The U.S. Supreme Court has agreed to reinstate a federal anti-money laundering statute at the request of the federal government, allowing the law to remain in effect while an ongoing legal challenge continues in a lower court. The justices issued an emergency stay that temporarily reverses a lower court’s injunction blocking enforcement of the Corporate Transparency Act (CTA). Justice Ketanji Brown Jackson 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 intervene after a federal district judge ruled that the CTA was unconstitutional and halted its implementation nationwide. Just three days after President Donald Trump’s inauguration, the Supreme Court granted the government’s request, enabling federal officials to move forward with enforcing the law as litigation proceeds. Although the Justice Department’s application remained pending through the presidential transition, the Trump administration did not withdraw it, even though Trump himself 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 decades. The law requires millions of small business owners and closely held companies to disclose identifying details about their “beneficial owners” — including names, dates of birth, and residential addresses — to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The goal is to prevent criminals, corrupt officials, and foreign actors from using anonymous shell companies to conceal 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 argue that the law imposes excessive compliance burdens on small businesses. These groups are pushing to delay or overturn the disclosure mandate, which they view as federal overreach into private enterprise. At the same time, transparency advocates and law enforcement supporters contend that the reporting rules are vital to curb money laundering, terrorism financing, and other financial crimes that rely on hidden corporate ownership.
Following the Supreme Court’s action, the case now returns to the 5th U.S. Circuit Court of Appeals. That court will hear the Justice Department’s argument that the CTA represents a valid and necessary exercise of Congress’s constitutional authority to regulate interstate commerce and financial activity. Until the appeals court issues its decision, the justices’ emergency order permits the government to proceed with implementing the law’s disclosure requirements, which had been scheduled to take effect this month.
Justice Jackson, the only member of the Court appointed by President Biden, wrote separately to express her dissent. She argued that the government had not demonstrated “sufficient exigency” to justify emergency intervention by the Supreme Court. Jackson also noted that the 5th Circuit had already agreed to consider the government’s appeal on an expedited basis, suggesting that the high court should have allowed that process to unfold before stepping in.
In practical terms, the Supreme Court’s decision means that, for now, the Corporate Transparency Act remains in force while the constitutional questions surrounding it continue to work their way through the courts.
