The US Supreme Court has temporarily reinstated enforcement of the Corporate Transparency Act (CTA), a federal law designed to combat financial crimes by requiring businesses to disclose their beneficial ownership information. The decision overrides a nationwide injunction issued by a Texas district court and enables enforcement while the case is appealed in the conservative-leaning 5th Circuit.

In an unsigned order, the Court emphasized the importance of proceeding with enforcement, citing national security and anti-money laundering priorities. U.S. Solicitor General Elizabeth Prelogar, representing the government, argued that the injunction impedes financial crime prevention and weakens U.S. leverage in urging other nations to improve their anti-money laundering policies. Justice Neil Gorsuch concurred with the Court's decision and urged the Court to definitively address the use of universal injunctions, like the one issued by U.S. District Judge Amos Mazzant. Justice Ketanji Brown Jackson dissented, asserting that the government had not demonstrated sufficient urgency to justify the intervention.

The CTA, enacted in 2021, mandates reporting requirements for over 32.6 million businesses, aiming to curb money laundering, terrorism financing, and the misuse of anonymous shell companies. The law, however, has sparked significant debate. Business groups argue it imposes unconstitutional burdens, including compliance costs estimated in the tens of billions, and infringes on First and Fourth Amendment rights. The challengers, represented by the Center for Individual Rights, maintain that delaying enforcement would cause minimal harm to the government.

Despite the Supreme Court’s ruling, the 5th Circuit will still evaluate the law’s constitutionality. Oral arguments are set for March 25, 2025. Justice Jackson highlighted the expedited timeline in the lower courts, suggesting that intervention was unnecessary given the government’s slow initial implementation of the law.

Prelogar had urged the Court to seize the opportunity to clarify the scope of universal injunctions, which block enforcement nationwide rather than limiting their effect to the litigants involved. However, the Court declined to address the issue at this stage, leaving the broader question unresolved.

For businesses, uncertainty persists. The Financial Crimes Enforcement Network (FinCEN) has encouraged voluntary compliance, warning that penalties for non-compliance could reach $500 per day if enforcement proceeds. As of early December, approximately 10 million businesses had already submitted beneficial ownership information.

The case, Garland v. Texas Top Cop Shop Inc., U.S., No. 24A653, underscores the tension between corporate privacy and regulatory transparency as the U.S. government grapples with the dual goals of national security and business-friendly policy.