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UPDATE: Supreme Court Rules on CTA Enforcement

January 24, 2025 - By: Michael J. Radin and Ellen Long


In the latest development of the ongoing legal saga over the Corporate Transparency Act (CTA), the United States Supreme Court has stayed the nationwide preliminary injunction from a Fifth Circuit US Court of Appeals that had temporarily blocked the law's enforcement, adding to the complex legal journey for this significant piece of financial regulation. However, a separate preliminary injunction against the CTA remains in place, issued by a federal judge in the Smith et al. v. U.S. Department of the Treasury case, on January 7, 2025. The Financial Crimes Enforcement Network (FinCEN) issued an updated statement on their website as of January 24, 2025, clarifying that “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.”

The stay will remain in effect through two potential phases: first, until the full Fifth Circuit Court of Appeals reaches its decision on the preliminary injunction, and second, through any subsequent Supreme Court proceedings. The Fifth Circuit scheduled oral arguments for March 25, 2025.

It's crucial to understand what this Supreme Court decision does – and does not – do. The Court's action specifically addresses the procedural question of whether a Fifth Circuit Court of Appeals nationwide preliminary injunction was appropriate in this case. Missing from this decision is any ruling on the fundamental question of whether the CTA is constitutional. That more substantive legal battle lies ahead in the appellate courts, where the core constitutional questions will be thoroughly argued and decided.

This latest chapter in the CTA's implementation underscores the complex interplay between administrative law, constitutional rights, and the practical challenges of implementing broad-reaching financial regulations. As the legal process continues to unfold, businesses – and their legal advisors - must remain attentive to further developments that could impact compliance obligations under this significant piece of financial transparency legislation.

We will continue to follow this complicated and frustrating process and report on any new updates. If you have any questions about your company’s filing requirements under the CTA, please contact us at (617) 218-2000.