Here is the State of Play
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Supreme Court Halts Nationwide Injunction Against Corporate Transparency Act
On Thursday, the Supreme Court granted the government’s request to stay a nationwide preliminary injunction against enforcement of the Corporate Transparency Act (CTA), a landmark bipartisan anti-money laundering and anti-corruption law. The order clears a major hurdle to enforcement efforts by the Financial Crimes Enforcement Network (FinCEN) – the nation’s financial intelligence unit, and the bureau of Treasury responsible for implementing and enforcing federal anti-money laundering provisions.
The Supreme Court’s decision to stay the injunction handed down by a Fifth Circuit judge last month is the culmination of a flurry of legal activity surrounding the CTA. Following the imposition of the nationwide preliminary injunction in early December, a panel of Fifth Circuit Court of Appeals judges dissolved the injunction on December 23, finding that the government “is likely to succeed on the merits in defending (the) CTA’s constitutionality.” However, on December 26, a separate Fifth Circuit panel reinstated the injunction, again pausing enforcement of the CTA against all entities. Several other challenges to the CTA are also making their way through various federal courts, including, most prominently, a case currently before the 11th Circuit Court of Appeals.
The order sends an important positive signal to the lower courts currently considering challenges to the CTA. A separate nationwide preliminary injunction issued by a different district court in Texas remains in place for now. Accordingly, Treasury’s FinCEN is treating reporting as voluntary for the time being. However, because that lower court injunction is at odds with the Supreme Court’s stay order, it should also be stayed.
The CTA, which requires certain legal entities to provide basic identifying information on their true, or “beneficial”, owners, represents the most important improvement to the U.S. anti-money laundering framework in a generation. For decades, anonymous shell companies have allowed domestic and transnational bad actors to launder ill-gotten gains within the U.S., enabling sanctions evasion, drug and human trafficking, tax evasion, and other crimes. Widespread recognition of the clear national and economic security dangers presented by anonymous shell companies garnered the CTA support from a diverse coalition of stakeholders, including the banking industry, national security experts, law enforcement professionals, small businesses, and others.
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Presidential Memorandum Threatens Retaliation Over Global Corporate Tax Deal
On Monday, President Trump issued a presidential memorandum criticizing the OECD/G20’s global corporate tax deal and ordering U.S. Treasury and trade officials to consider retaliatory measures against nations that implement tax rules deemed “extraterritorial or disproportionately affect(ing) American companies.”
The OECD/G20 Inclusive Framework’s two-pillar tax deal, initiated during the first Trump Administration and agreed to by the Biden Administration and nearly 140 other nations in 2021, seeks to end the decades-long global “race to the bottom” on corporate tax rates through the establishment of a 15 percent global minimum corporate tax rate, while also creating new rules for the taxation of cross-border services. The White House memo could impact both digital services taxes enacted by jurisdictions including Canada, Italy, France, and Spain, as well as the Under-Taxed Profits Rule (UTPR), a core anti-avoidance feature of the OECD’s 15 percent global minimum tax. The purpose of the UTPR provision is to cover companies from China and other non-participating jurisdictions.
FACT has long advocated for legislation to improve the taxation of U.S. multinational companies, including through measures to bring the U.S. into compliance with the OECD’s global corporate minimum tax. Doing so would help to end a slew of what FACT has characterized as “America-Last” policies that reward major U.S. multinationals for shipping ship jobs, factories, and profits overseas.
Treasury Convenes Virtual Summit on Combating Nature Crimes in the Amazon Region
Last week, Treasury’s Financial Crimes Enforcement Network (FinCEN) convened a virtual summit with partners from Brazil, Colombia, Ecuador, Guyana, Peru, and Suriname as part of an ongoing effort to operationalize the Amazon Region Initiative Against Illicit Finance announced last year. According to FinCEN’s press release, the financial intelligence units (FIUs) in attendance discussed the role of transnational criminal organizations in diverse environmental crimes including illegal deforestation and mining, gold smuggling, and timber and wildlife trafficking.
The continued rollout of the Amazon Initiative represents a crucial effort to fight both nature crimes and the illicit financial flows associated with them. Environmental crimes are the world’s third most profitable category of crime, and recent FACT research indicates that the U.S. is the most common foreign destination for the products and proceeds of environmental crimes that occur in countries in the Amazon region. FACT’s 2023 report, Dirty Money and the Destruction of the Amazon, outlines policy recommendations to address the role of U.S. financial secrecy vehicles in enabling environmental criminal profiteering, including through a mix of domestic anti-money laundering reforms and increased U.S. leadership and assistance through programs like the Amazon Initiative.
Latest from FACT
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FACT Welcomes New Policy Fellow for Environmental Crime and Illicit Finance
FACT is proud to welcome rainforest conservationist, political geographer, and El Heraldo columnist Isidoro Hazbun to the team in the role of Policy Fellow for Environmental Crime and Illicit Finance.
As Director of Public Affairs at the Amazon Conservation Team, Hazbun led financing initiatives for rainforest conservation and land rights programs in tropical South America. His work has also included advising the Inter-American Development Bank and the Colombian Ministry of Environment on climate policy and land use, as well as collaborating with the United Nations and the Smithsonian Institution on indigenous rights and cultural representation.
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FACT welcomed the release by Treasury of a proposed form that will be used by covered entities to submit information on the true beneficiaries of certain real estate purchases, pursuant to groundbreaking new anti-money laundering regulations finalized last year.
FACT in the News
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American Banker: Supreme Court Mulls Future of the Corporate Transparency Act
FACT executive director Ian Gary and policy director Zorka Milin were quoted in American Banker’s coverage of recent legal developments surrounding the Corporate Transparency Act.
When questioned about the possibility that the incoming Trump Administration may reverse course on the ongoing implementation of the CTA, Gary noted that anti-money laundering priorities rarely change with administrations.
“I think there will be an understanding that America’s adversaries — whether they’re state or non-state actors — frequently use and abuse the financial secrecy that the U.S. offers to harm Americans and to harm U.S. strategic interests,” said Gary. “I don’t think that is going to necessarily change very much between the Biden administration and the Trump administration, but who those threat actors are — who are prioritized — may change.”
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Tax Notes: Irish Economy Faces Tax Uncertainty Under Trump Presidency
FACT policy director Zorka Milin was quoted in coverage by Tax Notes’ Sarah Paez of the potential impact of upcoming U.S. corporate tax changes to the Irish Republic, which has for years acted as a premier global investment hub and corporate tax haven.
Milin noted that U.S. corporate tax rules have long played a role in enabling the abuse of investment hubs like Ireland by American multinationals. In particular, the vast gap between the U.S. minimum tax rate on foreign corporate profits of 10.5 percent and the domestic statutory corporate tax rate of 21 percent creates “an incentive for American companies to profit shift their income to lower-tax jurisdictions like Ireland at the expense of the United States.”
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Miami Herald: Feds Probe Financial Firm that was Focus of Herald’s Pandora Papers Investigation
FACT executive director Ian Gary was quoted by the Miami Herald’s Shirsho Dasgupta in coverage of the ongoing IRS probe into Trident Trust Group, a prominent financial services firm which is suspected of helping wealthy Americans evade taxes.
From the coverage: “The parallel summonses (in Georgia and South Dakota) show that the case isn’t ‘just an offshore problem,’ said Ian Gary, the executive director of the nonpartisan advocacy group, Financial Accountability and Corporate Transparency Coalition. He commended the federal agencies and said that cases like this shows why he believes that funding the IRS is a ‘smart investment.’”
From Our Allies
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Fair Tax Mark’s newly-revised explainer on public country-by-country reporting standards provides a comprehensive update of recent global legislative and accounting developments, and makes the case for adoption of strong tax transparency protocols by multinational companies.
From the report: “Driven by legislative developments in Europe and Australia, and accounting developments in the United States, the year 2026 will be a breakthrough year for public country-by-country reporting – when there will be a cascade of corporate tax transparency from thousands of businesses, based on data from 2025 and accounting preparations undertaken in 2024. Institutional investors, asset managers and ratings agencies are salivating at the prospect of accessing such data for the first time and being able to form a more rounded view of company tax conduct.”
Recent Events
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Inter-American Development Bank’s Regional Security and Justice Summit
FACT’s Julia Yansura spoke at the Inter-American Development Bank’s Regional Security and Justice Summit on December 11-12 in Bridgetown, Barbados alongside over 40 high level officials from 18 countries in the Amazon region. Yansura’s presentation focused on the importance of beneficial ownership data as a resource for law enforcement in combating environmental crimes.
About the FACT Coalition