The U.S. Supreme Court has agreed to reinstate a federal anti-money-laundering statute at the request of the federal government, thereby allowing the law to remain in effect while an ongoing legal challenge continues to move forward in a lower court. The justices issued an emergency stay that temporarily overturns a lower court’s injunction that had blocked enforcement of the Corporate Transparency Act (CTA). Justice Ketanji Brown Jackson, however, was the lone dissenter in the decision.
The Biden administration’s Justice Department filed an emergency appeal late last month, urging the high court to step in after a federal district judge declared the CTA unconstitutional and halted its nationwide implementation. Just three days after President Donald Trump’s inauguration, the Supreme Court granted the government’s request, enabling federal officials to resume enforcement of the law as the litigation progresses. Even though the Justice Department’s application remained pending throughout the presidential transition, the Trump administration chose not to withdraw it, despite the fact that Trump had criticized the CTA during his first term.
Enacted in early 2021 as part of the annual National Defense Authorization Act, the Corporate Transparency Act represents one of the most significant expansions of U.S. anti-money-laundering rules in several decades. The law requires millions of small business owners and closely held companies to disclose identifying information about their “beneficial owners”—including names, dates of birth, and residential addresses—to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Its primary goal is to prevent criminals, corrupt officials, and foreign actors from using anonymous shell companies to hide illicit funds or evade taxes.
The legal dispute surrounding the CTA has drawn intense scrutiny from business groups, trade associations, and anti-regulatory organizations, many of which claim that the law imposes excessive compliance burdens on small businesses. These groups are working to delay or overturn the disclosure requirements, which they see as an example of federal overreach into private enterprise. At the same time, transparency advocates and supporters of law enforcement argue that the reporting rules are essential for curbing money laundering, terrorism financing, and other financial crimes that depend on opaque corporate ownership structures.
Following the Supreme Court’s action, the case now returns to the 5th U.S. Circuit Court of Appeals. That court will consider the Justice Department’s position that the CTA is a valid and necessary exercise of Congress’s constitutional authority to regulate interstate commerce and financial activity. Until the appeals court reaches its decision, the justices’ emergency order allows the government to move forward with implementing the law’s disclosure requirements, which had originally been scheduled to take effect this month.
Justice Jackson, the only member of the Court appointed by President Biden, issued a separate dissent. She argued that the government had not shown “sufficient exigency” to justify the Supreme Court’s emergency intervention. Jackson also emphasized that the 5th Circuit had already agreed to review the government’s appeal on an expedited basis, suggesting that the high court should have let that process unfold before intervening.
In practical terms, the Supreme Court’s decision means that, at least for now, the Corporate Transparency Act remains in effect while the constitutional issues surrounding it continue to work their way through the judicial system.
