Reported by Tristan Navera

(Summary version featured below)

The U.S. Supreme Court has allowed enforcement of the Corporate Transparency Act (CTA) to proceed amid ongoing legal challenges, leaving the future of the 2021 financial crime law in the hands of the Trump administration. While the government is now closer than ever to implementing the law, which requires millions of businesses to disclose their ownership structures, former President Donald Trump’s stance on its enforcement remains uncertain. The CTA was designed to combat illicit financial activities enabled by anonymous shell companies, but its implementation has been hampered by legal disputes. The administration recently signaled support for enforcement in an appeal related to one of the ongoing cases challenging the law.

Despite the Supreme Court’s decision, legal hurdles persist. A separate case, Smith v. U.S. Department of Treasury, resulted in an injunction blocking the Financial Crimes Enforcement Network (FinCEN) from implementing key CTA regulations. The administration has pushed back, arguing that the law is constitutional and essential for fighting financial crimes such as money laundering and tax fraud. In a recent filing with the U.S. Court of Appeals for the Fifth Circuit, the government maintained its commitment to the CTA but also acknowledged concerns over the law’s burden on businesses. If the court allows the rule to take effect, FinCEN plans to grant a 30-day extension for businesses to comply, prioritizing enforcement on entities posing national security risks.

Political opposition to the CTA has been mounting, particularly among Republicans. Trump previously vetoed the measure in 2021 when it was included in the National Defense Authorization Act, though his objections were not explicitly tied to the transparency provisions. In recent months, 25 Republican state attorneys general and 14 members of Congress have sought to block enforcement, arguing that the law is overly invasive. Lawmakers including Sen. Tommy Tuberville (R-Ala.) and Rep. Warren Davidson (R-Ohio) have introduced bills to repeal the CTA, with broad Republican support. The growing resistance raises questions about whether the Trump administration will fully commit to enforcing the law or seek to scale it back.

Some experts see signs that the administration views the CTA as a valuable tool for advancing foreign policy objectives. A recent White House memorandum on Iran directed the Treasury Department to assess “beneficial ownership thresholds” as part of efforts to enforce sanctions. Scott Greytak, an attorney with Transparency International, suggests this signals that the CTA could be leveraged for national security purposes rather than abandoned altogether. Meanwhile, legal uncertainty continues to cloud compliance efforts, with attorneys advising businesses to prepare for enforcement despite the political and legal back-and-forth. “Just do the legwork,” said Danielle Lemberg, a partner at Seward & Kissel LLP. “If there’s a mad scramble to start the process and a short time frame to do so, it’ll be difficult.”

The legal battle over the CTA is far from over. While the Supreme Court’s ruling allows enforcement to continue, challenges in lower courts could still delay implementation. Annie Lawson, an attorney at Haynes Boone, expects the Smith case injunction to be lifted soon, allowing FinCEN to move forward with setting compliance deadlines. However, litigation is likely to persist, with tax attorney Niles Elber predicting that enforcement will initially target smaller businesses that fail to meet the filing requirements rather than large-scale financial criminals. “If you’re a money launderer, you’re probably going to find a way around this law,” Elber said. For now, businesses remain caught in the uncertainty, waiting to see how the administration will proceed.

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