The Supreme Court has allowed the enforcement of the Corporate Transparency Act (CTA), a pivotal anti-money-laundering law, while ongoing constitutional challenges are reviewed. Passed in 2021, the CTA requires businesses to disclose information about their owners to combat crimes like money laundering and terrorism financing.
On January 24, 2025, the Court temporarily set aside an earlier decision by U.S. District Judge Amos Mazzant, which had halted the law’s implementation nationwide. This move enables the federal government to enforce the CTA while the case continues in the conservative-leaning U.S. Court of Appeals for the 5th Circuit.
Justice Ketanji Brown Jackson dissented, questioning the urgency of the Supreme Court’s intervention and emphasizing that the government’s appeal is already on a fast track.
The Corporate Transparency Act: A Brief Overview
The CTA was enacted to curb financial crimes by mandating that businesses report key ownership details. This requirement aims to create a transparent system that helps law enforcement identify illegal activities like money laundering and terror financing.
However, the Act has sparked legal disputes, with challengers arguing it violates constitutional rights, including the First and Fourth Amendments. The financial burden of compliance is another major concern, as critics estimate costs in the tens of billions of dollars.
Timeline of Legal Proceedings
- District Court Ruling:
In December 2024, Judge Mazzant ruled in favor of the challengers, deeming the CTA likely unconstitutional. His nationwide injunction prevented the government from enforcing the law. - Appeal to the Supreme Court:
The federal government, led by then-Solicitor General Elizabeth Prelogar, appealed to the Supreme Court, arguing that the injunction hindered efforts to combat financial crime and undermined U.S. credibility in urging other countries to enhance their anti-money-laundering systems. - Supreme Court’s Decision:
The Court’s unsigned order temporarily stayed Mazzant’s ruling, allowing the CTA’s enforcement to proceed. Justice Neil Gorsuch supported the decision but called for a definitive ruling on universal injunctions—nationwide bans that prevent the government from enforcing laws against anyone, not just the parties involved in the case.
Key Arguments: For and Against the CTA
- Federal Government’s Position:
The government contends that the CTA is a critical tool in combating financial crimes and protecting national security. Solicitor General Prelogar warned that delays in implementing the law could have global repercussions, undermining U.S. leadership in financial transparency. - Challengers’ Concerns:
Businesses opposing the CTA argue that compliance imposes exorbitant costs and infringes on constitutional rights by compelling the disclosure of private information. They also point out that the government itself delayed implementing the law, casting doubt on the urgency of enforcement.
The Dissenting Opinion
Justice Jackson disagreed with the Court’s decision to stay Mazzant’s ruling, citing the following reasons:
- The government’s appeal is being expedited in the 5th Circuit, reducing the need for immediate Supreme Court intervention.
- The government initially took years to implement the CTA, contradicting its claims of urgency.
- There is no evidence that delaying the CTA’s enforcement would cause significant harm.
Broader Implications: Universal Injunctions and Legal Precedents
This case raises significant questions about the use of universal injunctions, which can halt federal laws nationwide. While the Supreme Court refrained from addressing this issue directly, Justice Gorsuch emphasized the need for clarity, suggesting that universal injunctions could face closer scrutiny in future cases.
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