Here we go again – another CTA update hot off the press.
- In our last update, we reported that the U.S. Department of Justice (DOJ) filed with the U.S. Supreme Court an emergency application to stay the injunction preventing FinCEN from enforcing the CTA, asking the Court to either stay the Texas district court’s December 3, 2024, injunction pending the Fifth Circuit’s merits review in Texas Top Cop Shop v. Garland (4:24-cv-00478-ALM), or, in the alternative, to treat the application as a “petition for a writ of certiorari before judgment presenting the question whether the district court erred in entering preliminary relief on a universal basis.”
- On January 7, 2025, in a separate Texas case – Smith v. United States Department of Treasury (6:24-cv-00336) – a federal judge in the Eastern District issued a separate order enjoining enforcement of the CTA against the plaintiffs in that case and staying the Reporting Rule on a nationwide basis. At this time, the government has not appealed in that matter.
- But, on January 23, 2025, the Supreme Court granted the DOJ’s application in Texas Top Cop Shop, staying the nationwide injunction against FinCEN’s enforcement of the CTA. The stay will apply through the appeal process before the Fifth Circuit Court of Appeals and disposition of a petition for a writ of certiorari.
Despite the Supreme Court’s order, the nationwide stay of the Reporting Rule granted in Smith remains in effect. Thus, FinCEN still cannot enforce the Reporting Rule’s reporting obligations, at least until the Smith court amends its order or the government seeks further review in that case. FinCEN has acknowledged the two conflicting rulings, stating on its website that “reporting companies are not currently required to file beneficial ownership information with FinCEN,” nor are they “subject to liability if they fail to file this information while the Smith order remains in force.”
McGuireWoods will continue to monitor developments and publish updates as these cases proceed. Our team stands ready to assist. For questions about the CTA or anti-money laundering (AML) compliance generally, including customer due diligence and beneficial ownership rules, contact the authors of this article or another member of the McGuireWoods’ Financial Services & Securities Enforcement, Government Investigations & White Collar Litigation, Healthcare, Tax & Employment Benefits, or Corporate & Private Equity teams.