The U.S. Supreme Court has stepped in to temporarily reinstate the Corporate Transparency Act (CTA), lifting a lower court’s block that had paused its enforcement. The decision came through an emergency ruling, with Justice Ketanji Brown Jackson standing as the lone dissenter.
Passed in early 2021 as part of a broader defense bill, the CTA requires many small businesses to report details about their owners—such as names, birthdates, and addresses—to the Financial Crimes Enforcement Network. The goal? To crack down on money laundering and other financial crimes by shining a light on anonymous shell companies.
This recent ruling came shortly after the Justice Department asked the Court to weigh in. Business groups and regulatory reform advocates had hoped to delay the law, arguing that its requirements are burdensome. But with the Supreme Court now allowing it to move forward, the fight shifts back to the 5th U.S. Circuit Court of Appeals, where the Justice Department will defend the law’s constitutionality, particularly its connection to regulating interstate commerce.
Justice Jackson, in her dissent, questioned the urgency of the DOJ’s request. She noted that the law had already been on hold for nearly four years and suggested that waiting a little longer wouldn’t cause serious harm.
The Justice Department, however, argued that any further delay would undercut efforts to prevent financial crimes and could weaken the U.S.’s ability to cooperate with international anti-money laundering operations. Former Solicitor General Elizabeth Prelogar emphasized that swift enforcement is vital for both national security and the integrity of current investigations.
Meanwhile, the Court also declined to take up a broader debate over whether federal judges should be able to block laws nationwide with a single ruling—a hot topic that Justice Neil Gorsuch hinted the Court may revisit in the future.
For now, business owners should prepare to comply with the CTA as enforcement gears up once again.