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The US Financial Crimes Enforcement Network (FinCEN) has told firms that they do not currently need to comply with the Corporate Transparency Act (CTA), unless they wish to do so voluntarily.
In a statement posted on its website, FinCEN acknowledged that a federal court order has temporarily blocked the enforcement of the CTA until further notice.
Last week, as covered by Vixio, a federal judge in Texas struck down the controversial anti-money laundering (AML) law nationwide and with immediate effect.
However, as noted by FinCEN, the US Department of Justice has appealed against the Texas injunction on behalf of the US Treasury.
In the meantime, FinCEN has encouraged firms to comply with the CTA on a voluntary basis.
An 'unprecedented' AML law
The CTA requires almost all small businesses in the US to declare the identities of the individuals who own or ultimately control the business.
For this purpose, FinCEN has created a new online portal where owners and beneficial owners can submit their names, addresses and copies of government-issued IDs.
All small businesses with less than $5m in revenue and fewer than 20 employees are in scope.
Failure to comply with the reporting requirements can result in fines of more than $590 per day, felony charges and up to two years' imprisonment.
Prior to the Texas injunction, in-scope companies were required to file their beneficial ownership information by January 1, 2025.
However, Judge Amos Mazzant of the Eastern District of Texas blocked the enforcement of the law on privacy and constitutionality grounds.
FinCEN continues to support the enforcement of the CTA, and pointed to other courts — in Oregon and Virginia — where previous challenges to the CTA have failed.
“The CTA plays a vital role in protecting the US and international financial systems, as well as people across the country, from illicit finance threats like terrorist financing, drug trafficking and money laundering,” it said.
“The CTA levels the playing field for tens of millions of law-abiding small businesses across the United States and makes it harder for bad actors to exploit loopholes in order to gain an unfair advantage.”
