The United States has made its retreat from domestic beneficial ownership reporting permanent. On 14 August 2026, a final rule from the Financial Crimes Enforcement Network (FinCEN) took effect exempting all entities created in the United States from the beneficial ownership information reporting requirements introduced under the Corporate Transparency Act (CTA).
This means US persons are also exempt from being reported as beneficial owners or company applicants of foreign reporting companies. FinCEN has said it will remove previously submitted information relating to exempt US companies and US persons from its beneficial ownership database.
Banks, law firms and other regulated businesses still need to understand who owns and controls their customers where their own AML rules require it. More pressingly, sanctions compliance can still depend on identifying shareholders several layers up a corporate structure. UK firms remain subject to UK customer due diligence requirements regardless of what information a US company has to file with its own government. The FinCEN rule change substantially reduces the reporting burden on US companies, while potentially making ownership-based sanctions and KYC checks more difficult for the organisations doing business with them.
What has actually changed?
The CTA was enacted in 2021 and originally required millions of corporations, LLCs and similar entities to provide beneficial ownership information to FinCEN. The reporting regime went live in January 2024.
The policy changed sharply in 2025. An interim final rule issued in March 2025 exempted entities created in the United States and narrowed the definition of a reporting company essentially to certain foreign entities registered to do business in the US. The August 2026 final rule makes that approach permanent and expands some of the exemptions for US persons.
This means, for example, that a Delaware LLC owned entirely by individuals in the UK will not have to submit a beneficial ownership report simply because it is a US company.
A UK company registered to do business in a US state can be in a different position. Foreign entities that fall within the remaining definition of a reporting company must continue to report relevant foreign beneficial owners to FinCEN, subject to the applicable exemptions. They do not have to report beneficial owners who are US persons.
It is important to note that the CTA itself has not disappeared. FinCEN has used broad exemption powers contained within the legislation to remove US companies from its reporting requirements. Because the underlying statutory framework remains in place, a future administration could potentially reverse course through further rulemaking and bring domestic companies back within the reporting regime.
Beneficial ownership checks have not disappeared
There is an important distinction between a company’s obligation to report its owners to the government and another organisation’s obligation to find out who those owners are. FinCEN has explicitly said that its changes to the CTA reporting rules should not be interpreted as diminishing the importance of beneficial ownership information generally.
The separate US Customer Due Diligence Rule remains in force for covered financial institutions. Following additional relief introduced in February 2026, covered institutions generally have to identify and verify beneficial owners when a legal entity customer first opens an account, when information arises that calls existing ownership information into question, and where this is required under their risk-based ongoing due diligence procedures. Other BSA/AML monitoring obligations continue.
Why the change makes sanctions due diligence more complex
There is an important sanctions element to this rule change that firms should not overlook. Under OFAC’s 50 Percent Rule, an entity can itself be treated as blocked where one or more blocked persons own 50% or more of it, directly or indirectly and in aggregate, even when the entity does not appear by name on the sanctions list. OFAC specifically urges organisations considering transactions to conduct appropriate due diligence to determine relevant ownership interests. Removing one federal ownership reporting requirement therefore does not remove the need to understand ownership.
For example, a UK law firm might be instructed by a Delaware-incorporated company that does not itself appear on any sanctions list. The immediate customer therefore produces no match when screened by name. Further due diligence, however, shows that 60% of the company is owned by an offshore holding company which is itself 60% owned by an individual on the SDN List. The holding company is therefore blocked under OFAC’s 50 Percent Rule and, because it owns more than 50% of the Delaware company, the Delaware company is also treated as blocked, even though its name does not appear on the sanctions list. If the firm had relied only on entity-level screening and basic US incorporation records, it could have missed the sanctions exposure entirely.
What does this mean for UK firms?
There has been no corresponding relaxation of UK AML requirements. Under regulation 28 of the Money Laundering Regulations 2017, a regulated firm dealing with a legal entity must identify the beneficial owner, take reasonable measures to verify that person’s identity and take reasonable measures to understand the customer’s ownership and control structure. The extent of those measures must be appropriate to the money laundering and terrorist financing risk.
A US company’s exemption from FinCEN reporting therefore provides no exemption from UK CDD. Difficulties establishing beneficial ownership, unnecessary complexity and reluctance to provide ownership evidence are all matters that can affect the client or matter risk assessment.
However the FinCEN change does not automatically turn every American company into a high-risk client. Geography is only one part of the risk assessment, and the United States should not simply be recategorised wholesale because of this change.
Firms with material exposure to US entities should, however, consider whether the change affects their firm-wide risk assessment. Regulation 18 requires regulated businesses to maintain an up-to-date assessment taking account of customer and geographic risks, while regulation 19 requires policies, controls and procedures to manage the risks identified.
For some firms the answer may simply be a procedural amendment: US incorporation should no longer be assumed to imply that beneficial ownership information has been supplied to a federal authority. However for firms regularly advising on US corporate structures, a more substantial review may be justified.
US firms have a KYC question too
The rule change also creates an interesting position for American organisations. A US business may now have no CTA obligation to report its own beneficial owners to FinCEN while still being asked for exactly the same information by its bank, lender, investor, professional adviser or commercial counterparty.
Covered US financial institutions retain CDD obligations, and FinCEN has specifically rejected the idea that removing domestic CTA reporting makes beneficial ownership information irrelevant to financial crime controls.
Other US businesses may need ownership information for sanctions compliance, export controls, fraud prevention, contractual requirements or counterparties’ AML procedures. OFAC ownership rules are a particularly important reminder that screening the name of the company alone may be insufficient.
Firms should also avoid treating “UBO” as a single universal test. Different regimes use ownership and control information for different purposes and at different thresholds. A firm’s AML beneficial ownership analysis and its OFAC 50 Percent Rule analysis may therefore produce different questions about the same corporate structure.
The most immediate concern may be sanctions exposure. Removing federal beneficial ownership reporting for US companies makes effective ownership due diligence more important, particularly where firms rely heavily on automated sanctions screening. Screening the name of a US company against a sanctions list cannot identify a blocked person who owns it indirectly. Firms dealing with US entities therefore need to be able to establish the ownership chain independently where the risk warrants it, particularly where structures are complex, opaque or connected to higher-risk jurisdictions. As the US steps back from collecting this information centrally, more of the burden of establishing who sits behind a company falls on the organisations deciding whether it is safe and lawful to do business with it.
