Just what you wanted – another holiday edition of Subject to Inquiry tracking the legal wrangling around the Corporate Transparency Act (CTA).  If you’ve just joined our program:

  • On December 3, the District Court in the Eastern District of Texas issued a preliminary injunction that enjoined the Financial Crimes Enforcement Network (FinCEN) from enforcing the Act or holding the statutory December 31 deadline to report for non-exempt companies.  Emphasis on preliminary.
  • Then, on December 23, the United States Court of Appeals for the Fifth Circuit granted the government’s emergency motion for a stay, which lifted the injunction.  Our alert on that news, which required companies who reasonably thought they had some breathing room, was an unwelcome stocking stuff.
  • And in another stunner, last night the same Fifth Circuit has pulled a Vice Versa.  No, not a screening of the hit 1988 body swap film starring Judge Reinhold and Fred Savage.  Instead, the court decided to “preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.”  The Fifth Circuit vacated the “part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA,” as well as the Reporting Rule.  The case is now with the merits panel on an expedited basis, and “a briefing schedule will issue forthwith.” 

McGuireWoods will be closely monitoring developments and publishing alerts as the case proceeds.  As with the message following the December 3 injunction, it is reasonable to slow down on the analysis and preparation.  That holds more true here given that briefing will now occur. However, FinCEN granted only 13 extra days to file when the December 23 order was granted.  Accordingly, clients – especially those who are unlikely to have an available exemption from reporting – should consider substantially completing the analysis so they are prepared when or if beneficial ownership reporting is required under the CTA.

Our team is ready to assist.  For questions about the CTA or anti-money laundering (AML) compliance generally, including customer due diligence and beneficial ownership rules, contact the authors of this article or another member of McGuireWoods’ Financial Services & Securities Enforcement, Government Investigations & White Collar Litigation, Healthcare, Tax & Employment Benefits, or Corporate & Private Equity teams.