The US Supreme Court has removed a major obstacle to the enforcement of an anti-money laundering law. The law requires millions of businesses to reveal the identities of their true owners to the Treasury Department. However, its enforcement remains on hold, and the final decision could lie with President Donald Trump.
On Thursday, the Supreme Court declined to block the enforcement of the Corporate Transparency Act. This law was passed in 2021 but has faced legal challenges from small businesses. In December, a Texas-based federal judge, Amos Mazzant, issued a nationwide injunction, arguing that Congress overstepped its constitutional powers in passing the law. The Supreme Court has now suspended this injunction.
However, the law’s enforcement is still blocked due to a separate order issued on January 7 by another Texas-based federal judge, Jeremy Kernodle. Lawyers representing the small businesses in the Supreme Court case have said that the decision now rests with the Trump administration, which took office on Monday.
Todd Gaziano, president of the conservative Center for Individual Rights, which represented the small businesses, expressed confidence that the law’s reporting requirements and harsh penalties would ultimately be ruled unconstitutional.
The Supreme Court’s action came after the New Orleans-based 5th US Circuit Court of Appeals allowed the injunction to take effect. This was ahead of a January 13 deadline that most companies faced to submit their initial reports to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
Former President Joe Biden’s administration had urged the Supreme Court to stay the injunction, arguing that millions of entities had already complied with the reporting requirement before it was blocked. The administration emphasized that the law’s reporting requirements were crucial for preventing, detecting, and prosecuting crimes such as money laundering, tax fraud, and terrorism financing.
Conservative Justice Neil Gorsuch agreed that the injunction should be suspended but suggested that the Supreme Court should take up the case now to determine whether a single judge can issue a nationwide injunction. Liberal Justice Ketanji Brown Jackson dissented, arguing that further delay in implementing the law would not harm the government, which had already delayed enforcement for nearly four years after the law’s enactment.
The law was challenged by the National Federation of Independent Business and several small businesses through the Center for Individual Rights. The law requires corporations and limited liability companies (LLCs) to report information about their beneficial owners to FinCEN. Beneficial owners are individuals who directly or indirectly own or control a company.
Supporters of the law argue that it is necessary to combat the growing trend of criminals using US-based entities to launder illicit funds. They say that the law’s reporting requirements are vital for preventing and prosecuting financial crimes.
Read more: