The U.S. Supreme Court has issued an emergency stay, temporarily reinstating the Corporate Transparency Act (CTA), a federal anti-money laundering law, while a legal challenge continues in the lower courts. This ruling lifts an injunction that had blocked the law’s enforcement and allows officials to proceed with its implementation. Justice Ketanji Brown Jackson was the sole dissenter in the decision.
Background on the Corporate Transparency Act
Enacted in early 2021 as part of an annual defense bill, the CTA requires many business entities to disclose ownership details, including names, birth dates, and addresses, to the Financial Crimes Enforcement Network (FinCEN). The law aims to curb financial crimes, prevent illicit money flows, and enhance corporate transparency.
The legal dispute surrounding the CTA has attracted attention from both regulatory reform advocates and small business groups. Many have voiced concerns about compliance burdens, privacy risks, and potential government overreach.
Legal Challenge and Supreme Court Ruling
A federal judge had previously blocked the law, but the Justice Department sought intervention from the Supreme Court, arguing that further delays would hinder national security efforts and international cooperation on anti-money laundering measures. The court sided with the government, allowing the law to take effect while the case proceeds at the 5th U.S. Circuit Court of Appeals.
Justice Jackson, in her dissent, contended that the government had not demonstrated sufficient urgency to justify immediate enforcement. She pointed out that the law’s implementation had already been delayed for nearly four years and questioned whether further postponement would cause substantial harm.
Implications and Future Legal Considerations
The Justice Department maintains that enforcing the CTA is essential for combating financial crimes and ensuring corporate accountability. Former Solicitor General Elizabeth Prelogar highlighted in the government’s filing that halting the law would disrupt existing efforts to track illicit financial activities.
The Supreme Court also declined to take up a broader issue regarding the authority of federal judges to block laws nationwide. However, Justice Neil Gorsuch indicated interest in addressing this topic in the future, as such injunctions have increasingly been used as a legal tool.
As the case moves forward, the ruling underscores the ongoing tension between regulatory oversight and business privacy concerns. The 5th Circuit Court will now review the law’s validity, with potential long-term implications for corporate compliance and federal enforcement powers.
