A U.S. appeals court has temporarily blocked the enforcement of the Corporate Transparency Act (CTA), an anti-money laundering law requiring corporate entities to disclose beneficial ownership to the U.S. Treasury Department. The New Orleans-based 5th Circuit Court of Appeals reinstated a nationwide injunction initially granted by a Texas federal judge in December 2024, who deemed the law unconstitutional. This decision postpones the January 2025 deadline for most companies to submit beneficial ownership reports to the Financial Crimes Enforcement Network (FinCEN). FinCEN has clarified that while filing is not mandatory, companies may submit their reports voluntarily. The court’s order aims to preserve constitutional considerations until a merits panel reviews the substantive arguments in March 2025.
The injunction originated from a lawsuit led by the National Federation of Independent Business and other entities, represented by the Center for Individual Rights. Critics argued that the CTA imposes unconstitutional government surveillance, while supporters view it as a necessary measure to curb financial crimes. Enacted in 2021, the CTA sought to address criminal misuse of corporate structures for money laundering. The pause on enforcement raises questions about the future of the law and its implications for combating illicit financial activity in the U.S.
The Department of Justice, representing FinCEN, has appealed to the Supreme Court to lift the injunction, with oral arguments scheduled for March 2025. Until then, the CTA's enforcement remains on hold, and businesses are advised to stay informed about further legal developments.
