Sorry to be the bearer of this urgent news during the holiday season. In a ruling that many businesses might view as a “Grinchy” disruption to their holiday season, the 5th Circuit Court of Appeals issued a significant decision reinstating the requirements of the Corporate Transparency Act (CTA). The CTA, which mandates that U.S. corporations, limited liability companies (LLCs), and various other entities disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), was initially delayed due to legal challenges.
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This situation is rapidly evolving. In the coming days, the challengers in this case could seek further review from the Fifth Circuit or seek relief from the United States Supreme Court. Additionally, several other federal courts are actively considering challenges against the CTA. At the time of this email, the United States Department of the Treasury’s Financial Crimes Enforcement Network has not publicly released any guidance based on today’s ruling.
The 5th Circuit’s ruling overturned a lower court decision that had temporarily blocked the CTA’s enforcement. The court emphasized the necessity of these requirements for improving transparency in business ownership, combating money laundering, and preventing illicit financial activities. As a result, businesses formed or registered in the U.S. will now be required to comply with the CTA’s reporting obligations.
This decision means that, as of right now, businesses will need to report detailed information about their beneficial owners—including names, addresses, birthdates, and identification numbers. Non-compliance could result in significant penalties, so companies should meet these requirements without delay.
Author: Patrick MacQueen is the founder of Medalist Legal. Patrick’s legal career has been highlighted by work primarily in the areas of real estate transactional law and real estate litigation.
