Key Question
If U.S. companies no longer need to report beneficial ownership information to FinCEN, must broker-dealers and investment advisers still understand who owns and controls their legal-entity customers?
Our View
Yes. FinCEN’s permanent rollback of domestic Corporate Transparency Act reporting eliminates the company’s obligation to report beneficial ownership information to FinCEN, but it does not eliminate separate customer due diligence, AML, sanctions, supervisory, or risk-management considerations that may require broker-dealers, RIAs, compliance officers, and senior management to understand the individuals behind a legal-entity customer.
Executive Summary
FinCEN has finalized its rollback of the Corporate Transparency Act’s beneficial ownership information reporting regime, making permanent the exemptions first established in March 2025 for U.S. companies and U.S. persons. As a result, companies created in the United States generally no longer must file beneficial ownership information, or “BOI,” with FinCEN, and FinCEN has also addressed information previously submitted to its BOI database concerning U.S. persons.
For financial firms, however, the practical message is not that beneficial ownership has become irrelevant. Rather, the obligation of a company to report its owners to the government and the obligation of a financial firm to understand its customer are separate regulatory concepts. That distinction is clearest for broker-dealers. FinCEN’s Customer Due Diligence Rule continues to require covered financial institutions, including broker-dealers, to identify and verify the beneficial owners of covered legal-entity customers, subject to applicable exclusions, exemptions, and FinCEN’s February 2026 exceptive relief.
RIAs occupy a different position. They are not presently subject to the same CDD Rule applicable to broker-dealers, and FinCEN has postponed the effective date of its investment adviser AML rule until January 1, 2028, while Treasury reconsiders that regulatory framework. The SEC and FinCEN’s separate customer identification program proposal for RIAs and exempt reporting advisers also remains a proposal, not a final rule.
Accordingly, firms should not simply delete beneficial-ownership procedures because CTA reporting has ended. Instead, BDs and RIAs should identify why they collect ownership information, distinguish CTA requirements from their own regulatory and risk-management obligations, and adjust their procedures accordingly.
Regulatory Background: From Broad CTA Reporting to a Permanent Rollback
Congress enacted the Corporate Transparency Act as part of the Anti-Money Laundering Act of 2020. The original framework was designed to create a federal database containing information about the individuals who ultimately own or control millions of corporations, limited liability companies, and similar entities.
That approach changed substantially in 2025. On March 26, 2025, FinCEN issued an interim final rule narrowing the definition of a reporting company, so entities created in the United States were no longer required to report BOI. The remaining reporting regime generally applied to entities formed under foreign law and registered to do business in a U.S. state or Tribal jurisdiction. FinCEN also exempted U.S. persons from certain BOI reporting obligations.
FinCEN has now finalized that approach. The new final rule adopts the March 2025 framework with limited additional changes, including exemptions for U.S.-person company applicants and requirements associated with FinCEN identifiers.
The result is significant: for the ordinary U.S.-formed corporation or LLC, federal CTA reporting is effectively gone. But the CTA was only one component of the broader beneficial-ownership framework. In fact, FinCEN expressly recognized when it adopted the 2025 rollback that covered financial institutions’ continued collection of beneficial ownership information under the CDD Rule could help mitigate illicit-finance risks associated with eliminating domestic-company reporting. That distinction should drive how financial firms respond to the final rule.
Practical Impact for Broker-Dealers
For broker-dealers, the most important compliance message is simple: do not confuse the customer’s CTA exemption with the broker-dealer’s CDD obligations.
Broker-dealers are covered financial institutions under FinCEN’s Customer Due Diligence Rule. The rule generally requires covered institutions to identify and verify the beneficial owners of covered legal-entity customers. Under the existing framework, beneficial ownership generally includes individuals who own 25% or more of the legal entity and one individual with significant responsibility for controlling, managing, or directing the entity. Therefore, the fact that a domestic LLC tells a broker-dealer, “We no longer file BOI with FinCEN,” does not, by itself, relieve the BD of its applicable CDD responsibilities.
However, there has been a separate and important change. On February 13, 2026, FinCEN granted exceptive relief from the requirement to identify and verify a legal-entity customer’s beneficial owners each time that same customer opens another account. Under FinCEN’s current guidance, a covered institution may generally limit renewed identification and verification to the customer’s initial account opening, circumstances in which the institution learns facts that reasonably call the existing information into question, and situations in which its risk-based ongoing CDD procedures require updated information. This is an important operational change, but it does not eliminate beneficial-ownership diligence. It reflects a shift away from repetitive collection and toward a more risk-based approach.
Beneficial ownership can also matter outside the CDD Rule. OFAC’s sanctions framework, for example, generally treats an entity owned 50% or more, directly or indirectly and individually or in the aggregate, by one or more blocked persons as itself blocked. Accordingly, eliminating CTA reporting does not eliminate the need for a BD to understand ownership when such information is necessary to satisfy sanctions, AML, suspicious activity monitoring, or other risk-based obligations.
Practical Impact for RIAs
For RIAs, the analysis requires greater care because the current regulatory framework differs from that applicable to broker-dealers. FinCEN’s existing CDD Rule does not simply impose the broker-dealer beneficial-ownership collection requirement on RIAs. That distinction is important when firms update policies or communicate with advisory personnel.
FinCEN adopted an AML/CFT and suspicious activity reporting rule for certain investment advisers in 2024, but Treasury subsequently decided to revisit that framework. FinCEN ultimately postponed the rule’s effective date from January 1, 2026, until January 1, 2028. Similarly, the SEC and FinCEN proposed customer identification program requirements for RIAs and exempt reporting advisers in 2024, but the proposal has not become final.
The regulatory distinction matters: an RIA should not maintain a procedure on the mistaken assumption that the CTA itself requires it to collect BOI or that the existing broker-dealer CDD Rule automatically applies to the advisory firm.
The absence of a current federal CDD requirement specific to RIAs does not render ownership information irrelevant. RIAs remain U.S. persons subject to applicable U.S. sanctions restrictions. Determining whether a legal entity is owned by blocked persons may require examining the entity’s ownership structure. Ownership and control information may also be relevant to an adviser’s fraud controls, conflicts analysis, account-opening practices, private-fund investor diligence, custodian requirements, and the adviser’s overall understanding of the client relationship.
For dual registrants, the issue becomes particularly important. Firms should clearly identify which procedures arise from the broker-dealer’s BSA/AML obligations, which apply across the enterprise because of sanctions or firmwide risk controls, and which are advisory-specific. A single form may collect the information, but the legal basis for collecting it may differ.
Recommended Actions
FinCEN’s final rule provides an appropriate opportunity for BDs and RIAs to review their beneficial-ownership procedures, not necessarily to eliminate them, but to ensure that each requirement has a current and defensible regulatory or risk-management basis.
- Review Policies and Procedures. Firms should identify references to the CTA, BOI reports, the FinCEN BOI database, and beneficial-ownership collection throughout AML manuals, WSPs, advisory compliance manuals, onboarding procedures, and client forms. Outdated statements suggesting that domestic customers must file CTA reports should be revised.
- Separate CTA Obligations from CDD Obligations. Broker-dealers should make clear that a domestic customer’s exemption from CTA reporting does not determine whether the BD must collect beneficial-ownership information under the CDD Rule.
- Evaluate the 2026 CDD Relief. BDs should determine whether they will use FinCEN’s February 2026 exceptive relief and, if so, document when previously obtained beneficial-ownership information may be relied upon and what events trigger renewed identification or verification.
- Review RIA Procedures Separately. RIAs should avoid importing BD requirements without determining their legal basis. At the same time, advisory firms should identify circumstances in which ownership information remains necessary for sanctions screening, fraud prevention, custodian onboarding, conflicts management, or other risk-based purposes.
- Train Personnel on the Distinction. Employees should understand that “CTA reporting is gone” does not mean “beneficial ownership no longer matters.” Training should explain which requirements have disappeared, which remain, and when ownership changes or inconsistencies should be escalated.
- Document the Firm’s Rationale. If a firm continues collecting ownership information beyond a specific regulatory minimum, it should understand and document why. Conversely, if it reduces collection in response to FinCEN’s changes, the firm should ensure that the change does not inadvertently undermine another AML, sanctions, supervisory, or contractual control.
Key Takeaways
As we turn from the regulatory developments to their practical implications, the following key takeaways highlight what broker-dealers and RIAs should keep in mind when evaluating beneficial ownership, customer diligence, sanctions, and related supervisory controls.
- CTA Reporting and Customer Due Diligence Are Different. U.S. companies generally no longer report their beneficial owners to FinCEN under the CTA, but that does not eliminate a broker-dealer’s separate CDD obligations.
- Broker-Dealers Still Have Beneficial-Ownership Responsibilities. The CDD Rule remains operative, although FinCEN’s February 2026 relief permits firms to avoid duplicative identification and verification at every subsequent account opening when the conditions for the relief are satisfied.
- RIAs Are Different. RIAs are not currently subject to the same existing CDD Rule applicable to BDs. FinCEN’s investment adviser AML rule has been delayed until 2028, and the separate RIA CIP proposal has not been finalized.
- Sanctions Risk Did Not Disappear. Ownership information can remain essential to determining whether an entity is blocked under OFAC’s 50 Percent Rule and to managing other sanctions-related risks.
- The Regulatory Direction Is Toward Risk-Based Diligence, Not Ignoring Ownership. FinCEN’s recent actions suggest movement away from broad, repetitive information collection and toward more targeted, risk-based controls. Firms should consider whether their procedures reflect that distinction.
Conclusion
FinCEN’s permanent rollback of domestic BOI reporting closes an important chapter in the implementation of the Corporate Transparency Act. For U.S. businesses, the result is straightforward: the federal BOI reporting burden that once appeared likely to apply to millions of domestic companies has been lifted.
For BDs and RIAs, however, the compliance consequences are more complex. The central question is no longer simply whether a customer filed a BOI report with FinCEN. It is whether the financial firm has sufficient information about the people behind a legal entity to satisfy the firm’s specific obligations and risks. For broker-dealers, that continues to include FinCEN’s CDD framework, subject to recent risk-based relief. For RIAs, the federal AML and CIP landscape remains unsettled, but sanctions and other risk-management considerations can continue to make ownership information important.
The better compliance response, therefore, is not to automatically eliminate beneficial-ownership diligence. Instead, it is to identify why the firm collects the information, remove requirements that no longer have a regulatory basis, and preserve necessary controls.