The Corporate Transparency Act changed dramatically in 2025. See who must report beneficial ownership to FinCEN now, after domestic companies were exempted.
Table of contents
- The Corporate Transparency Act took effect in January 2024, requiring most US companies to report their beneficial owners to FinCEN, then was narrowed dramatically in 2025.
- After constitutional challenges, including NSBU v Yellen, FinCEN issued an interim final rule in March 2025 that exempts US domestic companies and US persons from beneficial ownership reporting.
- As of 2026, the reporting obligation falls mainly on foreign reporting companies registered to do business in the US, which also need not report US persons as beneficial owners.
- The federal beneficial ownership register is therefore no longer the comprehensive US ownership source it was designed to be, which matters for anyone relying on it for KYB.
- For business onboarding, you cannot assume FinCEN's database answers who owns a US company, so cross-source ownership resolution is more important, not less.
- The situation remains subject to change through litigation and rulemaking, so confirm current status before relying on any single position.
The the CTA is a US law, effective January 2024, that requires reporting companies to disclose their beneficial owners to FinCEN, intended to create a central registry against shell-company abuse. Following 2025 rulemaking, the obligation now applies mainly to foreign reporting companies, after US domestic companies and US persons were exempted.
TL;DR
The Corporate Transparency Act began life in January 2024 as an ambitious attempt to end anonymous shell companies in the US, requiring most companies to report their beneficial owners to FinCEN. Two years later, after constitutional challenges and a major policy reversal, it looks very different. Following litigation including NSBU v Yellen, FinCEN issued an interim final rule in March 2025 that exempts US domestic companies and US persons from beneficial ownership reporting, leaving the obligation mainly on foreign reporting companies.
The practical consequence for compliance teams is significant: the federal beneficial ownership register no longer offers comprehensive coverage of US-formed entities, so you cannot treat it as the answer to who owns an American company. This guide explains what the law required, what the courts and FinCEN changed, who must report now, and why robust, cross-source ownership resolution matters more than ever for KYB.
11 min read. Last updated 4 November 2026.
What is the Corporate Transparency Act?
The Corporate Transparency Act is US legislation that, as originally implemented, required most corporations, limited liability companies, and similar entities to report information about their beneficial owners, the natural persons who ultimately own or control them, to the Financial Crimes Enforcement Network, FinCEN. It took effect on 1 January 2024 and was designed to close the anonymous-shell-company loophole that had long made the US an attractive place to hide illicit ownership.
Beneficial ownership information, or BOI, includes identifying details of the individuals behind a company, and the law set out roughly two dozen exemption categories, for larger regulated entities and others already subject to oversight. The intent was a central federal registry that law enforcement and, in defined circumstances, financial institutions could use. That intent is important context for what changed, because the 2025 reversal hollowed out much of the coverage the registry was meant to provide, a shift that reshapes KYB.
What changed with NSBU v Yellen and the court challenges?
The Corporate Transparency Act faced immediate legal challenge. In a closely watched case often referred to as NSBU v Yellen, a federal district court in early 2024 held the law unconstitutional as applied to the plaintiffs, finding Congress had exceeded its enumerated powers, though the ruling's effect was initially limited to the parties involved. Further litigation followed across multiple courts, with injunctions issued and lifted, creating prolonged uncertainty for companies about whether and when they had to report.
The legal turbulence mattered because it made compliance a moving target through 2024 and into 2025: deadlines shifted, enforcement was paused and resumed, and businesses faced conflicting signals. For compliance teams, the lesson is that the the law's requirements have been unusually unstable, which is precisely why you should verify the current position rather than rely on a snapshot, and why building ownership resolution that does not depend solely on the federal register is prudent.
What does the March 2025 interim rule require now?
The decisive change came in March 2025, when FinCEN issued an interim final rule that fundamentally narrowed the scope of the Corporate Transparency Act. The rule removed the beneficial ownership reporting requirement for US domestic reporting companies and for US persons, redefining the set of entities that must report. In effect, companies formed in the United States were exempted from the BOI reporting obligation.
The reporting requirement was retained for foreign reporting companies, entities formed under the law of a foreign country that register to do business in a US state, and even those foreign companies were not required to report US persons among their beneficial owners. This was a substantial rollback of the law's original reach, shifting it from a near-universal US reporting regime to one focused on foreign-registered entities. As always with a fast-moving area, confirm the current rule text and any subsequent changes before acting.
Who still has to report beneficial ownership in 2026?
As of 2026, under the interim final rule, the beneficial ownership reporting obligation applies mainly to foreign reporting companies: entities formed abroad that have registered to do business in a US state or tribal jurisdiction. US domestic companies, the corporations and LLCs formed under US state law that made up the overwhelming majority of the original reporting population, are exempted.
Even the foreign reporting companies that must report are not required to disclose US persons as beneficial owners, narrowing the data further. The net effect is that the federal beneficial ownership dataset now captures a small, specific slice of entities rather than the broad US corporate landscape the original the reporting regime envisaged. For anyone who expected FinCEN's registry to become the definitive source of US company ownership, that expectation no longer holds, which is the crux of the KYB impact.
What does this mean for KYB and business onboarding?
For know-your-business and onboarding teams, the key takeaway is that you cannot rely on the federal beneficial ownership register to tell you who owns a US company, because most US companies no longer report to it. A KYB process built on the assumption that FinCEN's BOI database would be a comprehensive lookup needs rethinking, because for domestic entities that lookup will largely come up empty.
This does not reduce your obligation to identify beneficial owners under your own AML requirements; it removes a data source you might have hoped to lean on. So the practical effect is more work, not less: you still must establish the ultimate beneficial owners of business customers, but you have to do it through other means, state filings, corporate-registry data, and direct verification, rather than a single federal query. That is exactly the cross-source resolution that UBO mapping and decentralised KYB are built for.
How should you resolve US company ownership now?
With no comprehensive federal source, resolving US company ownership becomes a cross-source exercise. Start with the entity's state of formation filings, which establish the company's existence and sometimes officers, though US state registries generally do not capture full beneficial ownership. Layer in commercial corporate-registry and ownership data, and where a chain crosses into foreign entities, the FinCEN data on foreign reporting companies may help. Then verify the natural persons identified, rather than accepting a self-declaration.
For complex or multi-layer structures, automated ownership resolution that pulls and reconciles across these sources, scores confidence on each link, and escalates the gaps is far more practical than manual tracing, and it is resilient to the kind of source change the Corporate Transparency Act just underwent. The principle is not to depend on any single registry, federal or otherwise, but to assemble and verify ownership from multiple sources, which also future-proofs you against further rule changes.
When can you rely on FinCEN's beneficial ownership data?
There is a narrow but real set of cases where the FinCEN beneficial ownership data is useful: when your customer or counterparty is a foreign reporting company that has registered to do business in the US and is therefore within the current reporting scope. For those entities, the BOI filing can be a genuine input, subject to the access rules that govern who can obtain it.
What you should not do is treat the absence of a FinCEN BOI record as evidence that a US company has no beneficial owners to identify, or as a substitute for your own diligence. For the large majority of US domestic companies, there will simply be no federal record because they are exempt, and that silence tells you nothing about ownership. Use the data where it applies, do not over-read its absence, and keep verifying ownership independently. Given ongoing litigation and rulemaking, also re-check the current state of the Corporate Transparency Act before relying on any position. Book a KYB review to assess your approach.
The bottom line
The Corporate Transparency Act of 2026 is not the law it was in 2024. After constitutional challenges and FinCEN's March 2025 interim final rule, US domestic companies and US persons are exempt from beneficial ownership reporting, and the obligation rests mainly on foreign reporting companies. The central federal registry that was meant to answer who owns US companies now covers only a narrow slice of them.
For KYB and onboarding, that means leaning on your own cross-source ownership resolution rather than a federal lookup, because the database will be silent for most US entities and that silence is not an answer. Verify ownership from multiple sources, use the FinCEN data only where it genuinely applies, and re-check the law's status, because it is still moving.
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Related resources
- UBO mapping with AI
- KYB software guide 2026
- Correspondent banking due diligence in 2026
- AMLD6 and the AMLA Regulation
- Decentralised KYC
- AML compliance software in 2026
- How it works
Cited sources
- FinCEN, Beneficial Ownership Information and the 2025 interim final rule: https://www.fincen.gov/boi
- FinCEN, BOI interim final rule announcement (March 2025): https://www.fincen.gov/news/news-releases
- US courts, National Small Business United v Yellen (case background): https://www.govinfo.gov/
- FATF Recommendations (Recommendation 24, beneficial ownership): https://www.fatf-gafi.org/en/topics/fatf-recommendations.html
Michelangelo Frigo (Co-Founder at Zyphe) Michelangelo Frigo is a privacy and identity infrastructure expert and co-founder of Zyphe.