Jeffrey A. Newman
The Financial Crimes Enforcement Network, is asking the Supreme Court to stay the injunction issued by a Texas district judge in early December. The attorneys representing FinCEN said the government is likely to succeed in defending the constitutionality of the law and that the district court’s injunction was “vastly overbroad,” according to the filing. The lawyers said the Supreme Court, at a minimum, should narrow the injunction to the plaintiffs in the case.
The Corporate Transparency Act, a bipartisan effort passed in 2021 to stop the use of anonymous shell companies and track flows of illicit money, requires companies and trusts to file beneficial ownership information with the Treasury’s FinCEN or face the possibility of penalties such as fines and jail time. The law covers an estimated 32 million small businesses nationwide. Congress enacted the CTA as part of the Anti-Money Laundering Act of 2020. Congress noted that, under state law, companies are generally not required to disclose information about their “beneficial owners” — that is, the individuals who ultimately control the entities. National Defense Authorization Act of 2021, Pub. L. No. 116-283 §66402(2). Thus, Congress found, “malign actors” are able to “conceal their ownership of corporations” and use those effectively anonymous corporations for “money laundering,” “the financing of terrorism,” and “serious tax fraud.” Id. §66402(3). Courts in the District of Oregon and the Eastern District of Virginia have reached different conclusions about the likelihood that the CTA is constitutional.
Jeff Newman JD MBA, represents whistleblowers nationwide relating to customs and tariff fraud concerning imported Chinese goods as well as corporate whistleblowers in major claims under the False Claims Act (Qui Tam), and SEC, CFTC and FINCEN whistleblower programs. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217
