Are Banks Exempt From The Corporate Transparency Act?

There are 23 separate exemptions from the CTA's beneficial ownership reporting requirement. The exemptions are listed in order in FinCEN's Final Rule at 31 CFR 1010.380 and take effect on January 1, 2024.

CTA Exemptions Generally

In general, the CTA exempts companies that already report their beneficial ownership to the U.S. government under a separate legal framework. FinCEN's Final Rule addresses each exemption separately in subsection 1010.380(c)(2).

Exemption Number 3 - Banks

Subsection 1010.380(c)(2)(iii) of the Final Rule exempts:

(iii) Bank. Any bank, as defined in:

(A) Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);

(B) Section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)); or

Each of these three categories refers to a different standard under which an entity can be regulated as a Bank.

What Is Defined As A Bank?

In order to qualify for an exemption from the CTA, a bank must fall under one of the three following definitions

Section 3 of the Federal Deposit Insurance Act

The definition of "bank" in Section 3 of the Federal Deposit Insurance Act (the "FDIA") includes U.S. national banks, entities chartered as banks under state law, and any federal branch or insured branch of a bank. Importantly, the definition also includes any institution that was formerly regulated as a "savings association"

Section 2(a) of the Investment Company Act of 1940

The definition of "bank" in Section 2(a) of the Investment Company Act overlaps with the FDIA definition, but is also broader in some respects:

(5)"Bank" means (A) a depository institution (as defined in section 1813 of title 12) or a branch or agency of a foreign bank (as such terms are defined in section 3101 of title 12), (B) a member bank of the Federal Reserve System, (C) any other banking institution or trust company, whether incorporated or not, doing business under the laws of any State or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to national banks under the authority of the Comptroller of the Currency, and which is supervised and examined by State or Federal authority having supervision over banks, and which is not operated for the purpose of evading the provisions of this subchapter, and (D) a receiver, conservator, or other liquidating agent of any institution or firm included in clauses (A), (B), or (C) of this paragraph.

Importantly, this broader definition includes branches and agencies of foreign banks, and a receiver, conservator or other liquidating agent of any bank included in this definition.

Section 202(a) of the Investment Advisors Act

The definition of "bank" in Section 202(a) of the Investment Advisors Act is broader still:

(2)"Bank" means (A) a banking institution organized under the laws of the United States or a Federal savings association, as defined in section 1462(5) of title 12, (B) a member bank of the Federal Reserve System, (C) any other banking institution, savings association, as defined in section 1462(4) of title 12, or trust company, whether incorporated or not, doing business under the laws of any State or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to national banks under the authority of the Comptroller of the Currency, and which is supervised and examined by State or Federal authority having supervision over banks or savings associations, and which is not operated for the purpose of evading the provisions of this subchapter, and (D) a receiver, conservator, or other liquidating agent of any institution or firm included in clauses (A), (B), or (C) of this paragraph.