, please contact us.