FinCen’s Beneficial Ownership Disclosure – Jan 1, 2025 Deadline & CFPB Annually Adjusted Thresholds for 2025

Tags: Advocacy

Monday, December 2, 2024 8:01:00 AM

FinCen’s Beneficial Ownership Disclosure – Jan 1, 2025 Deadline on Hold Pending Recent Litigation and Injunction

This isn’t really TMHA’s field of expertise, so please check with your accounting professionals, but the federal FinCen Beneficial Ownership disclosure requirement deadline is coming at the end of this year.  Originating from a law passed in 2020 -  The Anti-Money Laundering Act of 2020, which includes the Corporate Transparency Act, became law after Congress’ overrode on January 1, 2021, former President Trump’s veto.  The law’s intent is to “crack down on anonymous shell companies, which have long been the vehicle of choice for money launderers, terrorists, and criminals.”  It seeks to do this by creating a federal database of beneficial owners of companies that the reporting companies must disclose.  There are some significant penalties for non-compliance. 

Generally speaking, a reporting company is a corporation, limited liability company or other similar entity that is created by the filing of a document with a secretary of state or similar office under the law of a state, or formed under the law of a foreign country and registered to do business in the United States by the filing of a document with a secretary of state or similar office under the laws of a state. 

For more on this, the American Bar Association has an informative post, and for more information on this you can go to FinCen’s dedicated page on Beneficial Ownership, and the Small Entity guide. 

The deadline to file initial BOI reports is January 1, 2025.

UPDATE - Federal Court Issues Injunction

On Tuesday, December 3, 2024, a federal court in Texas issued a nationwide injunction that blocks the implementation of the CTA and its regulations, determining that the Act is unconstitutional.

From Tuesday’s ruling:

“Reporting companies need not comply with the CTA's January 1, 2025, BOI reporting deadline pending further order of the Court." 

The case is Texas Top Cop Shop, Inc., et al. v. Garland, where the Court held that the CTA—which would have required an estimated 32.5 million companies in the United States as of January 1, 2024, to submit sensitive information regarding their “beneficial owners” (BOI) to the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025—was likely unconstitutional and that its implementation would irreparably harm reporting companies if they were forced to comply. The Court enjoined the CTA’s enforcement nationwide, specifically stating that neither the Act nor its related regulations may be enforced, and that “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline.”

Additional litigation regarding the CTA is anticipated, with the case likely moving to higher appellate courts in the coming weeks, creating additional uncertainty about the law’s future enforceability.  But as of Tuesday ruling, “[existing] reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline,” and that FinCEN cannot enforce any of the CTA’s penalties for willful noncompliance against entities or individuals.”

CFPB Annually Adjusted Thresholds for 2025

The CFPB has issued two final rules adjusting thresholds.  First, the CFPB has issued a final rule amending the official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA). The CFPB is required to calculate annually the dollar amounts for several provisions in Regulation Z. This final rule revises dollar amounts for certain provisions implementing TILA and amendments to TILA impacting HOEPA loans and qualified mortgages.  

Second, the CFPB has issued the annual adjustment to the maximum amount consumer reporting agencies may charge consumers for making a file disclosure to a consumer under the Fair Credit Reporting Act (FCRA).  The ceiling on allowable charges under Section 612(f) of the FCRA will remain unchanged at $15.50, effective for 2025.

For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2025 will be $26,968. The adjusted points-and-fees dollar trigger for high-cost mortgages in 2025 will be $1,348. For qualified mortgages (QMs) under the General QM loan definition in § 1026.43(e)(2), the thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) in 2025 will be:

  • 25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $134,841;
  • 5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $80,905 but less than $134,841;
  • 5 or more percentage points for a first-lien covered transaction with a loan amount less than $80,905;
  • 5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $134,841; 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $80,905; or
  • 5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $80,905.

 

For all categories of QMs, the thresholds for total points and fees in 2025 will be 3 percent of the total loan amount for a loan greater than or equal to $134,841; $4,045 for a loan amount greater than or equal to $80,905 but less than $134,841; 5 percent of the total loan amount for a loan greater than or equal to $26,968 but less than $80,905; $1,348 for a loan amount greater than or equal to $16,855 but less than $26,968; and 8 percent of the total loan amount for a loan amount less than $16,855.

These adjustments are applicable January 1, 2025, consistent with relevant statutory or regulatory provisions.

You can access the TILA notice at: https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/truth-lending-regulation-z-annual-threshold-adjustments-card-act-hoepa/.

You can access the FCRA notice at: https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/fair-credit-reporting-act-disclosures/