Injunction against implementation of US Corporate Transparency Act: what you need to know
The United States District Court for the Eastern District of Texas has issued a preliminary injunction against the nationwide implementation of the Corporate Transparency Act (CTA).
The CTA became effective on 1 January 2024, imposing new reporting requirements on US companies and Australian companies registered to do business in the US. The companies
would be required to submit a report containing beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN) within a certain period after registration. (See our article for more information about the CTA obligations).
Implications for reporting companies
Due to the injunction, issued on 3 December, FinCEN cannot currently enforce the beneficial ownership reporting requirements under the CTA against any entity but it has indicated that voluntary reporting would be permissible.
We anticipate the injunction will be appealed. If the injunction is stayed or reversed, reporting companies may still be required to meet the 1 January 2025 deadline, or a newly imposed deadline on very short notice.
In light of this, reporting companies may wish to continue with preparation of their beneficial ownership reports so they are ready to respond quickly if lodgement is required.
At a minimum, reporting companies should continue to monitor the situation closely to ensure they are ready to respond.
Any questions?
If you would like to know more about your obligations under the Corporate Transparency Act, please get in touch with Jacqui Barrett.
This article was written with the assistance of Law Graduate, Devina Maurice.
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