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CTA Update: What It Is, the Latest Ruling, and What Businesses Should Do Now

Published: Dec 22, 2025

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What You Need to Know:

For most domestic businesses, there is nothing to file or update right now while the Financial Crimes Enforcement Network (“FinCEN”) finalizes its rulemaking and courts resolve remaining cases.
The Corporate Transparency Act (“CTA”) aims to curb illicit finance by collecting beneficial ownership information. Still, under FinCEN’s March 2025 interim final rule, domestic entities and U.S. persons are currently not required to file.
The Eleventh Circuit’s December 16, 2025, decision upholding the CTA’s constitutionality strengthens the statute’s legal footing; it does not reinstate domestic reporting on its own, but it makes a wholesale judicial rollback less likely while FinCEN finalizes its rulemaking.
What to do now: (1) domestic companies should maintain clear ownership and control records in case of potential changes; (2) foreign reporting companies who do not fall within an exemption should prepare to meet the IFR deadlines and ensure complete reporting for non‑U.S. beneficial owners; (3) all businesses should remain alert to phishing related to “CTA compliance” and expect timely updates from us as FinCEN issues its final rule and courts resolve remaining cases.

Introduction

The CTA is down, but not out, for most U.S. businesses, so your to‑do list is empty for now.

The CTA is a federal beneficial ownership disclosure regime enacted as part of the Anti-Money Laundering Act of 2020 within the National Defense Authorization Act for Fiscal Year 2021, codified at 31 U.S.C. § 5336. It was designed to combat the use of anonymous shell and front companies for illicit activity by requiring certain entities to report information on their “beneficial owners” to the FinCEN.

Under the CTA framework, as originally implemented by FinCEN’s 2022 final rule, most newly formed domestic entities and foreign entities registered to do business in the United States were required to file initial beneficial ownership reports beginning January 1, 2024, with ongoing obligations to update within 30 days of changes, subject to detailed exemptions for regulated and larger enterprises.

The 2025 Litigation and Rulemaking Landscape: Where We Are Now

Two developments in 2025 materially changed the near-term compliance landscape for many businesses.

First, after conflicting district court rulings and injunctions in late 2024 and early 2025, the U.S. Supreme Court stayed a nationwide injunction in the Texas Top Cop Shop case on January 23, 2025, leading to the reinstatement—temporarily—of Beneficial Ownership Information (“BOI”) filing obligations, pending further proceedings. FinCEN then provided transitional deadline relief and signaled potential revisions to reduce burdens on lower-risk entities.

Second, and most consequentially, FinCEN issued an Interim Final Rule (“IFR”) on March 21, 2025, that removed BOI reporting requirements for all “U.S. entities” and “U.S. persons” and set new deadlines and scoping rules for foreign reporting companies. In parallel, the Department of the Treasury announced it would not enforce penalties against U.S. citizens and domestic reporting companies, and would pursue rulemaking to limit the CTA to foreign reporting companies.

Concretely, under the March 2025 IFR:

All domestic entities previously within the CTA’s “reporting company” definition are exempted from filing, updating, or correcting BOI reports; U.S. persons are similarly relieved of BOI reporting obligations in their capacity as beneficial owners or company applicants.
Foreign reporting companies must still file, but they are not required to report BOI of any U.S. person beneficial owners; foreign pooled investment vehicles need not report BOI of U.S. persons exercising substantial control.
Filing deadlines for foreign reporting companies have been reset: foreign entities registered before March 26, 2025, must have filed by April 25, 2025; those registered on or after March 26, 2025, must file within 30 days of effective registration or public notice.

FinCEN also made clear it would apply these exemptions and deadlines immediately. It would not enforce penalties or fines against U.S. citizens, domestic reporting companies, or their beneficial owners with the intention to finalize a rule this year.

The Eleventh Circuit’s December 16, 2025, Ruling: CTA Constitutionality

On December 16, 2025, the U.S. Court of Appeals for the Eleventh Circuit reversed a district court decision in National Small Business United v. U.S. Department of the Treasury. It held that the CTA is a constitutional exercise of Congress’s power to regulate economic activity with a substantial impact on interstate commerce, and that the CTA’s uniform reporting regime does not facially violate the Fourth Amendment. The court remanded for further proceedings.

The Eleventh Circuit reasoned that the CTA regulates economic actors through a generally applicable disclosure rule and that Congress rationally concluded anonymous ownership has substantial aggregate effects on interstate and international commerce. The court also emphasized the statute’s security, confidentiality, and access safeguards, which limit access to BOI to specified requestors and purposes, bolstering the Fourth Amendment analysis.

This appellate decision, while not the last word on every pending case, strongly supports the CTA’s legal foundation going forward, even as regulatory scope is presently narrowed by the March 2025 IFR.

What Counts as BOI and Who Is a Beneficial Owner?

Even with the current domestic exemption in place, it remains important to understand the statutory definitions and core mechanics, given the possibility of future scope changes and the continuing application to foreign reporting companies.

A “beneficial owner” is any individual who directly or indirectly either exercises “substantial control” over a reporting company or owns or controls 25% or more of its ownership interests. “Substantial control” encompasses senior officers, authority over appointments, and influence over major decisions, among other pathways. Ownership interests are defined broadly to capture equity, profit interests, options, and convertible instruments, and can be held through entities or trusts.

The statute and rules also enumerate 23 exemptions for more heavily regulated or larger entities, such as public companies, banks, credit unions, registered brokers and investment companies, public utilities, and “large operating companies” with more than 20 U.S. full-time employees, a physical office, and over $5 million in U.S. gross receipts. Subsidiaries wholly owned or controlled by exempt entities, certain inactive entities, and specified tax-exempt organizations also qualify. Loss of an exemption triggers a filing obligation.

Reporting (where required) must include individual identifiers for beneficial owners and, for entities formed or registered after the effective date, “company applicants.”

Practical Implications for Your Business

If you are a U.S.-created entity or a U.S. person, the current IFR exempts you from BOI reporting obligations under the CTA, and Treasury has committed to non-enforcement against domestic reporting companies and their beneficial owners. You do not need to file, update, or correct BOI at this time.
If you are a foreign entity registered to do business in the U.S. and not otherwise exempt, you likely remain within scope. You must meet the new IFR deadlines and content requirements, but you need not report BOI of any U.S. person beneficial owners.
The legal basis for the CTA is on firmer ground following the Eleventh Circuit’s decision, which reduces the risk of wholesale invalidation even as the Administration reassesses scope and burden.
BOI data, when collected, remains nonpublic and subject to strict access and safeguarding protocols. Misuse carries significant penalties.

Our Outlook and How We’re Monitoring

We expect continued rulemaking in 2026, including FinCEN’s effort to finalize the IFR. We also anticipate additional court activity, but the Eleventh Circuit’s decision materially strengthens the CTA’s constitutional footing. We are monitoring: (i) the content and timing of FinCEN’s forthcoming final rule; (ii) any adjustments to foreign reporting company deadlines or scope; and (iii) any subsequent appellate decisions or Supreme Court developments that might affect compliance obligations.

What You Should Do Now

For most domestic businesses, no further action is required at this time. However, it is important to stay prepared in case of a rule change.

U.S. entities and U.S. persons: No BOI reporting is required at this time under the current IFR, and Treasury has paused enforcement against you. Maintain good internal ownership records and governance documentation in case scope changes in future final rules.
Foreign reporting companies: Confirm whether you fall within an exemption; if not, prepare to meet the IFR deadlines and continue to track changes. Do not collect or submit BOI for U.S. person beneficial owners, consistent with the IFR.
All businesses: Stay alert to phishing and scam communications purporting to be from FinCEN. FinCEN does not send unsolicited CTA compliance notices or demand emails.

We will continue to follow developments closely and provide targeted updates once FinCEN publishes its final rule and any further appellate rulings are issued.

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