Corporate Transparency Act – ON HOLD

Corporate Transparency Act – ON HOLD

The Corporate Transparency Act (“CTA”) was enacted January 1, 2021, as part of the National Defense Authorization Act, representing the most significant reformation of the Bank Secrecy Act and related anti-money laundering rules since the U.S. Patriot Act. The CTA is intended to address and guard against money laundering, terrorism financing, and other forms of illegal financing by mandating certain entities (primarily small and medium-size businesses) to report “beneficial ownership” information to the Financial Crimes Enforcement Network (“FinCEN”).

On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction that enjoins the federal government from enforcing the Corporate Transparency Act (the CTA).

A group of six plaintiffs filed a lawsuit in May 2024 claiming that Congress exceeded its authority under the Constitution in passing the CTA.  In a lengthy 79 pages of analysis, a United States District Judge Amos L. Mazzant, determined that there was merit to the plaintiff’s claims and issued a sweeping nationwide injunction.  The Court stated that neither the CTA nor the implementing rules adopted by FinCEN may be enforced and that reporting companies need not comply with the CTA’s upcoming January 1, 2025 deadline for filing beneficial ownership reports.

The preliminary injunction will be in place until there is a final decision and temporarily pauses enforcement of the CTA on a nationwide basis.  If the Government wins on any appeal or the Government ultimately prevails on the merits, the CTA requirements may be reinstated.

For additional information regarding the status or the beneficial ownership reporting requirements under the CTA, refer to FinCEN’s FAQs at https://www.fincen.gov/boifaqs .

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.  Epps & Coulson, LLP has staff licensed in France and affiliated Counsel offices in New York and Connecticut with lawyers also admitted in Connecticut, District of Columbia Massachusetts (pending), New Jersey, Hawaii, European Union, England and Wales, France (Paris Bar) and Sweden.

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