
On December 26, 2024, the Fifth Circuit Court of Appeals in the United States made a significant decision by lifting the stay on the injunction related to the Corporate Transparency Act (CTA).
Earlier that week, a panel had put the injunction in place, but now it has been reinstated, effectively making the CTA unenforceable for the time being.
FinCEN’s Notice
The following day, December 27, 2024, the Financial Crimes Enforcement Network (FinCEN) issued an important notice.
This announcement clarified that companies are not required to provide beneficial ownership information and will not incur penalties for failing to comply with the requirements for as long as the court’s order remains in effect.
However, FinCEN also pointed out that companies have the option to voluntarily file beneficial ownership reports if they wish.
Understanding the Corporate Transparency Act
The Corporate Transparency Act requires many businesses, especially smaller ones that are less heavily regulated, to submit reports to FinCEN, part of the U.S. Department of the Treasury.
These reports must disclose the beneficial owners, or the individuals who ultimately own or control the business, and must include identifying information about those who established the company.
The law also allows FinCEN to share this beneficial ownership information with authorized government agencies and financial institutions under certain conditions.
Next Steps in the Legal Process
This recent ruling by the Fifth Circuit intends to uphold the constitutional framework while the court assesses the merits of the case at hand.
The court is expediting the process, with oral arguments set to take place on March 25, 2025.
Source: Natlawreview