US Ends Ownership Reporting, Straining Banks’ KYC Toolkit

Congress enacted the Corporate Transparency Act in 2021 to expose the individuals who ultimately own or control companies, giving the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, a federal registry that began accepting reports on Jan. 1, 2024. The system was expected to cover 32.6 million small businesses at an estimated initial cost of about $85 each. Banks had anticipated using the data, with customer consent, to strengthen know-your-customer checks and meet anti-money-laundering obligations aligned with Financial Action Task Force standards.

FinCEN finalized a rule on Aug. 11, 2026, permanently exempting US-formed companies and US persons from beneficial-ownership reporting and said it would delete information they had already submitted. Certain foreign entities registered to do business in the US must still report non-US beneficial owners. Business groups welcomed the reduction in compliance costs, but banks remain responsible under the Bank Secrecy Act and Customer Due Diligence Rule for identifying owners, monitoring risk and reporting suspicious activity, leaving them to fill the information gap without the federal database.