While the Corporate Transparency Act became law on Jan. 1, 2021, you may just be hearing about it now. That is because it became effective as of Jan. 1, 2024, and it has created new business reporting requirements on a federal level for smaller businesses.
The law’s effect on the insurance industry
The CTA mandates that business entities defined as “reporting companies” under the law must file reports with the Financial Crimes Enforcement Network disclosing information about their beneficial owners, which are individuals who directly or indirectly own or control at least 25% of the ownership interests of the entity or exercise substantial control over it. In the reports, FinCEN must be provided with the names and other personal information of beneficial owners and company applicants for all applicable entities.
Exemptions to the reporting requirements of the law have been carved out for entities already subject to close federal or state regulation that already disclose their beneficial ownership information to the government, including two exemptions that are of key interest to PIA members:
Insurance companies: Any insurance company as defined in Section 2 of the Investment Company Act of 1940:
- “… a company which is organized as an insurance company, whose primary and predominant business activity is the writing of insurance or the reinsuring of risks underwritten by insurance companies, and which is subject to supervision by the insurance commissioner or a similar official or agency of a State; or any receiver or similar official or any liquidating agent for such a company, in his capacity as such”; and
State-licensed insurance producers:
- Any entity that: (i) is an insurance producer that is authorized by a State and subject to supervision by the insurance commissioner or a similar official or agency of a State, and (ii) has an operating presence at a physical office within the United States.
Compliance with the CTA is mandatory, and reporting companies that fail to do so, or that provide inaccurate or misleading information, may face significant penalties (both civil and criminal).
Update: due to a recent decision from the federal district court in the Eastern District of Texas, which had previously filed an injunction against the CTA, has reinstated the BOI reporting requirements as outlined in the law. Due to this, FinCEN is allowing for the extension of the deadline by 30 calendar days from Feb. 19, 2025, for most companies, since the Department of the Treasury recognizes that reporting companies may now need additional time to comply with their BOI reporting obligations. This means that for the vast majority of reporting companies, the new deadline to file an initial, updated and/or corrected BOI report is now Friday, March 21, 2025.
PIA helps members
More information about the CTA can be found in the article Corporate Transparency Act, which PIA members can find in the PIA QuickSource library.
PIA will continue to monitor the status of this law and notify its members should there be any legislative updates.
Update: On Feb. 27, 2025, FinCEN announced that it would not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update BOI reports pursuant to the current deadlines until a forthcoming interim final rule becomes effective and new relevant due dates in the interim final rule had passed (intended to be issued no later than March 21, 2025).
On the heels of these changes, the Treasury Department announced on March 2, 2025, that it would not be enforcing any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines and that it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the new interim final rule changes take effect. The Treasury Department is expected to issue a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.
Danielle Caswell, Esq.
Danielle Caswell joined PIA Northeast as associate counsel in the Government & Industry Affairs Department in 2023. She earned her bachelor’s degree from New York University and her law degree from Brooklyn Law School with a particular focus on intellectual property, information, and media law. Prior to joining PIA, Danielle was an associate at a law firm in New York City where she focused primarily on intellectual property and entertainment-related transactional and litigation matters.
