The Corporate Transparency Act and Private Funds in 2026

The Corporate Transparency Act (CTA) created a federal beneficial ownership information (BOI) reporting regime, run by FinCEN, that was originally expected to cover tens of millions of U.S. companies. That scope has been sharply cut. Under FinCEN's March 2025 interim final rule, which it finalized in August 2026, companies created in the United States and U.S. persons are exempt. Only certain foreign entities registered to do business in a U.S. state or tribal jurisdiction still have to file. For most U.S. private funds, GPs, management companies and portfolio companies, the CTA no longer requires any filing as of late 2026.

Fund managers should still understand what changed, which foreign entities remain in scope, and why ownership records still matter.

How we got here#

The CTA was enacted on January 1, 2021, as part of the Anti-Money Laundering Act of 2020. Its path since then:

The statute itself was not repealed. The narrowing was done through FinCEN's rulemaking, by redefining "reporting company" to mean entities formed under foreign law. Legislative or regulatory change in either direction remains possible, so treat this as the position as of late 2026.

Who still has to report#

Under the current rule, a reporting company is an entity that:

1. is formed under the law of a foreign country
2. has registered to do business in any U.S. state or tribal jurisdiction by filing a document with a secretary of state or similar office
3. does not qualify for one of the regulation's exemptions

Even then, the foreign reporting company does not report beneficial owners who are U.S. persons, and a U.S.-person beneficial owner does not have to provide information to it. Foreign entities that register on or after the interim rule's effective date have 30 calendar days after their registration becomes effective to file an initial report.

What this means for typical fund entities#

The test turns on the state registration, not on whether the entity invests in the U.S. or has U.S. investors. A Cayman fund that holds U.S. securities without registering to do business anywhere in the U.S. is outside the definition.

Exemptions that still matter for funds#

The regulation's 23 exemptions remain, and a foreign entity that would otherwise be in scope may fit one of them. Those most relevant to private funds:

• Pooled investment vehicle. A pooled investment vehicle operated or advised by an exempt entity, such as an SEC-registered investment adviser or a venture capital fund adviser that has filed Form ADV, is exempt. A foreign pooled investment vehicle that is a reporting company reports only on a single individual who exercises substantial control over it, rather than on every beneficial owner.
• Registered investment adviser and venture capital fund adviser. Advisers that meet the conditions are exempt themselves.
• Large operating company. More than 20 full-time U.S. employees, more than $5 million of U.S.-source gross receipts or sales on its prior-year federal return, and an operating presence at a physical office in the U.S.
• Subsidiary of certain exempt entities. Entities wholly owned or controlled by certain exempt entities. Pooled investment vehicles are not among the parents that pass this exemption down, so a fund's subsidiary cannot rely on the fund's exemption.
• Inactive entity. Narrow conditions apply.

A hypothetical example#

Assume a U.S. sponsor manages a Delaware main fund and a Cayman feeder. The feeder owns a Cayman blocker. The blocker registered in Texas to hold an interest in a Texas operating property, and the Texas registration became effective on September 1, 2026.

• The Delaware fund and GP are U.S. entities and are out of scope.
• The Cayman feeder has no U.S. state registration and is out of scope.
• The Cayman blocker is formed under foreign law and is registered in Texas, so it is a candidate reporting company. It is not a pooled investment vehicle itself, and the subsidiary exemption does not pass through from a pooled vehicle. Unless another exemption applies, it must file within 30 days, by October 1, 2026, reporting only its non-U.S. beneficial owners and company applicants.
• If every individual who owns 25% or more of the blocker, or exercises substantial control over it, is a U.S. person, the report would list no beneficial owners. The blocker is still a reporting company, so confirm the filing mechanics with counsel.

The analysis turns on the facts. The practical lesson is to inventory every foreign entity in the structure and check whether it holds any U.S. state registration. See fund structures for how these vehicles typically fit together.

Penalties#

The statute provides civil penalties per day of a continuing willful violation, adjusted annually for inflation, and criminal penalties for willful failures to report or for providing false information. For foreign reporting companies still in scope, these remain live. FinCEN's non-enforcement stance applies to U.S. companies and U.S. persons, which are now outside the rule entirely.

Why ownership data still matters#

The CTA narrowing removes a federal filing, not the need to know who owns your entities and investors:

• Banks and broker-dealers must still collect beneficial ownership information on legal entity customers under FinCEN's customer due diligence rule. Opening fund accounts and subscription facilities still requires ownership charts and controller information.
• Offshore regimes keep their own requirements. Cayman, for example, has a beneficial ownership transparency framework and AML rules with a 10% investor look-through for funds. See Cayman Islands KYC/AML.
• AML programs. Investor KYC remains an LP and counterparty expectation, and FinCEN's investment adviser AML rule is scheduled for January 1, 2028. See AML and KYC.
• State laws. Some states have proposed or enacted their own beneficial ownership disclosure laws. Check the states where your entities are formed or registered.

Practical steps for fund managers#

1. Inventory foreign entities. List every non-U.S. entity in each fund structure: feeders, blockers, aggregators, GPs, co-invest vehicles and holding companies.
2. Check state registrations. For each, confirm whether it has registered to do business in any U.S. state or tribal jurisdiction, and on what date.
3. Test exemptions. Document which exemption applies, if any, with a short memo per entity.
4. File where required. Calendar the 30-day deadline for any new registration, and track updates, which are generally due within 30 days of a change to reported information.
5. Archive past filings. If you filed for U.S. entities in 2024 or early 2025, keep the records. No updates are required for U.S. entities under the current rule.
6. Revisit periodically. Add a CTA status check to the annual compliance review. See private fund compliance.

The Corporate Transparency Act's scope has changed several times. Confirm the current rule and how it applies to your entities with counsel.