Interim Final Rule Narrows Scope of Corporate Transparency Act

April 3, 2025

A recent interim final rule significantly narrows the scope of the Corporate Transparency Act (CTA), which was enacted on Jan. 1, 2021, to enhance financial transparency and strengthen anti-money laundering efforts.

However, the act faced several legal challenges regarding its constitutionality.

The CTA authorized the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to request limited liability companies (LLCs) and other entities to report “ultimate beneficial-owner information,” including name, date of birth, current address and more. Originally, this requirement would apply to entities which own business aircraft like LLCs and corporations, which are commonly used for a host of business and tax reasons.

Now, only foreign companies registered to do business in the U.S. are required to report to FinCEN and those foreign entities are not required to report information about U.S. beneficial owners.

“The change in the interim final rule was significant,” said Jeff Towers, general counsel at TVPX, which specializes in aircraft trust services, customs brokerage and more. “It eliminated the requirement that domestic reporting companies submit beneficial ownership information. Essentially any company formed in the U.S. is not required to report through the FinCEN portal, even if the owners of the entity are non-U.S. citizens.”

The interim final rule’s impact for business aircraft owners is significant, as the CTA applies to LLCs, corporations and other business structures commonly used for aircraft ownership. Now, these structures – if U.S. organizations – are exempt from reporting beneficial ownership information to FinCEN.

Towers added, “The whole concept behind the CTA and momentum for its enactment were concerns that foreign bad actors were using shell companies in the U.S. to carry on illicit activities. The CTA was intended to shed light on who those people were and hopefully prevent them from doing anything inappropriate.”

FinCEN estimates only 20,000 entities will now be required to file beneficial ownership information, compared to the 32.6 million entities required to report under the original rule.

While the CTA’s overall scope has reduced dramatically, this may not be the end of the act for U.S. business aircraft owners. The interim final rule is open for comment until May 27, after which FinCEN will publish a final rule. Until then, the narrower scope applies.

Towers noted that while the CTA might not impact U.S. business aircraft owners at this time, the FAA is considering regulatory action to require aircraft owners to report more transparent information regarding beneficial owners.

The U.S. Government Accountability Office (GAO) found in a 2020 report that the FAA allows civil aircraft registration applicants to submit “opaque” information on beneficial owners – that is, the persons who ultimately own and control the aircraft. The GAO made 15 recommendations to the FAA, three of which have been adopted.

“In the context of business aviation, we still have the GAO recommendations that FAA has agreed to which include collecting information about beneficial owners of aircraft. It’s possible we see a proposed rule on this later this year,” said Towers.

However, it is unclear whether an expanded scope of the CTA or additional FAA reporting requirements will be a priority under the current administration.