The U.S. Supreme Court has decided to reinstate a federal anti-money laundering statute at the request of the federal government while a legal challenge is ongoing in a lower court. The court’s emergency stay temporarily suspends a federal judge’s injunction that had prevented the enforcement of the Corporate Transparency Act (CTA), which requires millions of business entities to disclose personal information about their owners. Justice Ketanji Brown Jackson was the sole dissenter in this decision, as reported by The Hill.
Recently, the Justice Department, under the Biden administration, sought the Supreme Court’s intervention, and the ruling was issued just three days following President Trump’s inauguration. Although Trump’s Justice Department did not withdraw the request, he had expressed opposition to the new law during his first term.
Enacted as part of the annual defense bill in early 2021, the Corporate Transparency Act mandates that millions of small business owners submit personal details, including dates of birth and addresses, to the Financial Crimes Enforcement Network, which is tasked with combating money laundering and other illicit activities.
This legal dispute has garnered considerable attention from business organizations and anti-regulatory advocates, who are striving to postpone the approaching deadline. The case will now return to the 5th U.S. Circuit Court of Appeals, which will evaluate the Justice Department’s defense of the law as a legitimate exercise of Congress’s constitutional authority over interstate commerce. Meanwhile, the justices’ order allows officials to proceed with the implementation of the disclosure requirement, which was scheduled to take effect this month.
Justice Jackson, the only appointee of former President Biden, dissented, contending that the government had not established “sufficient exigency” and noted that the 5th Circuit was already addressing the government’s appeal on an expedited basis.
The Government has not indicated that a more serious or significant injury would occur if the implementation of the Act is further postponed while the litigation continues in the lower courts. Consequently, I would deny the application and allow the appellate process to proceed, Brown Jackson stated.
In contrast, the Department of Justice contended that delaying the deadline would result in irreparable harm.
“It hinders the government from enforcing a duly enacted Act of Congress, obstructs efforts to combat financial crime and safeguard national security, diminishes the United States’ capacity to urge other nations to enhance their anti-money laundering measures, and significantly disrupts the ongoing implementation of the Act,” former Solicitor General Elizabeth Prelogar articulated in the government’s application to the Supreme Court.
The Supreme Court declined an alternative suggestion from Prelogar to transfer the case to the justices’ regular docket, which would have enabled them to address the broader question of federal district judges’ authority to block laws on a nationwide scale, as reported by The Hill.
“Universal injunctions” have increasingly become a prevalent mechanism for challenging laws and regulations enacted by both Democratic and Republican administrations. Addressing this matter would have had considerable ramifications for legal challenges against future administrations.
Justice Neil Gorsuch, appointed by Trump and known for his previous concerns regarding such injunctions, expressed that he would have considered the issue.
“I concur with the Court that the government is entitled to a stay of the district court’s universal injunction. However, I would go further and, as the government proposes, take this case now to definitively resolve the question of whether a district court may issue universal injunctive relief,” Gorsuch remarked in a brief concurrence with the majority.
The case originated with a firearms dealer, a dairy farm, an information technology company, one of its owners, and the National Federation of Independent Business.
