Summary
-FinCEN reporting enforcement remains blocked by second stay
-Opponents hoping Trump administration weighs in on law
Bloomberg Law
"The US Supreme Court’s decision to pause a nationwide injunction blocking the Corporate Transparency Act again created uncertainty for US businesses even as the federal government said enforcement of the law remains on hold.
The justices on Thursday granted the Justice Department’s request to stay the injunction—the first to block the CTA nationwide—while litigation over the constitutionality of the law continues. The case will return to the US Court of Appeals for the Fifth Circuit for oral arguments in March.
But the effective date of a key regulation implementing the law remains stayed by another district court in a separate case, Smith v. US Department of Treasury, the Treasury Department’s Financial Crimes Enforcement Network said in an alert Friday.
That regulation would have imposed an initial deadline for about 32 million US business entities to disclose the identities of their beneficial owners—individuals who control the business—to FinCEN.
“I would advise everyone to take a deep breath,” said Seth Ashby, leader of Varnum LLP’s business and corporate practice team.
The Supreme Court’s order “has no immediate effect because the government already is on the record saying they would take steps to provide for an extended compliance deadline,” Ashby said. “But more importantly, they need to do something about the decision in the Smith case.”
In Smith, the US District Court for the Eastern District of Texas issued an injunction blocking the CTA only against the plaintiffs in the case, but paused the reporting deadline nationwide.
The government will likely need to appeal that order before Treasury can practically resume CTA enforcement, Ashby said..."
