On May 29, GAO released a report finding that Treasury had not addressed “gaps” in beneficial ownership information resulting from expanded Corporate Transparency Act (CTA) exemptions, even though Treasury must provide law enforcement with “highly useful” information and report to Congress on exempt entities that are “significantly abused” for illicit finance. The CTA, which took effect in 2024, requires FinCEN to develop beneficial ownership reporting requirements and maintain a registry of beneficial owners, but the statute and a preexisting FinCEN rule (covered by this Orrick Insight here) exempted 23 categories of entities, largely because they were already regulated or reported similar information to government authorities. GAO found that regulators overseeing those original exempt categories generally collect some ownership or control information, but the type and amount collected varies. GAO noted that the exemption from beneficial ownership reporting for domestic companies and U.S. persons applies to more than 99 percent of entities that previously were required to report.

GAO found that most states require entities operating within their borders to file reports that may collect ownership or control information, such as officers, directors, or LLC members, but that these individuals may not be beneficial owners or exercise substantial control and that states vary in the information they collect. GAO concluded that the 2025 domestic reporting company exemption may perpetuate illicit finance risks because state ownership and control reporting requirements vary. GAO and Treasury disagreed regarding whether requiring domestic companies to report beneficial ownership information was sufficiently useful to justify the burden.