US Treasury Department suspends enforcement of BOI reporting, says it plans narrow mandate's scope

The US Department of Treasury on Sunday announced it would not enforce the Biden-era Corporate Transparency Act, which requires millions of domestic businesses to declare their real beneficial owners.

The current administration under President Donald Trump has opposed the "beneficial ownership information (BOI)" reporting requirement, which was enforced through the Corporate Transparency Act.

Why was BOI reporting introduced?

The Trump administration's opposition has been based around the notion that the reporting requirement is a burden on low-risk entities, as per news agency Reuters. The Corporate Transparency Act was enacted in 2021 with the objective of combatting shady financing and formation of shell companies. BOI reporting mandates small-scale businesses to disclose to the Treasury Department's Financial Crimes Enforcement Network (FinCEN) the identity of individuals who directly or indirectly own them.


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Treasury plans to narrow down BOI’s scope

While making the announcement, the Treasury said it would not levy any fines or penalties on domestic reporting companies or American citizens under the Corporate Transparency Act. "The Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses," it said in a statement. The Treasury, however, added that it intends to bring in a rule that will leave only foreign reporting companies under the ambit of the anti-money laundering law.

"Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy,” said Secretary of the Treasury, Scott Bessent.

Treasury’s earlier BOI reporting deadline

The anti-money laundering legislation has encountered repeated legal challenges. In late February, the Treasury had announced March 21 as the deadline for businesses to comply under BOI reporting requirements or risk a maximum penalty of $591 per day or criminal fines of up to $10,000. The deadline announcement reportedly came after several court delays. The failure to comply could also result in a two-year prison sentence. CNBC cited federal estimates to report that the BOI reporting requirement could apply to roughly 32.6 million businesses.

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FAQs

What is BOI reporting?
The beneficial ownership information (BOI) reporting requirement was introduced with the enactment of the Corporate Transparency Act in the US in 2021 with an objective to crack down on shady financing and formation of shell entities.

Will BOI reporting requirement be abolished completely by the Trump administration?
The Treasury has said that it intends to introduce regulations that will include only foreign reporting companies under the ambit of the anti-money laundering law.