Business owners may feel like their heads are spinning in the middle of a tornado of ever-changing beneficial ownership reporting requirements — from the Financial Crimes Enforcement Network’s (FinCEN) Final Customer Due Diligence (CDD) Rule in 2018 to the now-sidelined Corporate Transparency Act (CTA) of 2024. With the halt placed on the CTA in March 2025, many business owners are left wondering: Why are we still being asked for beneficial owner information when opening new bank accounts?
CDD and CTA: What’s the Difference?
In 2018, FinCEN enacted the Final CDD Rule requiring financial institutions to collect information on beneficial owners with 25% or more ownership in covered business customers. The goal? To promote transparency and deter the creation of shell companies used for money laundering or other illicit purposes. In addition to identifying these owners, entities must also designate one individual as a control manager.
Several years later, in 2024, Congressional legislation introduced the Corporate Transparency Act (CTA), which required covered business entities to report beneficial ownership information directly to FinCEN through a central repository. If the word “redundant” comes to mind, you’re not alone.
Is the Corporate Transparency Act Still in Effect?
Following ongoing legal challenges and a shift in administration priorities, the U.S. Treasury announced on March 2, 2025, that the CTA would no longer be enforced. A new rule has been promised, but as of now, it has not been finalized or implemented.
So why is your bank still requesting beneficial ownership information? The answer is simple: while FinCEN has paused the CTA, the Final CDD Rule for financial institutions remains active. This means your bank is still required by law to collect this information when your business opens a new account.
Compliance, Transparency, and Your Role
While some business owners may view these requirements as burdensome, it’s important to understand the broader goal. By providing accurate ownership information when opening a bank account, you’re helping your financial institution remain compliant with federal regulations, and you’re also contributing to the fight against illicit financial activity.
For more information on the Final CDD Rule, visit: FinCEN’s Customer Due Diligence Final Rule
Have Questions?
If you’re unsure how these requirements affect your business or need help navigating compliance issues, our Risk Management team is here to help. Contact us today to discuss how we can support your organization’s risk and regulatory needs with clarity and confidence.
Article Contributed by Julie Mixtacki
