The State of Corporate Transparency After FinCEN’s August 11, 2026 Final Rule

Congress enacted the Anti-Money Laundering Act of 2020, which included the Corporate Transparency Act (“CTA”), as part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021. Public Law 116-283 (2021). The intent was to facilitate law enforcement in investigating and prosecuting financial crimes, money laundering, the financing of terrorism, and other illicit uses and activities carried out through anonymous business entities and companies operating within the United States. The CTA required reports to be filed with the US Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) including entity information and identification of the beneficial owners of domestic and foreign corporations, limited liability companies, and other covered legal entities. FinCEN then published regulations implementing the beneficial ownership reporting requirements of the CTA on September 30, 2022, codified at 31 CFR 1010.380.

Importantly, the Corporate Transparency Act has now been substantially narrowed in its scope and effect, and likely its effectiveness—but not abolished entirely—so compliance is still required for certain foreign entities registered to do business in the U.S. and owners who are not “United States persons” (as defined under Section 7701(a)(30) of the Internal Revenue Code). While the CTA’s database will no longer contain BOI reported by  U.S. companies or information concerning U.S. persons who are  beneficial owners or company applicants, the BOI reporting system remains in place for foreign entities that continue to qualify as Reporting Companies and their non-U.S. beneficial owners. The CTA in Brief Summary

Taking effect January 1, 2024, the CTA regulations required foreign and domestic business entities, unless exempted under the regulations, to file reports of Beneficial Ownership Information (“BOI”) about the “Reporting Company”, its “Beneficial Owners”, and other details. For Reporting Companies existing before 2024, BOI reports were to be due on or before January 1, 2025. Under the original regulations, reporting companies existing before January 1, 2024, generally had until January 1, 2025, to file initial BOI reports. Entities created or registered during 2024 generally had ninety days of formation to file, while entities created or registered beginning January 1, 2025, generally had thirty days of the Reporting Company’s date of formation. Under the original regulations, certain individuals involved in forming or registering new Reporting Companies were also required to be reported as “Company Applicants”. FinCEN initially estimated there would be roughly 32,600,000 total Reporting Companies in 2024 and estimated that about 5,000,000 new entities would be created each year. See 87 Fed. Reg.  59498, , 59585 (Sept. 30, 2022).

The rules specified certain exemptions from filing BOI reports and exclusions from being a Beneficial Owner, established filing processes and substance of the reports, set timeframes for submitting or updating BOI reports, and implemented civil and criminal penalties for non-compliance. Periodic reports were not required after the initial submission, unless changes occurred or were needed to correct any errors in the information previously reported.

On Again, Off Again, Off, On, Off

Not surprisingly, numerous legal challenges to the CTA and its regulations ensued, and some—but not all plaintiffs—had varying degrees of success in U.S. federal courts.

On March 1, 2024, the U.S. District Court for the Northern District of Alabama held the CTA to be unconstitutional, but only as to the plaintiffs in the case before it. National Small Business United d/b/a the National Small Business Association (the “NSBA”) and Isaac Winkles, an NSBA member and business owner, had argued that the CTA was not a necessary or proper means of regulating interstate commerce, overseeing foreign affairs, or imposing federal taxation, and that the CTA therefore exceeded Congress’s legitimate legislative powers. The court agreed but issued an order that did not enjoin or suspend BOI reporting obligations as to all Reporting Companies, just as to those specific plaintiffs. The court’s opinion also seemed to suggest ways that it believed Congress could amend the CTA to thereafter “pass constitutional muster.” National Small Business United v. Yellen, No. 5:22-cv-01448, 2024 U.S. Dist. LEXIS 36025, at *55, *59 (N.D. Ala. Mar. 1, 2024).

On December 3, 2024, the United States District Court for the Eastern District of Texas found certain of a plaintiff’s arguments sufficiently plausible and likely to prevail on the merits so as to issue a nationwide injunction against enforcement of the CTA. Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478, 2024 U.S. Dist. LEXIS 218294 (E.D. Tex. Dec. 3, 2024). The government appealed, and on December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit stayed the injunction to allow enforcement, pending litigation on the CTA’s validity and constitutionality. Texas Top Cop Shop, Inc., No. 24-40792 (5th Cir. Dec. 23, 2024). The same court, however, reversed and vacated the December 23 order just days later, putting the injunction against enforcement back into effect on December 26, 2024.

Meanwhile, the same district court issued a separate injunction on January 7, 2025, in a different case—Smith v. United States Department of the Treasury, No. 6:24-CV-336, 2025 U.S. Dist. LEXIS 2321 (E.D. Tex. Jan. 7, 2025). Then, on January 23, 2025, the U.S. Supreme Court once again stayed the Texas Top Cop injunction, McHenry v. Texas Top Cop Shop, Inc., No. 24A653, 145 S. Ct. 1 (Jan. 23, 2025), although enforcement of the CTA requirements was still enjoined by the injunction in the Smith case.

With the subsequent change of Executive Branch administration in January 2025 came a shift in Treasury Department policy. On February 18, the Smith court lifted its injunction, but FinCEN announced in a press release that same day that the BOI filing deadline of January 1, 2025, would be postponed to March 21, 2025. FinCEN also stated its intent to “assess its options to further modify deadlines” and proceed to “revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.” See FinCEN, Notice, FinCEN Extends Beneficial Ownership Information Reporting Deadline by 30 Days; Announces Intention to Revise Reporting Rule (Feb. 18, 2025). Accordingly, on March 21, 2025, FinCEN issued an interim final rule (“IFR”) that redefined a “Reporting Company” for CTA purposes to mean only entities formed outside of the U.S. that had or would later register to do business in U.S. jurisdictions, and restated BOI reporting requirements to apply only to non-United States-person beneficial owners of such entities. 31 CFR § 1010.380(c)(1)(ii), (d)(4).

The Final Rule

As of August 11, 2026, FinCEN has adopted the March 2025 IFR as permanent, with additional changes relating to U.S. persons who are company applicants and U.S. persons who have obtained FinCEN identifiers. . The Final Rule will be effective upon its publication in the Federal Register, still pending at the time of this article. See U.S. Dept. of Treasury, Press Release, FinCEN Permanently Ends Beneficial Ownership Reporting Requirements for Millions of Small Business Owners, (last visited Aug. 12, 2026).

The Final Rule officially exempts any entities formed in the U.S. from BOI reporting obligations under the CTA and eliminates the obligation for any foreign Reporting Companies to report BOI for any Beneficial Owners who are United States persons. It also, among other provisions, eliminates obligations to report United States persons as Company Applicants, if any, both for the Reporting Company and as to the Company Applicants themselves; and  exempts United States persons who previously obtained a “FinCEN ID” (a unique identifying number for purposes of BOI reports and filing processes) from obligations to report any errors or changes in the information provided for issuance of a FinCEN ID. Notably, FinCEN will also work in conjunction with the National Archives and Records Administration to delete previously reported personal and identifying information of U.S. person Beneficial Owners, Company Applicats, or FinCEN ID holders from its database, if reasonably believed to be a United States person. See FinCEN, Beneficial Ownership Information Reporting Requirement Revision,  (last visited Aug. 12, 2026).

Some Transparency Still Required

Importantly, separate instances requiring disclosure of ownership information still apply. For foreign Reporting Companies and non-United States-person Beneficial Owners of those foreign entities, the Final Rule does not eliminate BOI reporting obligations or the CTA’s penalties for violations, nor does it eliminate the reporting process and administrative infrastructure. Compliance with the rules is still mandatory for those entities to which, and persons to whom, the CTA and its regulations still apply. Relatedly, the Final Rule expressly does not alter information collection obligations under the Customer Due Diligence Rule and the Bank Secrecy Act, as applicable to covered financial institutions. See, e.g., 31 U.S.C. § 5318 and 31 CFR § 1010.210.

State-level disclosure obligations continue to varying degrees for entity formation filings, entity maintenance, and amendment filings, and periodic reporting, separately and independently from the CTA. —New York’s Limited Liability Transparency Act is one a notable example of exception of a state-level approach to beneficial ownership disclosure.See NY CLS LLC § 215.

At the federal level, however, the United States will now reverse course and go without the CTA’s intended, centralized database of Beneficial Ownership Information for millions of domestic entities doing business within its borders.      

Reprinted with permission from the August 19, 2026, issue of The Legal Intelligencer. © 2026 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.