August’s BEV Break unpacked one of the biggest regulatory curveballs of the year: FinCEN’s decision to pause beneficial ownership (BOI) reporting requirements for U.S.-formed entities. Middesk’s In-House Counsel, Sam Matthew, walked through how we got here, what’s changed (and what hasn’t), and how financial institutions can keep pace without the centralized BOI registry they were counting on.
Here are the highlights from the session:
Understanding the Corporate Transparency Act
The Corporate Transparency Act (CTA) was passed in 2021 to bring ownership transparency to U.S. businesses and curb the use of anonymous shell companies for illicit purposes. It required most corporations and LLCs to report their beneficial owners — defined as individuals with substantial control or 25%+ ownership — to FinCEN, which would maintain a confidential federal registry.
The registry was intended to give law enforcement, regulators, and financial institutions a clearer view of who actually stood behind U.S. entities, helping prevent fraud, money laundering, and other abuses. While there were exemptions (like for publicly traded companies, banks, and certain large operating companies), the law represented a major shift toward standardized ownership reporting.
📽️ Watch Sam break down what the CTA was designed to do:
What’s changed with the reporting pause
On March 26, 2025, FinCEN announced that U.S.-formed entities are exempt from BOI reporting, leaving only foreign reporting companies still subject to the requirement. That decision effectively shelved the centralized BOI registry that institutions were hoping would reduce the manual lift of KYB and due diligence.
But one thing hasn’t changed: banks, fintechs, and platforms are still required to collect, verify, and retain BOI themselves as part of existing CIP and CDD obligations. In other words, the burden remains squarely on financial institutions.
📽️ Watch Sam outline what’s changed (and what hasn’t):
Bridging the BOI gap — and why it matters for onboarding
With the federal registry off the table, financial institutions are left to piece together ownership data themselves. That means doubling down on alternative methods to uncover beneficial owners, like:
- Cross-checking associated persons across Secretary of State filings
- Running KYC checks to spot other businesses or fraud risks tied to an individual
- Leveraging alternative data (like web presence) to validate connections filings alone might miss
Sam also highlighted the riskiest entity types to watch — from offshore holding structures to nominee-heavy Delaware shells — and shared quick wins like flagging entities with a high-risk trifecta (no operating presence, nominee agents, and UBOs tied to 10+ unrelated entities).
The takeaway: without a centralized source of truth, onboarding gets harder. Institutions need to stitch signals together across filings, addresses, and ownership records to spot hidden risks. Strong KYB workflows are now the only way to prevent nominee fraud, tax ID mismatches, and ownership blind spots from slipping through.
📽️ Watch Sam share practical tactics for bridging the gap — and why they’re critical for onboarding:
Final thoughts
FinCEN’s pause may have shelved the BOI registry, but it hasn’t paused the risks. The responsibility for verifying ownership has shifted fully back to financial institutions — and the winners will be the ones that treat KYB not as a compliance checkbox, but as a competitive advantage.
By building stronger monitoring systems, connecting signals across filings and alternative data, and moving faster on high-risk flags, institutions can turn today’s uncertainty into tomorrow’s edge.
📽️ Watch the full recording on demand for Sam’s complete breakdown
Expert tip
Don’t miss our next BEV Break: Leveraging web presence data in the business customer lifecycle. Middesk’s forward-deployed engineer, Nick Molina, will share how to integrate overlooked web signals — from domains to business listings — into your identity workflows. Save your spot!
