Winston WONG, Max LIEW (12 March 2025) – On Sunday, 2 March 2025, the United States Department of Treasury announced that with respect to the US Corporate Transparency Act 2024 (“CTA”), no penalties or fines associated with the Beneficial Ownership Information (“BOI“) reporting rule under the current regulatory deadlines will be enforced on US citizens, domestic reporting companies or beneficial owners. The Treasury Department states that they will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. It is reported that Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.
CTA, BOI, and the FinCEN
The CTA was the Financial Crimes Enforcement Network’s (“FinCEN“) attempt at dealing with illicit financial activities by providing federal authorities with information about individuals who run US businesses. The CTA requires reporting entities (inclusive of associations) to file a BOI report within 30 days of creation or registration of any company, or if there were any changes to the beneficial owners of a company.
Constitutional challenges
The CTA has faced consistent resistance with its enforcement especially in the face of its deadline for compliance.
We highlight two illustrative cases.
On 3 December 2024, the US District Court for the Eastern District of Texas (Sherman Division) issued a preliminary injunction in favor of the plaintiffs in the case of Texas Top Cop Shop, Inc. et al. vs. Garland (US Attorney General). The court issued a nationwide preliminary injunction, suspending enforcement of the CTA and its implementing regulations. On December 5, the federal government filed a notice of appeal and requested that the preliminary injunction be stayed pending appeal. On 23 December, the Fifth Circuit, holding that the government was likely to prevail on the merits, stayed the preliminary injunction and reinstated the 1 January 2025, deadline for CTA filings.
On 26 December 2024, a panel of the US Court of Appeals for the Fifth Circuit vacated the above order therefore once again putting on hold companies’ obligations to file beneficial ownership information with the US FinCEN. The merits panel’s order stated that (the order vacating stay order of the nationwide preliminary injunction) is intended “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments,” and the court subsequently issued a briefing schedule, although it did not disclose the composition of the merits panel that issued the order and is handling the case. The parties’ deadlines to submit briefs extend through the end of February 2025, and the case is scheduled for oral argument on 25 March 2025.
On 7 January 2025, in the case of Smith v. United States Department of the Treasury, United States District Court Judge Jeremy D. Kernodle commented that “the (CTA) is unprecedented in its breadth and expands federal power beyond constitutional limits… it mandates the disclosure of personal information from millions of private entities while intruding on an area of traditional state concern”. On 5 February 2025, the U.S. Department of Justice (“DOJ“), on behalf of the Department of the Treasury, filed a notice of appeal, and requested a stay of the injunction pending appeal. Subsequently, on 17 February 2025, Judge Jeremy D. Kernodle issued an order granting the DOJ’s motion for a stay of the injunction pending appeal. Therefore, the CTA is once again in full force and effect with reporting companies being required to file BOI with the US FinCEN.
Key events thus far
A Comparative Study: US CTA v SG RORC/RONS/ROND
Since 31 March 2017, companies, foreign companies, and Limited Liability Partnerships (LLPs) in Singapore have been required to maintain a RORC at their registered office or with their Corporate Service Provider. Effective 30 July 2020, entities must also lodge this information with ACRA’s central register within two business days of setting up or updating their RORC. This centralization of beneficial ownership data underscores Singapore’s commitment to enhancing corporate transparency and maintaining its reputation as a trusted global financial hub.
The following is a non-exhaustive table with some comparing some key elements of the disclosure regime between the US CTA and the SG ACRA – RORC/RONS/ROND. Amongst matters compared are their relative scope, requirements, enforcement, penalties, and implementation.
| BOI (CTA) | RORC (Companies Act) | RONS / ROND (Companies Act) | |
| Which businesses are targeted | 1. Corporations/LLC’s created in the United States by filing a document with a secretary of state/any similar office under the law of a state/Indian tribe 2. A foreign company that was registered to do business in any U.S. state of Indian tribe by such a filing | All Singaporean LLPs (limited liability partnership)/Companies | Refer to comments for RORC |
| Who is the report about | 1. Company Applicant 2. Beneficial owner | Registrable Controllers | Nominee Shareholders (RONS) Nominee Directors (ROND) |
| Who is exempted | 1. Public companies with a class of securities registered under the Securities Exchange Act of 1934. 2. Banks 3. Savings associations 4. Trust companies 5. Credit unions 6. Bank holding companies 7. An entity that is a large operating company | 1. A public company which shares are listed for quotation on an approved exchange in Singapore 2. A company that is a Singapore financial institution 3. A company that is wholly owned by the Government of Singapore 4. A company that is wholly-owned by a statutory body established by or under a public Act for a public purpose 5. A company that is a wholly-owned subsidiary of a company mentioned in (1), (2), (3) or (4) 6. A company which shares are listed on a securities exchange in a country or territory outside Singapore and which is subject to — (i) regulatory disclosure requirements; and (ii) requirements relating to adequate transparency in respect of its beneficial owners, imposed through stock exchange rules, law or other enforceable means. | Refer to comments for RORC |
| What to do | Reporting companies are required to submit to US FinCEN for each beneficial owner and each individual who files an application to form a domestic entity or register a foreign entity to do business. | 1. Entities must maintain a register containing the particulars of the company’s or LLP’s registrable controller(s) (Beneficial Owners). 2. RORC must be kept at registered office address or at registered office of appointed corporate service provider. 3. Entities will have to lodge the same information in their RORC with ACRA’s central register within 2 business days after the RORC has been set up, or after any changes have been made to the RORC. | 1. Entities must maintain a register containing the particulars of the company’s or LLP’s nominee shareholders (RONS) / nominee directors (ROND). 2. RONS / ROND must be kept at registered office address or at registered office of any registered filing agent appointed by the company for the purpose of keeping the register of nominee shareholders. |
| Which platform/storage method to use | File with US FinCEN | “Update register of registrable controllers” e-service via Bizfile | Keep register until requested, upon which it must be produced along with any related documents to the Registrar, an officer of ACRA or a public agency. |
| When | 1. Reporting companies formed before/on February 17th, 2025 will have until March 21st, 2025 to make an initial report. Any reporting company formed on or after February 18th, 2025 is required to make an initial report to US FinCEN within 30 days of creation or registration. 2. Any reporting company formed or registered on or after January 1, 2025 is required to make an initial report to US FinCEN within 30 days of notice of formation or registration. 3. Updated reports must be filed within 30 calendar days after the date of a change. | 1. RORC must be set up within 30 days after the company has been incorporated/LLP registered. 2. Company/LLP must send notices to persons that may be potential controllers to get confirmation and verify particulars. 3. RORC can be kept at the entity’s registered office address or at the address of the entity’s appointed registered Corp Service Provider. 4. Same RORC Information must be filled with ACRA via Bizfile within 2 days of creation/change. | 1. Companies must establish and maintain the register from the time a nominee arrangement is created. 2. Any changes to the information in the RONS / ROND must be updated within 7 days of receiving notice of change. 3. Nominees must give notice to the company within 30 days of becoming a nominee, or any change to their personal information. |
| Required information to be provided (Individuals) | 1. Full legal name 2. Date of birth 3. Current residential address (company applicants forming/registering companies in the course of their business report the business street address) 4. Unique identifying number and issuing jurisdiction from an acceptable identification document | 1. Full name 2. Aliases if any 3. Residential address Nationality 4. Identity card number/passport number 5. Date of birth 6. Date of becoming a controller 7. Date of cessation as a controller if applicable | 1. Full name 2. Aliases if any 3. Residential address Nationality 4. Identity card number/passport number 5. Date of birth 6. Date on which the shareholder (RONS) / director (ROND) became the individual’s nominee. |
| Required information to be provided (Company/Entity’s) | 1. Full legal name & any trade name/”doing business as” name 2. Current US address of its principal place of business/current address where it conducts business in the US. If principal place of business is outside the US, provide the jurisdiction of formation or registration 4. IRS taxpayer identification number including an employer identification number or a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction if not issued a TIN. | 1. Name 2. Unique entity number if any 3. Address of registered office 4. Legal form of the corporate controller if applicable 5. Jurisdiction where the corporate controller is formed or incorporated and under which law 6. Name of authority in which the corporate controller is formed or incorporated if applicable 7. Identification number or registration number issued to the corporate controller when it was formed or incorporated, if applicable. 8. Date of becoming a controller 9. Date of cessation as a controller if applicable | 1. Name 2. Unique entity number if any 3. Address of registered office 4. Legal form of the legal entity 5. Jurisdiction where and statute under which the legal entity is formed or incorporated 6. Name of corporate entity register of the jurisdiction where the legal entity is formed or incorporated if applicable 7. Identification number or registration number of the legal entity on the corporate entity register of the jurisdiction where the legal entity is formed or incorporated, if applicable. 8. Date on which the shareholder (RONS) / director (ROND) became the legal entity’s nominee |
| Acts/Laws to take note of | CTA | Section 386AG of the Companies Act and Section 386AH of the Companies Act | Section 386ALA of the Companies Act and Section 386AM of the Companies Act (RONS) / Section 386AKA of the Companies Act and Section 386AL of the Companies Act (ROND) |
| Penalties for non-compliance | Civil penalties of US$500/day (up to US$10,000) and possible criminal penalties of up to US$10,000 and two years in prison. [Currently suspended] | The company or foreign company, and every officer of the company or foreign company who is in default, shall each be guilty of an offence and shall each be liable on conviction to a fine not exceeding S$5,000. No continuing penalties for continuing non-compliance. | Any person who fails to comply with any requirement shall be guilty of an offence and shall be liable on conviction to a fine not exceeding S$5,000. No continuing penalties for continuing non-compliance. |
Targeted approach
Singapore’s Companies Act specifically addresses nominee arrangements, which are not explicitly covered under the CTA. For nominee arrangements, Singapore does not require declarations, instead requiring the maintenance of a register, to be presented when requested for.
The CTA targets beneficial owners, much like Singapore’s Companies Act targets controllers of the company, and both the BOI reporting and RORC must be reported to a centralized federal registry (US FinCEN for the CTA, the Singapore Companies Registry (ACRA) for the Singapore Companies Act). In Singapore’s case, only the RORC declarations are reported to a centralized government registry. It is notable that the RONS and ROND disclosures are not technology reported but required by law to be held by the company itself or its company secretary. It is explicitly stated that the Company shall not disclosure these disclosures to a member of the public, though the Singapore Companies Registry may exercise its power under Section 386AM(1)(a) to compel its contents to be revealed for its inspection. This power is ostensibly for the purpose of ensuring compliance and notably is silent on whether it is illegal for the Singapore Companies Registry to disclose such information to any other Government body. We feel the weight of legal jurisprudence slightly favors illegality.
Significant administrative costs for smaller business
In Singapore’s case, the disclosure requirements were added piecemeal: RORC on 31 March 2017, ACRA central register reporting in July 2020, ROND on 30 May 2022, and RONS on 4 October 2022. The US CTA in comparison faced massive resistance and in its implementation all its required BOI reporting information at once, which, inter alia, increases administrative difficulty for affected persons, and places a larger burden on smaller companies (which caused many of these small companies to gather and file a challenge, contending that BOI reporting was apparently too burdensome). In Singapore’s experience and under Singapore’s existing disclosure regime, it is not untrue that smaller companies similarly have a larger burden (relatively) placed on them.
Law 9.10: Repeated infringements
Regarding the proposed penalties, it is worth noting that the CTA prescribes not just criminal (up to US$10,000 and up to 2 years imprisonment) but also civil penalties, that accrue daily (up to US$10,000), whereas the penalties for failure to comply with the Singaporean Companies Act is a fine, however it does not include civil penalties, or a continuous penalty (like the CTA).
The penalty for non-disclosure pursuant to the Singapore RORC/RONS/ROND regime is a S$5,000 fine. As above, there is no continuously accruing penalty if such person does not rectify the non-compliance. Section 401 of the Singapore Companies Act provides that a false and misleading statement to ACRA will result in up to S$50,000 fine and/or up to 2 years imprisonment. Putting the above together, it seems that there is a lacuna in the law for a person considering to not disclose their controllers, nominee directors, nominee shareholders, to simply not declare the same under Sections 386AG/386AH, 386ALA/386AM, and 386AKA/386AL of the Singapore Companies Act and paying the (maximum) S$5,000 fine, at the same time ostensibly avoiding exposure to Section 401 and the 2 year imprisonment term for making a disclosure but failing to name the correct information in such disclosure, knowing there is no continuously accruing penalty for continued non-rectification. This immediately brings to mind Law 9.10 where a team is persistently offside just outside the try-line, the referee has the authority to call the captain of the errant team in for a final caution whereupon the next offside player in the errant team will be yellow carded with 20-minute suspension – authority visibly missing here.
Moving Forward
Currently, Singapore’s Companies Act has remained relatively untouched since the addition of the RONS, which indicates that it is the view of the Monetary Authority of Singapore that the current legislation is sufficient in its efforts against illegal financial activity. There is one matter that we may choose to consider, though, that the implementation of a continuously accruing penalty (civil, or otherwise) for continuing non-compliance on top of the pre-existing penalties as it would act as additional deterrence for the relevant person, and an incentive for companies to fasterly comply with the requirements set out by the Companies Act.
Amidst the current flux in the CTA’s implementation, it is impossible to ascertain if the CTA would have achieved its raison d’etre. Flint & Battery believes that transparency laws are an important component in establishing a stable, sustainable, vibrant financial center driven by the rule of law and supporting legitimate commerce activity. US lawmakers should consider the piecemeal RORC/RONS/ROND roadmap.
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