Interim Final Rule Clarifies Tribal Entities Not Subject to Corporate Transparency Act

The Financial Crimes Enforcement Network (FinCEN), a unit of the U.S. Department of the Treasury charged with administering the Corporate Transparency Act (CTA), issued an interim final rule on March 21, 2025, that exempts Tribal entities, as well as all other entities created in the U.S., from reporting obligations under the CTA. This is a most welcome development for Indian Country. As reported in a previous Holland & Knight alert, the application of the CTA to Tribal entities had been unclear, which was concerning given the significant penalties associated with the CTA.

Background

The lack of U.S. beneficial ownership information (BOI) reporting requirements made the U.S. the jurisdiction of choice to establish shell companies to hide ultimate beneficial owners. This weakened U.S. efforts to combat the flow of illicit money into the U.S. The underlying policy reasons for the CTA were to address "malign actors [that] seek to conceal their ownership of corporations, limited liability companies (LLCs), or other similar entities in the United States." The CTA implemented this policy initiative by requiring the disclosure of those individuals who were beneficial owners of domestic and foreign reporting companies.

As such, the CTA authorized the establishment of a national registry of BOI about U.S. and foreign individuals with direct or indirect ownership or control over a "Reporting Company," which was defined to include certain U.S. entities such as corporations or LLCs and foreign companies registered to do business in the U.S. An unfortunate collateral consequence of the CTA's reporting obligations was burdensome compliance requirements for Tribal entities, as well as for others owning or controlling such entities.

In illustration, the CTA requires a Reporting Company to disclose information about its "Beneficial Owner(s)." A "Beneficial Owner" is defined as an individual who has certain ownership or control interests in the reporting company. Since a Tribal government is not an individual, the application to entities owned by Tribes was not clear. If the CTA were to apply to an entity wholly owned by a Tribe, for example, that would require the Tribe to undertake the burdensome – and intrusive – task of determining the individuals who exercised substantial control over the entity.

The CTA's disclosure obligations were recently reexamined by the new administration in a manner consistent with their policy orientation to minimize compliance burdens. On Jan. 31, 2025, President Donald Trump issued Executive Order (EO) 14192, "Unleashing Prosperity Through Deregulation," announcing the administration's policy "to alleviate unnecessary regulatory burdens placed on the American people." The interim final rule reflects efforts to circumscribe the CTA in accordance with this EO and advance the public interest, while at the same time eliminating requirements that impose burdens without sufficient benefits.

The Interim Final Rule

The interim final rule made three significant changes, the first of which is primarily relevant to Tribal interests.

First, the interim final rule removes the requirement for U.S. or Tribal companies to report BOI to FinCEN. The rule removes Tribal entities from the definition of a "Reporting Company" and clarifies that domestic Tribal entities are exempt from reporting obligations under the CTA. This exemption is implemented by excluding entities and companies formed under Tribal, state or federal law from the scope of the term "Reporting Company." As a consequence, an entity that formerly was a domestic reporting company and required to make BOI reports – initial, updated and corrected – no longer is required to do so. And this is irrespective of whether its beneficial owners or substantial control persons are U.S. persons or non-U.S. persons.

More specifically with respect to Tribes, the result of the interim final rule is that tribally chartered entities and Tribal entities formed under state law are exempt from the CTA. Therefore, irrespective of whether any of these domestic entities are wholly or partially owned by a Tribal government, these types of entities are not subject to BOI reporting.

Further, certain other Tribal entities remain outside the scope of the CTA. For example, Tribal entities formed under federal law through the issuance of a charter of incorporation by the secretary of the U.S. Department of the Interior were never subject to the CTA; examples of such entities are those formed under Section 3 of the Oklahoma Indian Welfare Act (25 U.S.C. 5203) and Section 17 of the Indian Reorganization Act of 1934 (25 U.S.C. 5124).

Second, the rule retains BOI reporting for a foreign entity that is a foreign reporting company – that is, if it is 1) a corporation, an LLC or other entity, 2) formed under the law of a foreign country and 3) registered to do business in any state or Tribal jurisdiction by the filing of a document with a secretary of state or any similar office under the law of that state or Indian Tribe, provided the entity is not out of scope or able to qualify for one or more of the exemptions from reporting.

Third, a foreign reporting company no longer needs to report information about any of its beneficial owners who are U.S. persons. Thus, a foreign reporting company that has beneficial owners, some of whom are U.S. persons and some on whom are non-U.S. persons, reports only the non-U.S. beneficial owners. A foreign reporting company that has only U.S. beneficial owners will be exempt from the requirements to report any beneficial owners but apparently will have to file information about itself.

The interim final rule extended the deadline for foreign reporting companies to file initial BOI reports or update or correct previously filed BOI reports. The new deadline is April 25, 2025, or 30 days after the foreign reporting company's registration to do business in the U.S., whichever comes later. Furthermore, foreign reporting companies will also need to comply with the reporting deadlines for subsequent updated or corrected reports.

Next Steps

The interim final rule was effective on March 26, 2025. FinCEN is accepting public comments on the rule until May 27, 2025. Comments may be submitted through either the Federal E-Rulemaking Portal or by mail. FinCEN intends to issue a final rule by the end of the year.

Although the rule is favorable to Tribal governments, it is still worthwhile to submit comments so as to express support and help clear up ambiguities. For example, it is unclear whether a Tribal government could still be subject to the CTA by virtue of its full or partial ownership of a foreign reporting company.

For a more in-depth analysis of existing CTA requirements under the interim final rule, see Holland & Knight's previous alert, "Corporate Transparency Act Interim Final Rule Issued," March 24, 2025.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.