The Corporate Transparency Act (CTA) has changed significantly since beneficial ownership information (BOI) reporting requirements first took effect in January 2024. On March 26, 2025, the US Department of the Treasury (Treasury) and the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that significantly narrowed the scope of entities subject to BOI reporting.
Treasury stated that the revised rule was intended to reduce compliance burdens on US businesses, while continuing to support national security and law enforcement objectives through a more targeted reporting framework focused on foreign entities operating in the US.
The interim final rule is currently in effect as the final rule awaits review and approval by the Office of Management and Budget (OMB). As a result, many domestic family office structures that were previously expected to file BOI reports are no longer subject to CTA reporting requirements. However, several international family office arrangements, offshore holding structures, investment vehicles and foreign-owned operating companies may still fall within the CTA’s scope.
In addition to FinCEN’s rulemaking, Congress has made efforts to scale back the CTA through proposed legislation, S. 4419 (introduced April 2026) and H.R. 425, the Repealing Big Brother Overreach Act (introduced January 2025). Both bills would repeal or substantially limit CTA reporting obligations for many privately held entities. It remains to be seen whether these legislative efforts will succeed. Additionally, on June 5, 2026, OMB’s Office of Information and Regulatory Affairs received a copy of FinCEN’s final rule to review.
This alert provides an overview of the revised reporting framework and highlights several considerations for family offices and private wealth structures.
What is the CTA, and why was it enacted?
Congress enacted the CTA in 2021 as part of the Anti-Money Laundering Act of 2020 to address public interest concerns that anonymous legal entities could be used to facilitate money laundering, sanctions evasion, corruption, terrorist financing, tax crimes and other illicit activities. The CTA also served as a response to longstanding criticism from the Financial Action Task Force, a global financial watchdog that had identified the lack of timely access to beneficial ownership information as a weakness in the US anti-money laundering framework. The CTA went into effect in 2024, and originally required domestic companies formed in the US and foreign entities registered to do business in the US to report their BOI to FinCEN unless an exception applied. It also sought to create a centralized federal database containing beneficial ownership information for many entities formed or registered in the US.
What changed in 2025?
Following challenges of the CTA’s scope in federal court, FinCEN issued an interim final rule in March 2025 that substantially narrowed the CTA’s reach. The interim final rule altered the BOI reporting framework by explicitly exempting “domestic reporting companies” from the term “reporting company.” This definitional change effectively narrowed the term to only include entities formed under the laws of a foreign country that are registered to do business in a US state or tribal jurisdiction through a filing with a secretary of state or similar office. It further exempted these foreign reporting companies from reporting beneficial ownership information on any US persons, and maintained that US persons were not required to provide beneficial ownership information to foreign reporting companies.
FinCEN’s stated objectives for narrowing the scope of the CTA were to eliminate the burden on domestic entities, particularly small businesses, of having to self-report while still requiring foreign entities, which pose greater national security and illicit financing risks, to report.
The interim final rule became effective upon publication in the Federal Register on March 26, 2025.
Who must report?
For most family offices, the threshold question is now whether a foreign entity qualifies as a “foreign reporting company.” A foreign reporting company is an entity that both:
Is formed under the laws of a foreign jurisdiction
Registers to do business in a US state or tribal jurisdiction through a filing with a secretary of state or similar office
If a foreign entity is not registered to do business in the US, the CTA will generally not apply. Importantly, the reporting obligation turns on where the reporting entity is organized and whether it is registered to do business in the US, rather than its ultimate ownership. As such, a domestic subsidiary would not be subject to reporting even if wholly foreignowned. Family offices should not assume, however, that the use of a US subsidiary automatically eliminates CTA considerations. Foreign parent entities should separately evaluate whether their US activities may require registration under applicable state law, which could result in the entity becoming subject to CTA reporting requirements.
Examples potentially subject to reporting
Examples of structures that may still trigger CTA reporting obligations include:
A Cayman Islands holding company that registers in Delaware to manage US real estate investments
A Luxembourg investment vehicle that registers to conduct business activities in the US
A UAE family office management company that establishes a US office and registers in Florida
A foreign operating company owned by a family trust that registers in Texas to conduct business operations
A foreign real estate acquisition vehicle that registers in a US state to own and manage a portfolio of US properties
Examples generally outside the reporting regime
Examples that may not be subject to CTA reporting include:
A Delaware LLC formed to hold family investments
A domestic family office management company
A domestic special purpose investment vehicle
A US holding company owned by a family trust
A foreign investment vehicle that merely holds passive investments in US funds, and is not registered to do business in a US state
Do the 23 exemptions still apply?
Yes.
Although the number of entities subject to the CTA has been significantly reduced, the statutory exemptions remain in place and continue to play an important role in determining whether a foreign reporting company must file BOI reports.
For family office clients, some of the more relevant exemptions include the following:
Large operating company exemption
An entity may qualify if it:
Employs more than 20 full-time employees in the US
Maintains a physical operating presence in the US
Reports more than US$5 million in gross receipts or sales.
This exemption is often relevant for family-owned operating businesses, manufacturing companies, hospitality businesses and other active enterprises.
US Securities and Exchange Commission (SEC)- regulated and investment adviser exemptions
Certain SEC-registered investment advisers, registered funds, broker-dealers and other regulated entities may qualify for an exemption.
These exemptions may be relevant where family offices sponsor investment platforms, private funds or co-investment structures that operate through regulated affiliates.
Pooled investment vehicle exemption
Certain pooled investment vehicles advised or operated by exempt entities may qualify for an exemption.
This analysis frequently arises in connection with offshore fund structures, club deals and family-sponsored investment vehicles.
Tax-exempt entity exemption
Private foundations and certain charitable organizations may qualify for an exemption, although separate analysis may be required for foreign charitable structures and related entities.
Subsidiary exemption
Certain entities wholly-owned or controlled by exempt entities may themselves qualify for an exemption, making ownershipchain analysis particularly important.
What information must be reported?
For entities that remain subject to the CTA, FinCEN requires reporting of information about both the reporting company and its beneficial owners. Family offices should be aware that a foreign reporting company may still have a filing obligation even where none of its reportable beneficial owners ultimately need to be disclosed because all such individuals are US persons.
Company information
Foreign reporting companies must generally report:
Legal name
Jurisdiction of formation
US registration information
Principal business address
Tax identification information
Beneficial owners
A reporting company must disclose information regarding its beneficial owners who are not US persons.
A beneficial owner is any individual who, directly or indirectly:
Owns or controls at least 25 percent of the ownership interests of the reporting company; or
Exercises substantial control over the reporting company
For each reportable beneficial owner, FinCEN generally requires:
Full legal name
Date of birth
Residential address
A unique identifying number from an acceptable government-issued identification document, together with an image of that document, unless the individual has obtained a FinCEN identifier
Ownership interests
The 25 percent ownership test is broadly applied, and may include direct or indirect ownership through equity interests; membership interests in an LLC; partnership interests; stock or similar ownership interests; convertible instruments; options or other rights to acquire ownership interests and certain trust or intermediary arrangements.
For family office structures, ownership often must be analyzed through multiple tiers of entities, trusts, and holding companies to determine whether an individual ultimately owns or controls 25 percent or more of the reporting company.
Substantial control
An individual may be a beneficial owner even if he or she owns little or no equity in the entity.
FinCEN’s substantial control test includes individuals who:
Serve as a senior officer of the reporting company;
Have authority to appoint or remove senior officers, or a majority of the governing body;
Direct, determine or have substantial influence over important decisions of the entity; or
Otherwise exercise substantial control over the reporting company
As a result, multiple individuals may need to be reported under the substantial control standard.
For family office structures, substantial control may extend to family principals, managers, directors, trustees, protectors or other individuals who possess significant decision-making authority over the entity.
Why does this matter for family offices?
Although the CTA now applies to a much smaller group of entities, family offices frequently utilize the types of international structures that remain within the law’s scope.
Particular attention should be paid to:
Offshore holding companies
Foreign family investment vehicles
Cross-border real estate structures
Foreign management companies with US operations
International estate planning structures involving foreign entities
Family-controlled operating businesses expanding into the US
Historically, many family offices focused on whether their domestic entities had CTA filing obligations. Now, the more important assessment is whether a foreign entity has registered, or may be required under applicable state law to register, to do business in the US. Because the CTA’s revised reporting framework is tied to registration status, family offices should carefully evaluate whether a foreign entity’s US activities may trigger state-law registration requirements that could ultimately result in the entity having to report.
