Five Years Later, the Beneficial Ownership Rule Will End – Digital Transactions

Created as part of the Corporate Transparency Act in 2021, a rule that required millions of U.S. small businesses to report their ownership structures to the Financial Crimes Enforcement Network, or FinCEN, will officially end following a final rule from FinCEN.

The original reporting rule, meant to combat money laundering and related financial crimes, was issued in 2022 and went into effect Jan. 1, 2024. It was halted in early December 2024 following a nationwide preliminary injunction, only to be reinstated later that month with the reports due beginning Jan. 13, 2025, just days before President Trump was sworn in for his second term and his stated business-friendly policies.

Then in March, FinCEN issued an interim rule that removed the requirement for U.S. companies and individuals. Now, FinCEN’s final rule, released Wednesday, permanently removes the requirement.

The beneficial ownership reporting rule had been seen as confusing among acquirers and processors. It was a big enough issue for the Electronic Transactions Association, a trade group representing the acquiring industry, to launch an education campaign about it and its members’ roles in complying with it.

This final rule, which is to be effective when published in the Federal Register, is welcome, says Scott Talbott, executive vice president at the ETA. The Register is the official daily journal of the U.S. federal government.

“FinCEN’s final rule provides welcome certainty by permanently removing a duplicative reporting requirement,” Talbott says in an email to Digital Transactions News.

“For the payments industry, however, the work is not finished. ETA encourages Treasury to align its customer-due-diligence framework with this rule so that banks and payments companies can focus resources on identifying genuinely high-risk activity without shifting unnecessary compliance burdens onto financial institutions or their small-business customers.”