On September 30, 2022, the Financial Crimes Enforcement Network (“FinCEN”) of the Department of the Treasury adopted a final rule (the “Final Rule”) to implement the beneficial ownership reporting requirements of the Corporate Transparency Act (“CTA”), as part of the Anti-Money Laundering Act of 2020.  The CTA and Final Rule require a range of U.S. entities, and non-U.S. entities registered to do business in the United States, to report information on their underlying beneficial owners who are individuals to FinCEN.  Notably, certain investments advisers exempt from registration and subsidiaries of private fund clients of investment advisers will be subject to these reporting requirements.

Specifically, while SEC-registered investment advisers (“RIAs”) are exempt from the reporting requirements, private fund advisers, foreign private advisers, and family offices are not.  And of importance to registered private equity and other advisers, while the 3(c)(1) and 3(c)(7) private fund clients of RIAs are exempt from reporting, subsidiaries of those private fund clients are not exempt and will require analysis to determine whether reporting must be provided to FinCEN under the Final Rule.

The Reporting Requirements

The CTA and the Final Rule will require a wide range of entities to file confidential reports to FinCEN, which provide identifying information for the reporting company, its beneficial owners and certain individuals involved with the formation or registration of the reporting company.  The Final Rule requires the following entities to file reports unless they meet an exemption:

  • U.S. corporations;
  • U.S. LLCs;
  • Similar U.S. entities that are created by the filing of a document with a secretary of state or similar office under State law—which would typically capture LPs and business trusts/statutory trusts/Massachusetts trusts; and
  • Corporations, LLCs and other non-U.S. entities registered to do business in the United States by the filing of a document with a secretary of state or a similar office under State law.

Because the CTA is largely targeted at smaller, lightly regulated entities that may not be subject to other beneficial ownership reporting requirements, it exempts many entities from reporting requirements.  For more detail on the reporting requirements and exemptions relevant to non‑investment advisers under the Final Rule, see Cleary Gottlieb’s Article on the Final Rule.

Applicability to Investment Advisers

The Final Rule expressly exempts RIAs and the following unregistered investment advisers, from reporting and other requirements of the Final Rule:

  • Advisers relying on the “bank” exclusion in Advisers Act section 202(a); and
  • Advisers relying on the venture capital exemption under Advisers Act section 203(l), but only where they have otherwise filed beneficial ownership information with the SEC as required by the Advisers Act.

All other unregistered advisers do not have a blanket exemption from the reporting requirements, including private fund advisers who are “Exempt Reporting Advisers” under Advisers Act section 203(m), “foreign private advisers” exempt from Advisers Act registration under Advisers Act section 203(b)(3), and advisers relying on the family office exclusion under Advisers Act Rule 202(a)(11)(G)-1.  As a result, private equity sponsors must meet the limited other exemptions in the Final Rule described below, or will be required to file the ownership reports to FinCEN.

Some feeder fund vehicles, AIVs and other subsidiaries of private funds are also likely to be subject to the Final Rule’s reporting requirements.  The Final Rule exempts SEC-registered investment companies (“RICs”) and pooled investment vehicles relying on the exemptions from the definition of an investment company in Investment Company Act Sections 3(c)(1) or 3(c)(7) (“private funds”) that are listed on the investment adviser’s Form ADV (or will be listed as of the next annual update).  However, not all subsidiaries of RICs and private funds are exempted.  Although the Final Rule exempts directly or indirectly wholly owned subsidiaries of RICs from the reporting requirements, there is no such blanket exemption for subsidiaries of private funds.  This means that all investment advisers otherwise exempt from these reporting obligations must still consider the reporting obligations of subsidiaries of private funds that the advisers manage.  Reporting obligations extend to both direct and indirect beneficial owners who are individuals, which include individuals that can exercise direct and indirect substantial control over the reporting entity.  This means that non-exempt subsidiaries may be required to report individuals who control otherwise exempt entities if the exempt entity exercises substantial control over its non-exempt subsidiary.

The Final Rule also does not exempt pooled investment vehicles relying on exemptions under the Investment Company Act other than Sections 3(c)(1) or 3(c)(7), such as real estate vehicles relying on Section 3(c)(5)(c) and commodity pools, and requires that foreign pooled investment vehicles relying on the Investment Company Act exemption under Sections 3(c)(1) or 3(c)(7) still file an ownership report with respect to a single individual who exercises substantial control over the vehicle.

Advisers and other entities not exempted on a blanket basis under the Final Rule, including private fund advisers, can rely on other general exemptions from the reporting requirements, such as an exemption for entities that (A) employ more than 20 full-time employees in the United States; (B) have a physical operating presence within the United States; and (C) filed in the previous year Federal income tax returns in the United States with more than $5 million aggregate gross receipts or sales, including through certain related entities.  In practice, we expect that many private fund advisers will meet this general exemption from the reporting requirement, though monitoring and documenting the number of employees will be important in order to confirm continued eligibility.

Effective Date

The Final Rule provides for a January 1, 2024 effective date, though FinCEN acknowledges that significant additional implementation work is required.  In the adopting release, FinCEN noted that its ability to meet this schedule will depend on its receipt of adequate funding in Congressional appropriations, and that without additional funding, it may need to adjust its implementation and outreach plans.


The Final Rule left many questions unanswered, and new interpretive issues will inevitably arise as the effective date approaches.  FinCEN has indicated that it intends to conduct additional stakeholder engagement and may release further guidance and FAQs at a later date.  In the meantime, advisers that operate or invest in the United States should review the CTA and Final Rule to understand what parts of their business may be affected and identify ambiguities and questions where further guidance may be required.