The U.S. Department of the Treasury announced that it will not be handing down penalties stemming from violations of the beneficial ownership information (BOI) reporting rule as part of the Corporate Transparency Act (CTA).
According to a press release, the Treasury will not enforce any penalties or fines associated with the beneficial ownership information reporting rule under existing regulatory deadlines. It also will not enforce any penalties or fines against U.S. citizens or domestic reporting companies (or their beneficial owners) after the forthcoming rule changes take effect.
A BOI reporting deadline of March 21 had been set for most businesses. But the Financial Crimes Enforcement Network (FinCEN), a division of the Treasury, will reportedly issue an interim rule that extends deadlines and provides new guidelines.
Passed in 2021, the CTA aims to combat financial crimes such as tax fraud, money laundering and terrorist financing by requiring certain businesses to file a BOI report with FinCEN. FinCEN began accepting BOI reports from new and existing companies in January 2024.
The American Land Title Association (ALTA) noted that title insurance companies were already exempt from the BOI reporting requirement due to the rule’s exemption for state-licensed insurance producers. But ramifications could still be felt in the title sector.
“The Treasury’s announcement could still impact the title and settlement services industry as it works to prepare for the anti-money laundering (AML) regulations for residential real estate transfers,” ALTA explained. “This rule, which goes into effect Dec. 1, requires real estate professionals to submit reports and keep records about certain high-risk, non-financed transfers of residential real property to specified legal entities and trusts.
“Over the past few years, ALTA has worked with allies in Congress and FinCEN to try to narrow the scope of the AML rule. While this latest announcement doesn’t directly affect the AML rule, it could impact ALTA’s ability to obtain further relief for the industry either because the Treasury is more open to changes or because the data provided by settlement agents under the rule becomes more valuable.”
ALTA added that the Treasury announcement is likely to face legal challenges. It cities prior court rulings that allow regulators to impose additional or more specific requirements but not “generally add to, detract from or modify the statute.”
“An initial question will be whether any litigant other than Congress has the standing to sue,” ALTA stated. “Courts are more likely to scrutinize agency motives in the wake of the repeal of the Chevron doctrine by the U.S. Supreme Court.”
