U.S. Supreme Court Lifts Injunction on Corporate Transparency Act Enforcement
Learn about the Supreme Court's decision on 1/23/2025 lifting the injunction on the Corporate Transparency Act (CTA), reinstating BOI reporting requirements. Discover its implications for businesses and how to stay compliant with evolving regulations.
The U.S. Supreme Court today issued a stay on a nationwide injunction that had prevented enforcement of the Corporate Transparency Act (CTA), reinstating the requirement for businesses to report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). This decision marks a significant development in the ongoing legal battle surrounding the CTA.
Background on the Case
The dispute originated in Texas, where a district court judge issued a nationwide injunction blocking the enforcement of the CTA. This injunction was challenged by the government, and in late December, the Fifth Circuit Court of Appeals lifted it. However, just three days later, a panel of Fifth Circuit judges responsible for reviewing the merits of the government’s appeal reinstated the injunction, citing the need to "preserve the constitutional status quo while the merits panel considers the parties' weighty substantive arguments."
In response, the U.S. Department of Justice sought emergency relief from the Supreme Court to stay the Fifth Circuit’s injunction. The Supreme Court’s decision today effectively allows the CTA’s enforcement to resume while the case proceeds in the lower courts. For a broader understanding of beneficial ownership information (BOI) and its implications, read this overview. The full text of the Supreme Court’s order can be accessed here. For more context on prior judicial determinations regarding the CTA, visit our judicial insights on CTA rulings.
Implications of the Supreme Court’s Stay
With the stay in place, the CTA’s requirements are back in effect. The law mandates that covered businesses submit detailed information about their beneficial owners to FinCEN, a measure designed to combat illicit financial activities such as money laundering and tax evasion. However, as of Thursday afternoon, FinCEN had not released updated guidance regarding the immediate resumption of BOI reporting requirements.
The Supreme Court’s ruling underscores the complexity of balancing transparency with the potential burdens placed on businesses, particularly small and mid-sized enterprises that may face compliance challenges. For now, businesses subject to the CTA should prepare to meet reporting obligations, pending further updates from FinCEN.
What Comes Next?
The Fifth Circuit’s review of the government’s appeal remains ongoing. Legal experts anticipate that the final decision on the merits of the CTA will have far-reaching implications for financial transparency and corporate compliance nationwide. In the meantime, the Supreme Court’s stay provides a temporary green light for enforcement of the law.
Businesses impacted by the CTA are advised to monitor FinCEN’s announcements closely and consult with legal or compliance experts to ensure readiness. For expert legal guidance, connect with Bianca S. Sánchez-Rivera, who leads CTA-related matters at MZLS. This pivotal moment highlights the evolving legal landscape surrounding financial transparency and underscores the importance of staying informed about regulatory requirements.
Call to Action
If your business is affected by the CTA, now is the time to act. Contact us through our dedicated page to understand how these legal developments impact your compliance obligations and to ensure your organization is fully prepared to meet reporting requirements. Stay ahead of the evolving regulatory landscape with our expert guidance.