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The Financial Crimes and Enforcement Network of the U.S. Treasury Department (FinCEN) on March 21, 2025 announced an interim final rule (the “Interim Rule”) which, if finalized in its current form, exempts all domestic entities from the requirement to report beneficial ownership information (“BOI”).  It further exempts foreign entities registered to do business in the United States from the obligation to report BOI of U.S. citizens who own or exercise substantial control over such foreign entities.  While public comment on the Interim Rule will be solicited before a final rule is issued, in the meantime, FinCEN has used authority granted in the Corporate Transparency Act (“CTA”, 31 U.S.C. 5336) to suspend the reporting requirements for domestic reporting companies until January 1, 2026.[1] Assuming the Interim Rule becomes the final rule, the end result of this suspension coupled with the updated rule is the same: FinCEN will require no entity formed in the U.S. to file any report  under the CTA. The modified regulatory regime drastically reduces the number of entities and individuals subject to the CTA. 

The last remaining nationwide injunction pausing obligatory reporting under the Corporate Transparency Act (CTA) and the related regulations (31 C.F.R. § 1010.380) was lifted on February 17, 2025.  Absent further administrative or Congressional action, reporting companies which have not yet filed beneficial ownership information with the U.S. Treasury’s Financial Crimes and Enforcement Network (FinCEN) must do so by March 21, 2025.

On January 23, 2025, the United States Supreme Court ruled on McHenry v. Texas Top Cop Shop, Inc., granting the Government’s application to stay the injunction of the Corporate Transparency Act (“CTA”) initially ordered by the Eastern District of Texas. Despite this order, the CTA is still on hold due to a separate nationwide order issued by a different federal judge in the Eastern District of Texas in Samantha Smith and Robert Means vs. U.S. Department of Treasury, No. 6:24-CV-336 (E.D. Texas 1/7/2025), which stayed the effective date of the CTA reporting rule nationwide while the lawsuit is pending.

For followers of developments related to National Bank Act (NBA) preemption and the United States Supreme Court’s related decision in Cantero v. Bank of America, N.A., 602 U.S. 205 (2024), the waning days of 2024 proved noteworthy. On December 20, 2024, the U.S. District Court for the Northern District of Illinois (the “District Court”) applied Cantero’s principles for evaluating claims of NBA preemption of state law and granted a preliminary injunction from enforcement of Illinois’s Interchange Fee Prohibition Act (the “IFPA” or, the “Act”) against national banks and federal savings associations. Illinois Bankers Association et. al. v. Raoul, No. 24 C 7307, 202 WL 5186840 (N.D. Ill., Dec. 20, 2024).  Only a few days later, the Ninth Circuit Court of Appeals (the “Ninth Circuit”) withdrew its August 2024 decision that had affirmed its 2022 decision that the NBA did not preempt California’s interest on escrow (IOE) law, indicating it would schedule oral arguments and requesting supplemental briefing by the parties to address whether the IOE law was preempted “under the standard and methodology” announced in Cantero.  Kivett v. Flagstar Bank, FSB, No. 21-15667, 2024 WL 5206133 (9^th Cir. Dec. 24, 2024). These developments gave us the first reasoned lower court opinion applying Cantero and set the stage for potentially three circuit courts (the First, Second and Ninth) to explicitly address and apply Cantero in 2025.   

Following up on our most recent blog post on developments regarding the enforcement date for the Corporate transparency Act (“CTA”), on December 26, 2024, the Fifth Circuit Panel that will ultimately be handling the merits of the appeal from the District Court issued an order vacating another order by a different Fifth Circuit panel on December 23, 2024 that had stayed the U.S. District Court for the Eastern District of Texas’ nationwide injunction on the beneficial ownership reporting obligations under the CTA. The aim of the rapid reversal is to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.

Following up on our most recent blog post on developments regarding the enforcement date for the CTA, on the afternoon of December 23, 2024, the Fifth Circuit issued its order staying the U.S. District Court for the Eastern District of Texas' nationwide injunction on the beneficial ownership reporting obligations under the CTA.

As a result, the reporting obligations under the CTA are now back in effect except to the extent enjoined for plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), with all entities existing prior to 2024 and all entities formed in 2024 being required to file. Recognizing that reporting companies may need additional time in light of the injunction previously in effect, FinCEN will require entities existing prior to 2024 and entities formed in September, 2024 who would have had to file during the period when the injunction was in effect to file their initial BOIR before January 13, 2025 (instead of before January 1, 2025 as originally required). Entities formed on or after December 3, 2024, which would have had to file within 90 days of formation have an additional 21 days to file (111 days in total in which to file).  See https://www.fincen.gov/boi for the full update.

We are continuing to monitor the situation, and will provide further updates when they become available.

As discussed in our prior blog post, on December 3, 2024, the U.S. District Court for the Eastern District of Texas (“District Court”) issued an order preliminarily enjoining enforcement of the Corporate Transparency Act and the associated beneficial ownership information reporting rules (the “CTA”) nationwide (the “preliminary injunction”).

Artificial Intelligence (“AI”) is everywhere you look right now. AI is a lot of things, but for most of the market it is simultaneously a buzzword for innovation and efficiency, and a bogeyman for fraud and privacy concerns. As such, AI is a technology that banking and markets regulators, like the Commodity Futures Trading Commission (“CFTC”) are watching closely. On December 5, 2024, the CFTC issued a staff advisory (the “Advisory”) regarding the use of AI in CFTC-regulated markets.

On December 3, the U.S. District Court for the Eastern District of Texas (“Court”) entered a sweeping order enjoining enforcement of the Corporate Transparency Act and the associated beneficial ownership information reporting rules (the “CTA”) nationwide. The immediate effect: notwithstanding the CTA’s stated reporting deadline of December 31, 2024, no entity is currently required to file with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) information about itself, its owners or the persons otherwise controlling the entity.

On October 21, 2024, the Office of the Comptroller of the Currency (OCC) finalized revisions to its Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches at 12 CFR Part 30, Appendix E (Revised Guidelines). The Revised Guidelines continue the regulatory trend following the 2023 bank failures of lowering the threshold at which financial institutions become subject to requirements aimed at promoting their resiliency—in this case, from $250 billion to $100 billion in average consolidated assets (Covered Banks). This will result in Covered Banks in the $100 billion to under $250 billion range having to develop and annually review recovery plans for the first time since 2018. Moreover, all Covered Banks will be subject to new requirements to test their plans and incorporate non-financial risk, with standards that differ from those applicable to resolution plans under the Federal Deposit Insurance Corporation’s (FDIC) recently finalized rule for insured depository institutions (IDI Rule) and Section 165(d) of the Dodd-Frank Act (165(d) Plans). As a result, Covered Banks of all sizes will need to reexamine and update their recovery planning processes. These changes are effective as of January 1, 2025, and are subject to staggered compliance dates.