In a ruling that muddies the water for cracking down on anti-money laundering, U.S. District Judge Liles C. Burke ruled that the Corporate Transparency Act is “unconstitutional on the grounds that Congress exceeded its powers in enacting the law — and so the rulemaking stemming from it is unlawful.”
The Corporate Transparency Act was put in place to prevent illicit funds laundering through anonymous shell companies in the United States, requiring “tens of millions of small businesses” to register with the government.
In 2022, the National Small Business Association (NSBA) filed a lawsuit to block the requirement arguing that it violated the Constitution and is “unduly burdensome on small firms, violates privacy and free-speech protections and infringes on states’ powers to govern businesses.”
The ruling has brought differing opinions. Here are two opposing viewpoints quoted in a Wall Street Journal article:
- Todd McCracken, president and chief executive of NSBA – [It] “justifies the concerns of millions of American businesses about how the CTA is not only a bureaucratic overreach, but a Constitutional infringement…The judge’s decision is an opportunity for Congress to go back to the drawing board and find a solution that will truly protect Americans from bad actors”
- Ian Gary, executive director of the anticorruption group FACT Coalition – “This is a pro-crime, pro-drug cartel, pro-fentanyl ruling which undermines the rule of law and allows criminals to use anonymous shell companies to hide their dirty money from law enforcement.”
Related post: New Beneficial Ownership Solutions Are Launching Now That Reporting is Required
Image by Arek Socha from Pixabay
