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Home News Supreme Court Revives Small Business Registration Rule To Combat Money Laundering

Supreme Court Revives Small Business Registration Rule To Combat Money Laundering

by Celia

The Supreme Court has revived a requirement for millions of small business owners to register with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). This move is aimed at combating money laundering and other financial crimes. The requirement was part of the Corporate Transparency Act, which was enacted in 2021 to crack down on the illicit use of anonymous shell companies.

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The Supreme Court’s decision came after the Justice Department made an emergency plea in the final days of the Biden administration. The ruling allows the enforcement of the Corporate Transparency Act while legal challenges continue in the courts.

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Owners and part-owners of approximately 32.6 million small businesses must now register personal information, including photo IDs and home addresses, with FinCEN. However, it remains unclear whether the Trump administration will actively enforce this requirement. The registration rule has faced opposition from Republican-led states, lawmakers, and conservative and business interest groups.

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The registration requirement was initially blocked by a federal judge in Texas, who ruled that Congress lacked the authority to pass the Corporate Transparency Act. The 5th U.S. Circuit Court of Appeals kept the requirement on hold while reviewing the judge’s ruling.

The National Small Business Association (NSBA), which had challenged the reporting requirements in court, urged FinCEN to give businesses ample time to comply. “This decision creates even more uncertainty for the millions of small businesses we represent,” said NSBA President and CEO Todd McCracken. He called on Congress to delay and repeal the Corporate Transparency Act.

Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council, said the order likely isn’t the end of the “go-stop-go story” of the reporting requirement. She urged President Trump to provide immediate penalty relief for late filers, noting the confusion and chaos surrounding the law.

A coalition of labor, environmental, and progressive organizations that support the law praised the court’s decision. “For years, police and prosecutors have tried to combat a flood of dirty money associated with often violent crimes, but that can’t happen if they run into a wall of shell companies and secrecy,” said Ian Gary, executive director of the FACT Coalition. “Today’s order is a reminder of the urgency of opening the money trail so our law enforcement officials can crack down on criminals who abuse the system.”

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