On Dec. 3, a federal district court in Texas issued an injunction against enforcement of the CTA anywhere in the country, finding that the law exceeded Congress’s legislative authority under the Constitution. The ruling comes less than one month before the Jan. 1, 2025, deadline requiring all reporting entities to disclose their beneficial ownership information (BOI) to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
The federal government is likely to file a motion to stay the court’s order in the U.S. Court of Appeals for the Fifth Circuit, meaning the Dec. 3 ruling may not be a final decision. Note: As of the morning of Dec. 4, FinCEN had not issued any statement as to their stance on the ruling.
This is a quickly developing and urgent issue, particularly with the Jan. 1 deadline approaching. It is still unclear how FinCEN will respond and whether the filing deadlines will be extended due to the Texas court’s injunction.
Update:
The Financial Crimes Enforcement Network (FinCEN) issued a response to the federal district court ruling.
While they appeal the court’s decision, FinCEN will comply with the preliminary injunction for as long as it remains in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information reports and will not be subject to liability if they fail to do so while the order remains. Reporting companies may continue to voluntarily submit reports to FinCEN.
Due to the uncertainty regarding the duration of the preliminary injunction, it is advisable for reporting companies to continue gathering information to be prepared to file. Further guidance will be shared as it becomes available. If you have any questions, please reach out to your Rehmann advisor or Anthony Licavoli.