The court’s emergency stay removes an injunction imposed by a federal judge that had prevented the implementation of the Corporate Transparency Act (CTA), which mandates numerous business entities to reveal ownership information. Justice Ketanji Brown Jackson was the sole dissenter in this ruling.
The United States Department of Justice recently sought the Supreme Court’s involvement, and the decision was rendered shortly after a new administration assumed power. The Corporate Transparency Act, implemented in early 2021 as a component of an annual defense legislation, requires small business proprietors to provide personal details, including birth dates and addresses, to the Financial Crimes Enforcement Network to assist in the fight against financial crimes..
The legal conflict has garnered interest from business organizations and advocates for regulatory reform, with some aiming to postpone the law’s enforcement. The matter will now be referred back to the 5th U.S. Circuit Court of Appeals, where the Justice Department will uphold the law as a legitimate use of congressional power concerning interstate commerce. In the meantime, the Supreme Court’s ruling permits officials to proceed with the implementation of the disclosure mandates.
Justice Jackson, in her dissenting opinion, contended that the government failed to demonstrate an adequate sense of urgency to warrant intervention. She pointed out that the enforcement of the law had already been postponed for almost four years and raised concerns about whether additional delays would result in substantial harm.
The Department of Justice argues that postponing the law’s implementation would hinder the fight against financial crimes and jeopardize national security. Former Solicitor General Elizabeth Prelogar highlighted in the government’s application that such a delay would interfere with current enforcement initiatives and international collaboration on anti-money laundering efforts.
The Supreme Court also rejected a different proposal to consider a wider issue concerning the power of federal judges to impose nationwide injunctions against laws. Justice Neil Gorsuch indicated a willingness to explore this matter in the future, highlighting that such injunctions have increasingly become a prevalent legal instrument.