In March 2025, FinCEN published an interim final rule that removed the requirement for U.S. companies and U.S. persons to report beneficial ownership information under the Corporate Transparency Act. Domestic reporting companies, the millions of LLCs, corporations, and similar entities that had spent the better part of a year preparing to file, were suddenly exempt. Only foreign entities registered to do business in the United States remained on the hook.
The compliance community exhaled. Some banks started asking whether they could scale back their own beneficial ownership collection at account opening. A few began treating the CTA rollback as a signal that the broader CDD framework was loosening.
That reading is wrong, and acting on it creates real examination risk.
What FinCEN Actually Changed
The interim final rule did one specific thing: it narrowed who qualifies as a “reporting company” under the CTA to foreign entities only. U.S. companies no longer need to file beneficial ownership reports with FinCEN. U.S. persons no longer need to be identified in those reports. The entire domestic reporting apparatus that FinCEN spent two years building was effectively shelved.
What the rule did not touch is the separate, longstanding CDD Rule that applies to financial institutions. That rule – codified at 31 CFR 1010.230 – requires covered financial institutions to identify and verify the beneficial owners of legal entity customers at account opening. It has been in effect since May 2018. It was not amended, suspended, or modified by the March 2025 interim final rule.
These are two distinct regulatory regimes. The CTA created a federal reporting obligation for companies themselves. The CDD Rule created an obligation for banks to collect beneficial ownership information as part of their BSA/AML programs. One was rolled back. The other was not. The confusion between them is understandable, but the regulatory distinction is clear.
Why the Confusion Matters
The practical risk here is that compliance teams conflate the CTA exemption with a relaxation of their own CDD obligations. If a bank stops collecting beneficial ownership information at account opening because “the CTA was rolled back,” that bank has a BSA deficiency that an examiner will cite regardless of what happened to the Corporate Transparency Act.
This is not a hypothetical concern. FinCEN’s own FAQ on the interim final rule explicitly states that the CDD Rule obligations for financial institutions remain in effect. The agency went out of its way to draw this line, and examiners will hold institutions to it.
The timing makes this worse. Many banks had been building internal processes that assumed the CTA’s BOI database would eventually become a verification resource for their own CDD programs. That integration is now indefinitely delayed. Banks are back to relying entirely on customer-provided information and their own verification procedures – which is exactly where they were before the CTA was enacted, but with higher examiner expectations around documentation and risk-based analysis.
What the CTA Rollback Signals About Regulatory Direction
The CTA’s trajectory through 2024 and 2025 is worth understanding beyond the immediate compliance impact. Congress passed the Corporate Transparency Act in 2021 with broad bipartisan support and a clear policy rationale: the U.S. had become a global leader in anonymous shell company formation, and that opacity facilitated money laundering, sanctions evasion, and fraud. The law was designed to close that gap by creating a federal beneficial ownership registry.
The Supreme Court stayed enforcement in late 2024 after constitutional challenges. FinCEN responded with deadline extensions and voluntary compliance periods. Then the March 2025 interim final rule effectively gutted the domestic component entirely, citing a desire to reduce burden on small businesses. The Eleventh Circuit subsequently upheld the CTA’s constitutionality, but the executive branch had already moved to limit its reach.
For compliance officers, the signal is that beneficial ownership transparency remains a stated policy priority that the government is not currently willing to enforce broadly. That disconnect between stated priority and operational reality is a familiar pattern, and it almost always resolves in the direction of more enforcement, not less. Institutions that maintain strong CDD programs through this period will be better positioned than those that read the rollback as permission to do less.
What Banks Should Be Doing Now
Three things are worth prioritizing.
First, confirm that your beneficial ownership collection procedures at account opening have not been modified in response to the CTA rollback. If they were, reverse the changes and document the correction. The CDD Rule is unchanged, and your next BSA examination will evaluate compliance with it on its own terms.
Second, review how your institution verifies beneficial ownership information. With the CTA’s BOI database no longer available as a planned verification resource, your CDD program needs to stand on its own. That means documented procedures for verifying ownership claims, risk-based triggers for enhanced verification, and clear escalation paths when information doesn’t add up.
Third, watch for FinCEN’s final rule. The agency stated its intent to issue a final rule in 2025 but has not done so. The regulatory landscape around beneficial ownership is still shifting. A compliance program that can adapt to either direction, reinstatement of domestic reporting or permanent exemption, is the one that won’t need emergency remediation when the final rule drops.
The CTA rollback removed a reporting obligation from companies. It did not remove the obligation from banks to know who they’re doing business with. That obligation is older, broader, and – for the moment – entirely unaffected by what happened to the Corporate Transparency Act.
Sources
U.S. Department of the Treasury Announces Publication of Interim Final Rule | Treasury (Mar. 2025)
