Fifth Circuit Court of Appeals Reinstates Injunction as Deadline Looms
In an update to our previous post concerning the implementation of a new law designed to crack down on money laundering through small businesses and LLCs, a three-judge panel in the 5th Circuit reinstated a Texas District Court judge’s previously issued injunction, halting the new rule from taking effect saying that the Corporate Transparency Act which authorized the rule was unconstitutional. Before the injunction was reinstated, most companies had until a January 13, 2025, deadline to submit their initial reports to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) identifying to the government agency who the “beneficial owners” or otherwise qualified individuals are to the government. The panel stated in its order that ultimately a separate panel of judges would rule on whether or not to ultimately uphold the injunction itself, but that keeping the injunction in place with the looming deadline was necessary, “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments” with oral arguments in that appeal scheduled to be heard on March 25, 2025. The challenge to the law was raised by an attorney from the Center for Individual Rights, who applauded the decision and whose President commented in light of the ruling that, “Given that we have established that the [Corporate Transparency Act] is likely unconstitutional, this intrusive form of government surveillance should be halted until the law’s fate is finally resolved.” All LCCs and small businesses effected by these regulations should be paying close attention to legal developments as they are appealed to make sure they are in compliance with the law.
