US Appeals Order Halting Corporate Transparency Act Disclosures

The US government appealed a Texas federal judge’s nationwide preliminary injunction that halted enforcement of the Corporate Transparency Act.

Judge Amos L. Mazzant III of the US District Court for the Eastern District of Texas issued an order Dec. 3 calling the law “likely unconstitutional” and blocking the Treasury Department from enforcing it. The order came just weeks before the law’s original Jan. 1, 2025 deadline for existing US entities to file disclosures of their beneficial owners’ identities to the Financial Crimes Enforcement Network, prompting companies who hadn’t yet filed to breathe a sigh of relief.

Congress passed the CTA as part of an anti-money laundering package in the 2021 National Defense Authorization Act, with the aim of cracking down on anonymous shell companies’ illicit financial activities, like drug trafficking and terrorist financing.

Businesses soon after challenged the law in several courts, calling its disclosure mandate insufficiently targeted and burdensome on small entities paying compliance costs.

The federal government, which appealed Mazzant’s injunction to the US Court of Appeals for the Fifth Circuit on Thursday, was already appealing a separate, narrower CTA halting order in the Eleventh Circuit.

SL Law and the Center for Individual Rights represent the plaintiff businesses.

The case is Tex. Top Cop Shop, Inc. v. Garland, E.D. Tex., No. 4:24-cv-00478, notice of appeal filed 12/5/24.