The Corporate Transparency Act caused two years of confusion for anyone holding an LLC, domestic or offshore, and 2026 is the year the picture clarified. FinCEN narrowed the rule considerably in March 2025, a federal appeals court upheld the underlying law’s constitutionality, and a new bill in Congress could narrow it further still. For clients holding a Nevis LLC or Cook Islands LLC, the current rules land in a specific, fairly narrow place, and it is worth being precise about where.
Offshore Broker forms and maintains offshore LLCs and IBCs across the Cook Islands, Nevis, and 20+ other jurisdictions. Our team includes Connor Steens and John Evans, both with direct trustee and private banking experience in the Cook Islands.
What Changed in 2025
FinCEN published an interim final rule on March 26, 2025, that redefined “reporting company” under the Corporate Transparency Act to mean only entities formed under foreign law that have registered to do business in a US state or tribal jurisdiction, the category formerly labeled “foreign reporting companies.” Every entity formed inside the United States, along with the US persons who own them, is now exempt from federal beneficial ownership information filing entirely. That exemption held up under legal challenge: the Eleventh Circuit affirmed the CTA’s constitutionality while the narrowed rule remained in effect, meaning the underlying law stands but its practical reach has been cut dramatically. By one estimate, roughly 99.8% of the entities originally covered when the CTA took effect have been removed from its scope.
Who Still Has to File
A Nevis LLC or Cook Islands LLC that never registers to do business inside a US state falls outside the CTA entirely under the current rule, since it is a foreign entity that has not registered anywhere in the US. The obligation appears specifically when a foreign entity registers to do business in a US state, which turns it into a “foreign reporting company” under the narrowed definition and triggers a federal BOI filing. This is a scenario worth checking carefully rather than assuming away: some structures register an offshore LLC to do business in a specific state for banking, licensing, or operational reasons, and that registration is what creates the filing requirement, not the offshore formation itself.
The New York Wrinkle
New York became the first state to layer its own beneficial ownership disclosure requirement on top of the federal rule. The New York LLC Transparency Act took effect January 1, 2026, and applies specifically to LLCs formed outside the United States that register to do business in New York State. Foreign LLCs already authorized to do business in New York before 2026 must file a beneficial ownership disclosure, or an attestation of exemption, with the New York Department of State by December 31, 2026. LLCs newly authorized on or after January 1, 2026, have 30 days from their registration to file. The requirement is annual going forward, and at present it applies to non-US beneficial owners rather than reaching US persons behind the structure. Any client with a Nevis LLC or Cook Islands LLC registered, or planning to register, to do business in New York needs this on the calendar independently of whatever happens with the federal rule.
We help clients confirm CTA and state-level filing status for offshore LLCs. Free, confidential consultation.
What Filing Actually Involves, When It Applies
For the narrow set of structures that do trigger a federal filing obligation, the process itself is not especially burdensome. A foreign reporting company files a BOI report through FinCEN’s online system, identifying each beneficial owner who exercises substantial control or holds at least 25% of ownership interests, along with each owner’s legal name, date of birth, current address, and an identifying number from a passport or similar document. There is no fee to file, and the report is not made public; it sits in FinCEN’s database, accessible to law enforcement and, under specific circumstances, to financial institutions conducting due diligence. The bigger practical burden is the update requirement: any change in beneficial ownership, or any change to a listed owner’s name or address, has to be reflected in an updated filing within 30 days, which means a structure that files once and stops paying attention can drift out of compliance without anyone noticing until an audit or an unrelated legal proceeding surfaces it.
Penalties for a company that is required to file and does not are civil penalties that accrue daily, alongside potential criminal penalties for willful non-compliance, though FinCEN’s enforcement posture in the current narrowed environment has focused overwhelmingly on entities that clearly fall within the foreign reporting company definition rather than ambiguous edge cases. That enforcement posture is itself a policy choice that could shift with a new final rule, which is part of why treating the current exemption as settled law rather than a current administrative position is the more cautious approach for anyone maintaining an offshore structure.
Where This Could Go Next
The interim final rule is a regulatory pause, not a repeal, and FinCEN is expected to issue a final rule that could reinstate broader requirements with limited notice, since the underlying statute remains valid law. Congress has also moved in the opposite direction: the House Committee on Financial Services advanced the Repealing Big Brother Overreach Act on April 21, 2026, a bill that would codify the current domestic exemption in statute and limit federal beneficial ownership reporting permanently to foreign-owned entities. Neither outcome is settled. A structure that assumes today’s narrow rule is permanent, and stops tracking ownership records accordingly, is the structure most exposed if the rule moves back toward its original scope.
What This Means If You Hold a Nevis or Cook Islands LLC
For most clients whose offshore LLC sits inside a Cook Islands Trust structure and never registers to do business in a US state, there is currently no federal BOI filing obligation, and no state-level obligation unless that state has enacted its own transparency law and the LLC has registered there. The prudent position is not to treat that as settled: keep beneficial ownership records current, confirm whether any state registration exists or is planned, and revisit the question when FinCEN issues its final rule. Our overview of offshore company formation covers the full range of jurisdictions we work in, and our guide to what an offshore company is places these reporting questions inside the broader picture of how these entities are used.
