As of January 23, 2025, the Supreme Court reinstated the Corporate Transparency Act (CTA), a federal anti-money laundering law, pausing a lower court’s injunction. This decision has reignited debates around the purpose of the law, its implementation, and its broader implications for businesses across the United States. Let’s break this down to understand the legal framework, the purpose of the CTA, and the history of this critical case.

However, based upon the BOI E-Filing System website it states: “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports. More information is available at https://www.fincen.gov/boi.”

What Is the Corporate Transparency Act (CTA)?

The Corporate Transparency Act, passed as part of the annual defense bill in 2021, mandates millions of businesses in the United States to disclose key personal information about their owners. This includes details like names, addresses, and dates of birth. The goal is to combat financial crimes such as money laundering, fraud, and terrorism financing.

The CTA targets “beneficial owners” of companies—those who directly or indirectly own or control at least 25% of the business. Information gathered under this law is submitted to the Financial Crimes Enforcement Network (FinCEN) for secure storage, accessible only by authorized entities.

Why Was the CTA Created?

Money laundering and other financial crimes cost governments billions of dollars annually. The CTA was designed to:

  • Increase transparency: By requiring beneficial ownership disclosure, the law aims to prevent anonymous shell companies from being used to conceal illicit activities.
  • Protect national security: Transparency allows for better monitoring of financial networks linked to criminal activities and terrorism.
  • Enhance global cooperation: The U.S. can encourage other countries to implement similar anti-money laundering measures by leading with its own robust regulations.

While the CTA seeks to safeguard financial systems, critics argue it imposes undue regulatory burdens, particularly on small businesses.

A Chronological History of the Case

The Law’s Origins

  • In 2021 the CTA was passed as part of the annual defense bill. Despite opposition, Congress overrode then-President Trump’s veto, marking the only such override during his presidency.

Implementation Delays

  • The government initially deferred the CTA’s enforcement, scheduling its start nearly four years after enactment. This delay fueled arguments that the law’s immediate enforcement was unnecessary.
  • Various groups, including a firearms dealer, a dairy farm, and the National Federation of Independent Business (NFIB), filed a lawsuit arguing the law exceeded Congress’s constitutional authority over interstate commerce.

Lower Court Injunction

  • A federal district judge issued an injunction, temporarily halting the law’s implementation. The plaintiffs emphasized the irreversible nature of the disclosure, claiming the law could unfairly target small businesses.

Appeal to the Supreme Court

  • The Justice Department, under the Biden administration, sought an emergency stay from the Supreme Court, asserting that delaying the CTA would cause irreparable harm. The department argued the injunction undermined U.S. anti-money laundering efforts and set a dangerous precedent for blocking federal laws.

Supreme Court Ruling

  • On January 23, 2025, the Supreme Court reinstated the CTA, allowing its implementation to proceed while legal challenges continue in the 5th U.S. Circuit Court of Appeals. Justice Ketanji Brown Jackson dissented, citing a lack of urgency in enforcing the law while litigation is ongoing.

One of the broader legal issues raised by the Corporate Transparency Act (CTA) case is the use of universal injunctions — court orders that block the enforcement of federal laws nationwide. Critics, including Justice Neil Gorsuch, have expressed concern that these injunctions overreach, preventing democratically enacted laws from being implemented, even in areas where they are not directly challenged.

For business owners, this debate carries significant implications. Universal injunctions can create uncertainty about whether federal laws will remain enforceable, making it difficult for companies to prepare for compliance. While the Supreme Court’s reinstatement of the CTA allows its implementation to move forward, the broader question of when universal injunctions should be used remains unresolved.

Implications for Small Businesses

The reinstatement of the CTA has significant implications for small business owners:

  • Compliance Requirements: Businesses must disclose sensitive information about their owners, increasing administrative burdens.
  • Penalties: Non-compliance could result in hefty fines or legal action.
  • Opposition from Advocacy Groups: Organizations like the National Small Business Association and several Republican state attorneys general view the law as a power grab that could harm small enterprises disproportionately.

What’s Next?

The case now returns to the 5th Circuit Court of Appeals, where the law’s constitutionality will be evaluated. In the meantime, the Supreme Court’s decision has paved the way for the CTA’s enforcement, meaning businesses must act now to comply with its requirements.

Navigating the complexities of the Corporate Transparency Act and its compliance obligations can be overwhelming for businesses of all sizes. Don’t wait until enforcement deadlines approach—start preparing now. Consult with a trusted legal advisor to ensure your business is compliant, protected, and ready for the changes ahead.

Contact Omnus Law today to learn how our team can help you meet the challenges of this evolving regulatory landscape.