Nationwide Enforcement of Corporate Transparency Act Temporarily Halted by Federal Court

According to an article by Lowndes Law, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction halting nationwide enforcement of the Corporate Transparency Act (CTA) and its implementing rules on December 3rd, 2024. 

The CTA mandates reporting companies—domestic or foreign entities registered in the U.S., with certain exceptions—and their beneficial owners to disclose specified information to the Financial Crimes Enforcement Network (FinCEN) to combat illicit activities such as money laundering and terrorism financing.

Reporting deadlines under the CTA vary, with entities formed before January 1, 2024, required to comply by January 1, 2025, though extensions have been granted in some hurricane-affected areas. 

The court’s ruling in Texas Top Cop Shop, Inc. v. Garland found the plaintiffs likely to succeed in their constitutional challenge to the CTA, prompting Judge Amos L. Mazzant to enjoin the federal government from enforcing the compliance deadline. Although the plaintiffs initially sought a narrower injunction, the court extended it nationwide, citing the broad scope of the alleged constitutional violations.

This injunction is temporary, and the case could shift on appeal or through a final ruling affirming the CTA’s constitutionality. For compliance and risk professionals, this decision temporarily relieves reporting obligations under the Corporate Transparency Act but underscores the importance of monitoring legal developments and preparing for the potential resumption of enforcement.