A group of Republican senators has introduced legislation to limit beneficial owner information reporting requirements to foreign entities and owners. The move came just a week after a House committee advanced a bill with a similar purpose.
Senators Target CTA
The Senate bill, S. 4419, headed up by Senators Mike Lee (R-UT) and John Kennedy (R-LA), would narrow beneficial ownership reporting requirements. These requirements were put in place after Congress enacted the Corporate Transparency Act (CTA) in an effort to combat money laundering, trafficking, and other illicit activities.
The CTA requires specified entities or “reporting companies” to submit reports indicating their beneficial owners to Treasury’s Financial Crimes Enforcement Network (FinCEN). Reporting has largely been on pause, however, due to pending litigation and Trump administration actions.
Under the current statute, 31 U.S.C. 5336, “reporting company” is defined broadly to include corporations, limited liability companies, and other entities that are created or registered to do business in the U.S. by filing with a state or Tribal secretary of state or similar office. While the statute contains several exceptions to this definition, opponents said it went too far — bringing constitutional challenges in court, with mixed results.
The Senate bill largely aligns with a March 2025 interim final rule, which exempted domestic entities and U.S. beneficial owners of foreign entities from the reporting requirements. The bill would strike from the definition of reporting company entities that are created by filing with a state or Tribal secretary of state. It also would specifically exclude from the definition of beneficial owner “any United States person.”
The senators’ move comes on the heels of the House Financial Services Committee’s April 21 vote to advance a similar measure, the Repealing Big Brother Overreach Act, H.R. 425. While the introduced version of H.R. 425 would have simply repealed provisions of the CTA, the committee advanced an amended version that, instead, targets CTA requirements for domestic entities and U.S. beneficial owners.
Two Bills, One Goal
The House and Senate bills share the same objective — narrowing beneficial ownership reporting under § 5336 so that the regime applies primarily to foreign entities and foreign individuals rather than domestic companies and U.S. persons. They differ in drafting structure and certain substantive details.
The House bill, as amended, takes a broad approach, inserting the word “foreign” after “beneficial” everywhere those terms appear in § 5336. The Senate bill does not rename the regime — instead, it makes targeted amendments.
Both bills narrow the definition of “reporting company” to foreign-formed entities registered to do business in the United States, but they do so differently. The House bill removes the domestic-entity prong through a strike-and-insert amendment, while the Senate bill replaces the definition directly.
The bills also differ in how they address reporting by U.S. persons. The House bill simply inserts “foreign” after “beneficial” throughout to limit reporting to foreign entities and owners. The Senate bill, however, excludes “United States persons” from the definition of beneficial owner and separately provides that reporting companies need not report beneficial ownership information for U.S. persons, and U.S. persons need not provide such information.
Both bills require FinCEN to delete certain previously collected information within 90 days. The Senate bill requires deletion of beneficial ownership information of U.S. persons and expressly permits retention of information relating to non-U.S. persons. The House bill simply requires FinCEN to delete information about individuals who are not foreign beneficial owners and entities that are not reporting companies under the revised definition.
Mixed Reactions
In addition to Lee and Kennedy, the Senate bill has eight original co-sponsors — all Republicans. Senator Shelley Moore Capito (R-VA) said the Senate bill “takes a targeted, responsible approach that ensures oversight efforts are focused where they matter most, while lifting an undue burden.” She described the current CTA and its reporting requirements as “overly broad” and putting Americans’ personal information at risk.
The National Small Business Association — which recently asked the U.S. Supreme Court to weigh in on the CTA’s constitutionality, also supports the congressional efforts to narrow the requirements. NSBA President and CEO Todd McCracken called the House committee’s approval of H.R. 425 “a step forward in ensuring America’s small businesses aren’t harmed by the deeply flawed CTA.”
However, anticorruption groups, including the FACT Coalition, warn that narrowing the CTA reporting requirements to foreign entities and beneficial owners means exempting over 99% of covered companies.
“This legislation doubles down on Treasury’s unlawful gutting of the Corporate Transparency Act, leaving open a Mack-truck-sized hole in the U.S. anti-money laundering framework,” FACT Coalition Deputy Director Erica Hanichak told Checkpoint after the Senate bill introduction. In her view, it “ignores decades of bipartisan evidence compiled by Congress about the illicit finance risks of U.S. shell companies.”
CTA opponents “have spent millions of dollars to challenge a simple reporting requirement, one that most small business owners can file in 10 minutes or less,” said Hanichak. “Introducing this bill isn’t about lowering costs for small businesses: it’s about Congress choosing to protect the interests of wealthy donors over the safety of their communities.”
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