Important Update on FinCEN Beneficial Ownership Reporting Requirements
Recent Court Order Stays Filing Requirements; Voluntary Submission Still Permitted
In light of a recent federal court order issued on December 26, 2024, reporting companies are not currently required to file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN). This temporary pause stems from a nationwide injunction issued by the U.S. District Court for the Eastern District of Texas in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al.
Ongoing Litigation
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al. This injunction temporarily halts the mandatory filing requirements under the CTA. While other courts have upheld the CTA’s constitutionality, the Department of Justice (on behalf of the Department of the Treasury) has filed an appeal against this injunction.
The U.S. Court of Appeals temporarily granted a subsequent stay of the injunction for the Fifth Circuit on December 23, 2024. However, on December 26, 2024, a different panel of the Fifth Circuit vacated that stay, reinstating the district court’s injunction.
Key Takeaways
1.
Mandatory Filing Temporarily Stayed: Reporting companies are not obligated to submit beneficial ownership information while the injunction remains in effect.
2.
Voluntary Submissions Allowed: Companies may still choose to file beneficial ownership information reports on a voluntary basis.
3.
Legal Developments in Progress: The Department of Justice has appealed the decision and is seeking to reinstate filing requirements.
The CTA, designed to combat financial crimes such as money laundering and terrorist financing, remains an important regulatory framework. While compliance deadlines are temporarily suspended, organizations should consider voluntary submissions and prepare for future compliance once the legal situation is resolved.
What You Should Do
1.
Stay Informed: Monitor ongoing updates from FinCEN and relevant legal developments.
2.
Prepare for Future Compliance: While reporting is not currently mandatory, it is advisable to prepare for compliance once the injunction is lifted.
For further guidance or assistance, please contact Jackellyn Davis directly at Jackellyn@DossLaw.com. We are here to help your organization navigate these changes and ensure compliance with applicable regulations.
For more information regarding FinCEN’s guidance, please visit FinCEN’s BOI Resource Page.
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