The US Department of the Treasury, Financial Crimes Enforcement Network (FinCEN), has reversed requirements that mandated individuals to report beneficial ownership in companies. The final rule will become effective after it is published in the Federal Register.
The rule adopts what was proposed this past March.
Beneficial ownership information (BOI) was despised by individuals as it placed compliance burdens on individuals while creating privacy risks and possibly assessing criminal penalties on transgressors. At the same time, it was deemed to be ineffective against criminals.
Under the final rule, foreign reporting companies will still be required to report beneficial ownership information for foreign individuals.
The BOI rule saddled tens of millions of reporting companies, as well as LLCs and more, with unnecessary compliance. At the same time, large companies were largely exempt, so the rule mostly impacted smaller firms and family businesses. It was estimated that the rule cost tens of billions of dollars in its first year, with many individuals unaware that it even existed.
FinCEN stated that it would delete information previously reported by individuals.
Secretary of the Treasury Scott Bessent called the repeal of the rule a victory for common sense.
“President Trump promised to cut red tape, and this final rule delivers. Treasury is eliminating a burdensome reporting requirement for millions of law-abiding business owners without compromising our national security.”
There have been ongoing concerns about the rise of intrusive government and privacy issues. Access to personal information can potentially lead to government abuse. There are numerous examples of erstwhile “secure” information being disclosed by the government. IRS contractor Charles Littlejohn leaked years of detailed tax-return data on thousands of high-income individuals to the media. Enforcement authorities are frequently chastised for misusing centralized private information.