Beneficial Owners/Corporate Transparency Act and FINCen—Supplemental Briefing—Government argues No Irreparable Harm because of Domestic Companies Exemption—Case Not Moot as to Foreign Entities

Supplemental Briefing by the Government as Requested by the Court—Filed This Week—Excerpts with Commentary Below

·       March 26, 2025, the Treasury published the Interim Final Rule that exempt a class of entities—namely, “all domestic reporting companies, and their beneficial owners.” In short, domestic companies no longer were required or potentially required to report the beneficial owners if certain conditions applied. This reversed and then cleared up an ambiguous portion of the rule as to when and if domestic companies needed to report. This Interim Final Rule was after many domestic companies had already prepared and submitted their reports.

·       At the same time, the Treasury recognized foreign reporting companies “present heightened national security and illicit finance risk.” Accordingly, foreign reporting companies are still required to report beneficial owners.

·       Although the regulatory changes underscore the plaintiffs should not get injunctive relief to stop the reporting, the case is not moot—the Rule is interim—once it is final it may make the case moot but not as to foreign companies and reporting.

·       That is, the government argues, there can be no dispute that Congress has the power to regulate foreign entities that have registered to do business in the U.S., and those foreign entities are still required to report benefical ownership due to the Corporate Transparency Act.

For these reasons, the government concludes, while it is now moot for domestic corporations to report under the Corporate Transparency Act/BOI/FINCen, it is not moot as to foreign corporations registered to do business in the United States.