BREAKING NEWS! Update on FinCEN

Seal of the U.S. Treasury Financial Crimes Enforcement Network featuring an eagle with a key and scales, surrounded by binary code and a globe.

 

On January 23, 2025, the Supreme Court of the United States granted the federal government’s request to stay the nationwide injunction that had been blocking enforcement of the Corporate Transparency Act (CTA). This injunction was originally issued by the U.S. District Court for the Eastern District of Texas on December 3, 2024, in Texas Top Cop Shop, Inc. et al. v. McHenry et al., Case No. 4:24-cv-478 (E.D. Tex.) (formerly Texas Top Cop Shop, Inc. et al. v. Garland et al.). However, despite the Supreme Court’s ruling, the CTA remains unenforceable due to a separate nationwide injunction issued on January 7, 2025, by another federal judge in the same district in Smith et al. v. United States Department of Treasury et al., Case No. 6:24-cv-00336 (E.D. Tex.).

Following the Supreme Court’s decision, the Financial Crimes Enforcement Network (FinCEN), the agency responsible for administering and enforcing the CTA, issued a statement clarifying that reporting companies are not currently required to file beneficial ownership information with FinCEN. The statement also confirmed that reporting companies will not face liability for failing to file while the injunction in Smith v. United States Department of Treasury remains in effect.

As a result, CTA enforcement is temporarily paused, and its future remains uncertain as legal challenges continue. The oral argument for the appeal in Texas Top Cop Shop, Inc. v. McHenry is scheduled for March 25, 2025, though it is unclear when the Fifth Circuit Court of Appeals will issue its ruling. For more details on the case’s history and status, refer to the December 5, 2024, December 26, 2024, and December 30, 2024, Alerts.

In the meantime, reporting companies may voluntarily submit their beneficial ownership information to FinCEN. Entities that choose not to file should continue gathering the necessary information to ensure compliance if reporting requirements are reinstated.

We will continue to monitor these legal developments and provide updates as needed. If you have questions or need guidance on compliance, please do not hesitate to contact us.