https://supplychainreport.org/court-ruling-clears-the-way-for-new-anti-money-laundering-reporting-requirements/

A recent court decision has advanced the implementation of the Corporate Transparency Act, a federal law requiring companies to report ownership information to the U.S. Treasury Department.

The U.S. Court of Appeals for the Fifth Circuit issued a ruling on Monday that lifted an injunction previously blocking the law’s enforcement. As a result, unless further legal action occurs, millions of businesses will be required to disclose the identities of their beneficial owners by January 1, 2025. Beneficial owners include individuals owning 25 percent or more of a company or those exercising significant control over it.

The Corporate Transparency Act, enacted to strengthen anti-money laundering efforts, aims to address the use of anonymous shell companies in financial crimes. Supporters of the law argue it will help deter criminal activities such as money laundering, human trafficking, and tax evasion.

Casey Michel, an expert on kleptocracy and author of American Kleptocracy, described the law as a significant step in U.S. anti-money laundering legislation, emphasizing its potential to disrupt illicit financial activities.

Critics, however, have raised concerns about the law’s requirements, arguing that it places an undue burden on small businesses and may infringe on constitutional principles. Legal challenges to the law are currently pending in multiple federal appeals courts.

Earlier this month, Judge Amos L. Mazzant III of the Eastern District of Texas had issued an injunction halting enforcement, citing concerns about its constitutionality and the potential for federal overreach into matters traditionally governed by states. The Fifth Circuit’s decision to pause that injunction allows the reporting requirements to proceed as scheduled.

In a separate case, Judge Liles C. Burke of the Northern District of Alabama expressed support for the law’s objectives but questioned whether Congress had exceeded its constitutional authority in enacting it.

The Treasury Department has not commented on the recent developments. The legal landscape remains uncertain, as further judicial rulings could alter the law’s enforcement timeline.