by Gina Parlovecchio, Brad Resnikoff, Matthew Bisanz, and Daisy Gray
From left to right: Gina Parlovecchio, Brad Resnikoff, Matthew Bisanz, and Daisy Gray (Photos courtesy of Mayer Brown LLP).
On March 1, 2024, the US District Court for the Northern District of Alabama declared the Corporate Transparency Act (“CTA”) unconstitutional, and suspended its enforcement against the plaintiffs in that case. While most companies remain subject to its requirements for now, this decision may presage more broadly applicable relief through subsequent judicial or administrative action.
The CTA requires many entities conducting business in the United States to disclose beneficial ownership information to the Financial Crimes Enforcement Network (“FinCEN”), a law enforcement arm of the US Department of Treasury. The court, in enjoining the CTA’s enforcement against the plaintiffs, found that the CTA exceeds constitutional limits on Congress’s power. In the wake of the decision, FinCEN announced that it intends to respect the court’s decision and will not enforce the CTA beneficial ownership requirements against the plaintiffs, but its silence as to other parties implies that everyone else must continue to comply.
In this Legal Update, we discuss the case, National Small Business Association, et al. v. Yellen, FinCEN’s response, and our predictions for what will come next.