Clients and Associates,

We write with a recent update on the enforceability of the Corporate Transparency Act (the “CTA”).  As we have previously discussed, the CTA would require certain U.S. and foreign entities registered to do business in the U.S. (“Reporting Companies”) to file a Beneficial Ownership Information Report (a “BOIR”) with the Financial Crimes Enforcement Network (commonly known as “FinCEN”). Many of our firm clients have filed or were preparing to file the BOIR in anticipation of the December 31, 2024 filing deadline for entities formed before January 1, 2024.

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking enforcement of the CTA. While the court made the necessary findings to issue this preliminary injunction, it also noted that it has not made an affirmative final finding that the CTA is contrary to law or in violation of the U.S. Constitution. On December 5, 2024, the U.S. government filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit.

FinCEN has issued an alert confirming that it will honor the injunction, and that Reporting Companies are not currently required to file a BOIR, however may continue to voluntarily do so while the injunction is in place.

We will continue to monitor and communicate developments.

Please contact us with any questions.