Summarize this content to 2000 words in 6 paragraphs An anti-money laundering law called the Corporate Transparency Act, or CTA, appears to have been given new life after an appeals court on Monday determined its rules can be enforced as the case proceeds. The law requires small business owners to register with the Financial Crimes Enforcement Network, or FinCEN, by Jan. 1, or potentially pay fines of up to $10,000. The registration rule had been on hold since Dec. 3, when a federal court in Texas issued a preliminary injunction prohibiting its enforcement. But on Monday, the 5th U.S. Circuit Court of Appeals lifted the order, ruling that the decision is in the “public’s urgent interest in combating financial crime and protecting our country’s national security.”The CTA requires that the owners and part-owners of an estimated 32.6 million small businesses must register personal information with FinCEN, such as a photo ID and home address. With the court ruling that enforcement can proceed, many small business owners may scramble to register ahead of the Jan. 1, 2025 deadline, although businesses that started in 2024 were given 90 days to register. Some civil liberties groups decried the ruling, saying that the regulation represents governmental overreach.”The government cannot be allowed to maintain this unconstitutional statute, which stretches beyond Congress’s proper authority to regulate Americans,” said the New Civil Liberties Alliance, a civil rights group, said in a statement emailed to CBS MoneyWatch.
The Treasury Department did not immediately reply to a request for comment from CBS MoneyWatch.Here’s what to know about the ruling and the CTA.What is the Corporate Transparency Act, or CTA?The CTA, an anti-money laundering statute passed in 2021, was intended to get a look inside shell companies and crack down on attempts by “criminals, organized crime rings, and other illicit actors to hide their identities and launder their money through the financial system,” Treasury Secretary Janet Yellen said in 2022.The rules first became effective in 2024, but gave existing businesses until Jan.1, 2025, to register, while businesses that began this year have 90 days to register.
FinCEN is a bureau within the U.S. Department of the Treasury that investigates money laundering and other illegal financial activities. What is the CTA’s reporting rule? The reporting rule is the CTA’s Beneficial Ownership Information reporting requirement, which mandates small businesses to register the following with FinCEN, according to the U.S. Chamber of Commerce. Your company’s full legal name.Its business address (P.O. boxes or lawyers’ offices aren’t accepted, the Chamber of Commerce says). The state where the company was formed or first registered.A taxpayer identification number and an identity document, such as a filed Articles of Incorporation.Beneficial owners’ full legal names and birth dates.Beneficial owners’ home addresses.A photocopy of beneficial owners’ U.S. driver’s license or passport.How do businesses register under the CTA? Small businesses can file their beneficial ownership information reports at this link with FinCEN. What happens if I don’t register under the CTA? The penalties are up to $591 per day for failure to file, according to FinCEN. Businesses may also face criminal penalties of up to two years imprisonment and a fine of up to $10,000, the Chamber of Commerce notes. Which businesses are exempt from the CTA filing?There are 23 types of businesses that are exempt from the beneficial ownership information filing, according to the Chamber of Commerce. These include many publicly traded companies and nonprofits, as well as some large operating companies.Many types of banks and other financial services businesses don’t need to file, according to FinCEN. Some other types of businesses, such as many sole proprietorships, are also exempt, it noted. (A list and Q&A on exemptions can be seen here.)
What may happen next in the CTA case?It’s unclear, but its possible that groups fighting against the regulation could seek relief from the U.S. Supreme Court or ask for the 5th Circuit for additional review, according to the National Law Review.
The Associated Press
contributed to this report.
Aimee Picchi
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
