After delays and legal challenges, the Corporate Transparency Act (CTA) now requires U.S. businesses to submit beneficial-owner reports to the Financial Crimes Enforcement Network (FinCEN), marking a significant advance in domestic anti-money laundering regulation. The policy, first enacted in 2021 and refined by rulemaking in late 2022, officially entered full enforcement on July 19 for both existing and newly formed companies, obliging them to disclose individuals holding substantial ownership or control.
This long-awaited mandate aims to increase transparency in corporate ownership and combat the misuse of shell companies in illicit financial activities. Reporting companies—generally corporations, LLCs, and similar entities formed or registered in the U.S.—must now provide FinCEN with beneficial-owner data such as name, date of birth, address, government ID number, and a copy of the document used to verify their identity. The law defines a beneficial owner as anyone owning at least 25% of an entity or having substantial control over it.
The initial January 1 deadline for pre-existing companies, along with the 90-day deadline for those formed in 2024, were reinstated following court decisions. In December 2024, a Texas district court granted a nationwide injunction, but the Fifth Circuit lifted that injunction on December 23, declaring that enforcement must resume, and backing the January 1, 2025 deadline for entities in existence as of January 1, 2024. Despite legal uncertainty, multiple rulings maintained that compliance was required and penalties could be enforced.
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In March 2025, FinCEN issued an interim final rule which redefined the scope of reporting companies to include only foreign entities registered in the U.S. and exempted domestically created businesses from reporting It also delayed penalties, stating that U.S.-domestic firms and their beneficial owners would not face fines until new deadlines became active. The new deadlines require foreign-reporting companies pre-registered before March 26 to file by April 25, 2025, while newly registered ones must file within 30 days of their registration becoming effective.
Nevertheless, FinCEN has publicly paused enforcement of penalties for domestic entities, signaling the rule’s evolving nature. Such temporary relief aims to give businesses time to adjust as legal landscapes shift.
Legal practitioners emphasize that despite shifting rules, businesses cannot afford complacency. Firms existing before January 1, 2024, faced deadlines and penalties; noncompliance carries civil fines up to $500 per day, criminal fines of $10,000, and potential imprisonment for two years. Experts caution that small and medium enterprises might lack the internal resources to identify reporting requirements, collect personal data, and submit BI reports accurately.
“Companies must now be far more proactive and informed about their ownership structures,” noted one compliance attorney. Noncompliance may lead not only to enforcement action, but also to reputational harm, industry experts warn. Indeed, The National Small Business Association, which obtained a temporary exemption for its members, continues to oppose the CTA as burdensome.
In response, law firms and in-house counsel have stepped in to provide guidance. Firms offering CTA compliance services stress due diligence—from mapping corporate structures to collecting and updating beneficiary data—as critical tasks in meeting FinCEN’s standards. These services include preparing functional internal reviews, training staff, and establishing monitoring protocols in case of ownership changes.
The broader significance of this regulatory rollout extends beyond compliance alone. The CTA aligns the U.S. with international expectations for transparency and anti-money laundering measures. By creating a centralized FinCEN database (accessible to authorized agencies), the rule puts pressure on shell companies to operate with more accountability and on professionals to diligently check ownership data before facilitating transactions.
Despite the already long compliance process, ongoing court appeals and FinCEN’s enforcement pause signal that confusion may continue. Yet advisors urge businesses to treat the disclosure process as an urgent priority. “Waiting until the last minute could result in rushed compliance efforts if the stay is lifted”.
In the coming months, FinCEN will likely finalize regulations defining access protocols and when domestic entities become subject to reporting. Businesses should monitor the process for rule updates, court rulings, and implementation timelines.
In summary, the CTA’s July 19, 2025 implementation represents a major inflection point in U.S. corporate transparency law. With strong penalties in place, companies must act now—even amid legal uncertainty—to assess ownership structures, compile accurate data, and file beneficial-owner reports. Advisors stand ready to assist in meeting these new requirements and navigating evolving compliance landscapes.
