By Bart Statowski, Director of Advisory Services

On February 18, 2025, the U.S. District court for the Eastern District of Texas issued a decision that affects beneficial ownership information reporting requirements under the Corporate Transparency Act (CTA). The Financial Crimes Enforcement Network (FinCEN) has extended the deadline for compliance with the beneficial ownership information reporting requirements by 30 days to March 21, 2025. The deadline has been extended to give companies more time to comply with the reporting requirements and provide FinCEN with more time to review and revise reporting requirements for small businesses. The agency has also stated it will assess the possibility of further modifying the deadline.

What Information Needs to be Reported?

Companies that are required to report by March 21, 2025, must provide their legal name, address, and tax identification number. Along with this information, the beneficial owners of a company need to provide their name, date of birth, address and a copy of their identification document.

What are the Penalties for Non-Compliance?

Companies and owners that fail to comply with the requirements may be subject to fines up to $10,000 and criminal penalties. The agency stated that its priority for enforcement would be entities that pose the most significant national security risks.

Next Steps

Financial institutions that are planning to use the database in the future to verify the beneficial ownership status of their customers will have to assess the risk of using the database and maintain in place current beneficial ownership collection processes. Also, the rules still create overlap and redundancy as businesses may have to provide the same information to both financial institutions and FinCEN. Overall, organizations should be prepared to understand the risk posed to their internal operations, and the reporting challenges faced by their customers.