Judge Amos Mazzant III of the U.S. District Court for the Eastern District of Texas issued a nationwide injunction against the Corporate Transparency Act (CTA) and its regulations requiring businesses to disclose their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Mazzant’s opinion rebuked the CTA for overstepping constitutional boundaries and noted that corporate regulation has traditionally fallen within the states’ jurisdiction. Moreover, Mazzant said that by mandating federal oversight of corporate ownership, the CTA disrupts the balance of power foundational to the U.S. federalist system. Finally, Mazzant also found that the CTA burdens businesses with significant compliance costs—projected to exceed $22 billion in the first year alone—without clear safeguards against misuse of collected data.
This nationwide injunction currently halts enforcement of the CTA, including requirements to report beneficial ownership information to FinCEN by January 1, 2025. However, further guidance or court decisions could reinstate the CTA’s enforceability and businesses may need to act quickly to meet reporting deadlines.
SWACCA has been deeply engaged on FinCEN’s beneficial ownership rulemaking, including securing provisions in the initial implementing rulemaking ensuring that most SWACCA affiliates and many SWACCA members will be exempt from reporting their beneficial owners and advocating to ensure the beneficial ownership database can be used to pursue misclassification investigations.