Summary
Three days after a different panel suspended the nationwide injunction that was preventing the enforcement of the Corporate Transparency Act, a Fifth Circuit panel reinstated it, causing confusion in compliance offices.
Bloomberg Law
A Fifth Circuit panel reinstated a nationwide injunction blocking enforcement of the Corporate Transparency Act, three days after a different panel lifted it, causing turmoil in compliance offices.
The CTA, enacted as an anti-money laundering measure, requires that US entities that existed before 2024 disclose the identities of their beneficial owners—individuals who own or control the business—by Jan. 1, 2025. With the injunction back in place as of Thursday, however, the government can no longer require businesses to file their beneficial ownership information reports to Treasury’s Financial Crimes Enforcement Network.
Back-and-forth changes to CTA enforcement over the holidays have caused whiplash for businesses weighing whether to proceed with their disclosures voluntarily. In between the Fifth Circuit rulings, the Treasury agency announced it was pushing back the reporting deadline to Jan. 13—meaning that the deadline has changed three times this week.
“What this has created, with respect to the back and forth, is widespread confusion and uncertainty,” said Danielle Lemberg, a Seward & Kissel LLP partner working on corporate formations and transactions,
Before the injunction, approximately 32.6 million existing US businesses would have needed to file reports in total by 2025, according to FinCEN estimates.
FinCEN said Friday that businesses could still file voluntarily if they chose.
“In light of a recent federal court order, 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,” a statement on the agency website said. “However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
