Texas Court Blocks Corporate Transparency Act Nationwide, Halting Enforcement
A federal judge in Texas has issued a nationwide injunction against the enforcement of the Corporate Transparency Act (CTA), a key anti-money laundering law requiring businesses to disclose their beneficial owners to the U.S. Treasury Department. The ruling, delivered by U.S. District Judge Amos Mazzant, argues that the CTA likely violates constitutional principles by infringing on states’ rights under the Tenth Amendment.
The decision builds on a similar ruling by an Alabama judge earlier this year, which deemed the law unconstitutional but limited the injunction to the plaintiffs involved. In contrast, Judge Mazzant’s ruling applies nationwide, effectively halting the law’s implementation across the country.
The CTA, enacted in 2021, mandates corporations and limited liability companies to report ownership information to the Financial Crimes Enforcement Network (FinCEN). While the law is designed to combat illicit financial activity and enhance corporate transparency, critics argue it imposes excessive compliance burdens on small businesses and intrudes on state authority over corporate governance.
The Department of Justice has not issued an official response but is expected to appeal the decision. For now, the future of the CTA is uncertain, leaving many businesses in limbo regarding their reporting obligations.
The nationwide injunction represents a significant setback for federal efforts to prevent financial crimes through increased oversight. It also raises broader questions about the limits of federal regulatory authority and the balance of power between federal and state governments.
