Treasury Should Move Quickly to Resume Full Implementation of Landmark Anti-Money Laundering Law

WASHINGTON, DC — On February 17, a Texas federal judge lifted a preliminary injunction issued in Smith v. United States Department of the Treasury, removing the last legal roadblock to the enforcement of the Corporate Transparency Act (CTA). The decision aligns with another decision made by the Supreme Court in a similar case in January. The U.S. Treasury may now enforce the bipartisan Corporate Transparency Act, which requires certain legal entities to provide basic identifying information on their true owners, though the department has previously signaled that it is likely to provide reporting companies with a 30-day extension to file. 

The Texas decision to stay the injunction in Smith occurred just a few days after another judge in Maine issued a summary judgment finding the CTA to be a valid exercise of Congress’ powers under the Commerce Clause of the U.S. Constitution.

Ian Gary, FACT executive director, said in a statement:

“With the removal of this final roadblock to enforcement of the Corporate Transparency Act, Treasury is now once again free to continue its full and faithful implementation of the most important anti-money laundering law of the past two decades. Today’s order, and the government’s continued strong defense of the CTA, serves as a reminder that cracking down on the money launderers enabling fentanyl trafficking and other crimes cannot wait.”

Scott Greytak, director of advocacy for Transparency International U.S., said in a statement:

“As anticipated, the federal court in Texas has allowed the enforcement of this landmark law, in alignment with the Supreme Court’s recent decision. Treasury should move swiftly to make sure that this vital national security law is fully enforced, and that America’s law enforcement officials are armed with the tools necessary to cut off the flow of dirty money from transnational criminals into the U.S.”

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Notes to the Editor: 

• Read the order from United States District Judge Jeremy D. Kernodle granting the government’s motion to stay here.
• Last week, the Department of Justice (DOJ) filed a strong brief in defense of the Corporate Transparency Act in Texas Top Cop Shop, Inc., et al. v. Pamela Bondi, making a clear case that the ongoing abuse of anonymous shell companies “threatens U.S. national-security and foreign-policy interests.”
• Federal courts in Oregon, Michigan and Virginia have denied motions for preliminary injunctions against enforcement of the CTA. A narrower injunction by a federal lower court judge in Alabama is currently on appeal before the 11th Circuit Court of Appeals. 
• The CTA has been supported during legal proceedings by diverse stakeholders, including through amici curiae briefs filed by national security and anti-corruption experts, small-businesses, Members of Congress, and tax policy experts.