A woman holds a “SCOTUS v THE PEOPLE” sign in front of the U.S. Supreme Court on Monday, Oct. 7, 2024, in Washington.
Bill Clark | Cq-roll Call Inc. | Getty Images
this Supreme Court Thursday cleared the way for enforcement of a federal anti-money laundering law that requires corporate entities to disclose the identities of their true beneficial owners to the government Ministry of Finance.
The justices suspended a nationwide injunction issued on December 3 by a federal judge in Texas who concluded that Congress exceeded its authority under the U.S. Constitution by passing the Corporate Transparency Act. The 2021 law is being challenged in court by small businesses.
The judges acted after the New Orleans-based 5th U.S. Circuit Court of Appeals allowed the ban to take effect ahead of a Jan. 13 deadline for most companies to submit preliminary reports to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). .
former president Joe BidenThe government has asked the Supreme Court to stay the ban. It said millions of entities had complied with reporting requirements before U.S. District Judge Amos Mazzant issued a ruling that blocked the law from being enforced nationwide, even though small businesses did not demand that outcome.
The injunction was obtained by the National Federation of Independent Business, which along with several small businesses challenged the law through attorneys at the conservative Center for Individual Rights.
A beneficial owner is defined as an individual who directly or indirectly owns or controls a company. The law requires corporations and limited liability companies (LLCs) to report information about their beneficial owners to FinCEN, which collects and analyzes information about financial transactions to combat money laundering and other criminal activity.
Supporters of the measure say it is intended to address the growing problem that the U.S. has become a place for criminals to launder money by setting up entities such as limited liability companies under state laws but not disclosing their involvement.
“The Act’s reporting requirements are extremely important for the government to prevent, detect, and prosecute crimes such as money laundering, tax fraud, and terrorism financing,” Elizabeth Preloga, deputy attorney general in the Biden administration, wrote in a brief to the Supreme Court. important.
Mazzant, who is based in Sherman, Texas, ruled that Congress does not have the authority to pass “quasi-Orwellian regulations” under its power to regulate commerce, taxes and foreign affairs and that it may infringe on the Tenth Amendment to the Constitution Rights given to the states.
Preloga argued in a brief to the Supreme Court that the justices’ ruling was too broad and wrong, citing Congress’ power under the Constitution’s so-called Commerce Clause to regulate economic activity that affects interstate commerce.
