With the deadline for reporting entities to register their beneficial ownership information (BOI) with FinCEN’s Beneficial Ownership Secure System (BOSS) just three weeks away, the U.S. District Court of Eastern Texas issued a preliminary injunction blocking the implementation of the Corporate Transparency Act (CTA) citing that the Act is unconstitutional.
Bloomberg Law published the Court’s opinion here.
This ruling could lead to questions from bank clients at account opening. Although the CTA is, for now, blocked, this ruling does not impact FinCEN’s 2018 Customer Due Diligence (CDD) Rule which requires covered financial institutions to obtain beneficial ownership certifications from legal entities opening bank accounts or any time the institution has knowledge that beneficial ownership has changed for an existing customer. Front line staff should continue following their account opening procedures until FinCEN finalizes any revisions to the 2018 CDD Rule. Customers may inquire about their obligation to register their beneficial ownership information with the BOSS. Frontline staff should be reminded that they cannot provide legal advice and should direct customers with questions about the CTA to their own legal counsel for advice on how to proceed with BOI registration.
TCA had anticipated that FinCEN would be publishing a notice of proposed rulemaking either late fourth quarter 2024 or early first quarter 2025 in advance of the anticipated financial institution access to the BOSS scheduled to occur in May 2025. This ruling puts that timetable in doubt as FinCEN will await the outcome of the appeals process prior to publishing any proposed rulemaking.
It is business as usual for opening accounts for legal entities while we remain in limbo awaiting the outcome of future legal proceedings. In the meantime, TCA will continue to monitor regulatory changes and advise our clients of future developments and proposed rules.
TCA is your source for regulatory information and A Better Way. Contact us at (800) 934-7347 or by email at [email protected]if you have any questions.
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