The Corporate Transparency Act became law on Jan. 1, 2021, and it officially took effect on Jan. 1, 2024. The legislation was introduced to enhance transparency in entity ownership structures to combat money laundering, tax fraud, and other illicit activities. It is part of the Anti-Money Laundering Act of 2020, which was enacted as part of the National Defense Authorization Act for Fiscal Year 2021.
However, a recent court decision has thrown the CTA’s enforcement timeline into uncertainty.
Court halts enforcement of the CTA
The U.S. District Court for the Eastern District of Texas issued a preliminary injunction blocking enforcement of the CTA on Dec. 3, 2024. The court also stayed the Jan. 1, 2025, compliance deadline, which previously required businesses to submit their beneficial ownership information to the Financial Crimes Enforcement Network.
Following the ruling:
FinCEN issued an alert on Dec. 7, 2024, stating that reporting companies are not currently required to file their BOI reports, and they will not face liability for failing to do so while the injunction remains in effect.
However, reporting companies still may choose to voluntarily file BOI reports if they wish.
The Department of Justice—acting on behalf of the Department of the Treasury—has filed a notice of appeal to challenge the ruling. As a result, the future of the CTA and its reporting requirements remains uncertain.
Key exemption for insurance agencies and producers still stands
While the legal landscape continues to evolve, there’s good news for insurance agencies and producers: the CTA’s 13th exemption still applies. This exemption means that state-licensed insurance producers are not subject to the reporting requirements of the CTA. Specifically, the exemption covers any entity that:
Is licensed and supervised by a state insurance commissioner or similar regulatory authority and maintains a physical office in the United States.
This carve-out recognizes the existing regulatory oversight in place for insurance professionals, preventing duplicative and unnecessary reporting requirements.
What should insurance professionals do now?
While insurance agencies and producers remain exempt from the CTA, it’s important to stay informed about ongoing legal developments—especially as the government appeals the court’s decision.
For now: Stay updated on the legal status of the CTA and FinCEN’s guidance.
For businesses outside the insurance sector, review your CTA obligations, including identifying beneficial owners and gathering required information, in case the injunction is reversed.
If you have clients impacted by the CTA, ensure they are aware of the current pause in enforcement, but encourage them to be prepared for possible changes.
Why it matters to PIA members
While many industries will need to adapt to the CTA’s compliance demands, most insurance agencies and producers can breathe easy, knowing they fall under this important exemption.
For more in-depth information on this legislation and who needs to comply, PIA Northeast members can access the Corporate Transparency Act in the PIA QuickSource library.
If you have any questions about this legislation, PIA Northeast members can contact PIA by phone at (800) 424-4244 or via email at resourcecenter@pia.org.
Shirley Albright, CPIA, CISR
Shirley Albright, CPIA, CISR, joined PIA in 1983 and has worked in many facets of the association over the years. In 1995, she was an integral part of establishing the Industry Resource Center to include the development of the software system to record and track all incoming and outgoing inquiries. She quickly moved from industry resource representative to assistant director and eventually to her current position as director. Currently, Shirley oversees the daily operations of the Industry Resource Center to include the triage of thousands of incoming member inquiries. Her other accomplishments include obtaining her New York state property/casualty broker’s license, CPIA and CISR designations.
