On December 3, 2024, a federal judge in the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the CTA’s enforcement. The CTA, enacted in 2021, was designed to combat money laundering and other illicit financial activities by requiring businesses to report their beneficial ownership information (BOI) to FinCEN.
The reporting requirements, originally set to take effect on January 1, 2025, would have affected millions of businesses. However, Judge Amos Mazzant ruled that the CTA’s implementation raised constitutional concerns, including potential overreach of federal authority.
This injunction means that businesses are currently not obligated to comply with the CTA’s reporting requirements. The U.S. Treasury Department has announced plans to appeal the decision, emphasizing the importance of the CTA in protecting the U.S. financial system.
Despite the injunction, legal experts advise businesses to remain prepared, as the ruling is temporary and may be overturned on appeal.
In light of the court order, FinCEN has taken the additional step of suspending all API access for submitting BOI reports. FinCEN announced that, effective Friday, December 6, 2024, at 5:30 PM EST, businesses with system-to-system API connections will no longer be able to transmit BOI reports.
In an email to businesses using the API, FinCEN clarified that companies are not required to file BOI reports while the injunction is in place and will not face penalties for non-compliance. However, it noted that voluntary submissions of BOI reports are still permitted.
This suspension is a direct response to the court order and adds further uncertainty for businesses preparing for the CTA’s implementation. FinCEN has promised additional guidance on the matter, leaving businesses to wait for clarity on when or if API access will be restored.
What This Means for Businesses
These developments introduce a significant pause in the rollout of the CTA’s reporting requirements. While the injunction provides temporary relief from compliance obligations, it also creates uncertainty about the future of the CTA and FinCEN’s enforcement mechanisms.
Businesses using automated systems to file BOI reports will need to halt their API processes and stay tuned for updates. Organizations should continue monitoring communications from FinCEN and the courts to stay compliant with any future changes.