In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN) and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry — formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in effect.
Originally passed into law during the first Trump Administration, the CTA cracks down on anonymous shell companies by requiring certain legal entities to provide and register beneficial ownership information (BOI).
The injunction was handed down by a lower court judge in Texas Top Cop Shop, Inc., et al. V. Merrick Garland, which effectively prevented the Treasury Department from enforcing the CTA. Following the Supreme Court staying the injunction, Treasury’s Financial Crimes Enforcement Network (FinCEN) will now be allowed to resume enforcement for the vast majority of entities originally covered under the CTA.
Despite the legal challenges the CTA has faced in recent months, the act has been widely praised as a crucial tool against money laundering, shell company fraud and other forms of financial malpractice.
Continue following Dodd Frank Update for more information as this story develops.