The U.S. Supreme Court on Thursday decided not to block an anti-money laundering law that requires businesses to disclose their real beneficial owners to the Treasury Department. However, the law’s enforcement remains suspended after a nationwide injunction was issued by Texas-based U.S. District Judge Amos Mazzant in December. The ruling was backed by small businesses, arguing that the Corporate Transparency Act of 2021 exceeded Congress’ powers.
In a separate order issued in January, U.S. District Judge Jeremy Kernodle also blocked enforcement. The case now hinges on whether the new Republican administration under President Donald Trump will take action on the law. Lawyers representing the small businesses, including the conservative Center for Individual Rights, argue that the law’s invasive reporting requirements and penalties are unconstitutional.
Despite the injunction, millions of companies have already complied with the reporting requirements. The Biden administration requested the Supreme Court to lift the injunction, arguing the law is crucial for preventing crimes such as money laundering and tax fraud.
Justice Neil Gorsuch supported the injunction being put on hold but suggested the Court address whether a single state judge can issue a nationwide injunction. Meanwhile, Justice Ketanji Brown Jackson dissented, questioning the harm in delaying the law further. The Corporate Transparency Act aims to curb the use of LLCs for illicit financial activities by requiring disclosure of their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
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