CTA Enforcement Stalled Despite Supreme Court Backing Treasury Department

The Corporate Transparency Act (CTA), which requires millions of companies to disclose their true ownership, is still not being enforced despite the US Supreme Court ruling in favor of the Treasury Department. The law is supposed to help combat financial crimes like money laundering and terrorist financing by requiring companies to report their beneficial owners.

On Thursday, the US Supreme Court overturned a lower court’s ruling that had blocked the CTA. The Treasury Department, which oversees the law through the Financial Crimes Enforcement Network (FinCEN), won that decision. But a separate national injunction issued earlier this month by a federal judge is still in effect. That injunction is still blocking the law from being enforced nationwide.

Despite the Supreme Court’s decisions, the implementation of the CTA remains a challenge due to ongoing legal changes.

FinCEN announced on Friday that businesses do not have to comply with the CTA while the injunction is in place. The injunction was part of a lawsuit brought by plaintiffs like the Texas Top Cop Shop, a small business. They argued the CTA’s reporting requirements were a big burden on small businesses.

The CTA was supposed to give law enforcement more access to information to track illegal activity and fight financial crime. The law requires companies to disclose their real owners, which can help authorities identify suspicious activity. But many business owners argue the law is too much administrative work especially for smaller businesses.

The CTA lawsuits are still ongoing. On December 3, Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas issued an injunction against the law. Judge Jeremy Kernodle of Texas also has an injunction in place. The government has not filed an appeal yet.

While Judge Kernodle’s office declined to comment, Chance Weldon, representing the plaintiffs in the case, confirmed the standing of the injunctions. “Our position remains in effect,”  Weldon stated, noting that “the government is still within its window to appeal.”

Although the Supreme Court ruling gave some clarity, the law is still not in full effect. The CTA lawsuits are still ongoing, and we don’t know when the law will be fully implemented. Since the FinCEN is accepting BOI filings, businesses submit their data to the FinCEN to avoid the risk of legal penalties and risk.

Suggested Read: 

Corporate Transparency Act: Beneficial Ownership Filing Suspended

Big BOI Reporting Update: Small Businesses Get a Break from the Deadline