FinCEN Eliminates BOI Reporting Requirements for US Companies and US Persons

On March 21, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule (Rule), effective March 26, that eliminates the requirement for US companies and US persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act, consistent with the US Department of the Treasury's announcement on March 2. FinCEN has invited comments on the Rule and plans to issue a final rule later this year.

Under the Rule, "domestic reporting companies" are exempt from BOI reporting requirements. However, entities formed under the laws of foreign countries that have registered to do business in any US state or tribal jurisdiction (known as "foreign reporting companies") are still required to report BOI. Nevertheless, foreign reporting companies are exempt from reporting the BOI of any US person who is a beneficial owner.

Additionally, US persons who are beneficial owners of foreign reporting companies do not have to provide BOI to those entities. Foreign pooled investment vehicles must report the BOI of any individual who exercises substantial control over the entity, provided that the individual is not a US person. If there is no individual with substantial control who is not a US person, the foreign pooled investment vehicle is not required to report any beneficial owners.

The deadline for BOI reports is now April 25, 2025, for reporting companies that are currently in existence. For companies formed on or after that date, the deadline is 30 days after the reporting company receives actual notice that it has been registered to do business or when a secretary of state first provides public notice of that registration.

On March 14, the US Securities and Exchange Commission (SEC) extended the compliance date to the "Names Rule" of the Investment Company Act. The Names Rule was adopted in September 2023, and prohibits registered funds from using materially deceptive or misleading names. Also subject to the rule are terms that historically have been viewed as related to a fund's strategy, such as "growth" or "value." The compliance date for larger fund groups is now June 11, 2026, and December 11, 2026 for small fund groups.

On March 20, the Office of the Comptroller of the Currency (OCC) announced that it will no longer examine its regulated institutions for reputation risk and is removing references to reputation risk from its Comptroller's Handbook booklets and guidance issuances. These actions are in line with the OCC's previously stated objectives of ensuring that banks have appropriate and strong risk management processes for their business activities, treat customers fairly, and comply with applicable laws and regulations. The removal of references to reputation risk from OCC handbooks and guidance issuances does not alter the OCC's expectation that banks remain diligent and adhere to prudent risk management practices across all other risk areas. The OCC expects to complete its efforts to update its public documents in the coming weeks.

On March 19, in an effort to help community banks meet their digitalization objectives, the OCC announced that it established a new Digitalization page on its website intended to provide community banks with relevant OCC rules, statements, and guidance while they pursue digitalization efforts. The OCC notes that while new and emerging financial technologies are important tools that help community banks better meet customer demands, increase bank revenue, improve efficiencies, and remain competitive, community banks may face challenges when trying to implement a new digitalization strategy. The OCC will update the webpage as new resources become available.

On March 17, the OCC conditionally approved an application for CenTrust Bank, N.A. to effect a substantial asset change resulting in a material increase in size in connection with CenTrust Bank, N.A.'s proposed acquisition by SmartBiz Loans (which remains subject to Federal Reserve approval). Following the acquisition, CenTrust Bank would offer nationwide lending and deposit-taking services. The conditional approval is of note because it relates to the potential acquisition of a bank by a fintech company, which to date has been a rare event.