New Treasury Rule Limits LLC Information Reporting

The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has published a final rule that clarifies—and narrows—the scope of companies required to report beneficial ownership information under the Corporate Transparency Act (CTA), which was part of the broader Anti-Money Laundering Act enacted in 2021.

The law is intended to combat money laundering and other financial crimes by reviewing financial transactions. It initially required certain limited liability companies (LLCs) and other entities to report “ultimate beneficial-owner information,” including name, date of birth, current address, and more, to FinCEN.

According to NBAA, this applied to many entities that own business aircraft under an LLC, which is a common structure to establish leases under which companies may share aircraft. The group raised concerns regarding privacy and the potential exposure of personally identifiable information of business aircraft owners and business aircraft ownership structures.

The final rule mitigates many of the previous privacy and legal concerns by permanently removing beneficial ownership reporting requirements for U.S. companies and U.S. persons. As a result, NBAA noted, domestic entities—including U.S.-formed LLCs, corporations, and other entities commonly used in aircraft ownership structures—are no longer subject to CTA beneficial ownership reporting.

FinCEN also stated that it will address privacy concerns raised by industry stakeholders by removing previously reported ownership information concerning U.S. persons from its database.

Foreign entities registered to do business in the U.S. are still subject to CTA reporting, but that is generally limited to information on foreign beneficial owners. NBAA advised those entities to reach out to their legal and tax advisors for more information and to ensure compliance with the regulation.