US: Justice Department asks Supreme Court to reinstate anti-money laundering law

The Justice Department asked the Supreme Court to issue an emergency order reinstating a federal anti-money laundering law as a legal battle plays out in a lower court.

Passed in 2021, the Corporate Transparency Act (CTA) would require millions of business entities to disclose personal information about their owners by next month.

The law is on hold after a series of rulings that began when a federal district judge in Texas this month found the legislation likely exceeded Congress’s authority and blocked its enforcement. At the end of multiple whiplash decisions, the 5th U.S. Circuit Court of Appeals refused the federal government’s request to reinstate the law as it appeals.

In an emergency application docketed Tuesday, the Justice Department asked the Supreme Court to revive the law as the government continues its appeal in the 5th Circuit, insisting the law is constitutional and that the lower court overreached.

“Contrary to the district court’s decision, the Commerce Clause and Necessary and Proper Clause empower Congress to adopt the CTA’s reporting requirements,” the Justice Department wrote.

The law would require millions of small business entities by next month to provide information about their owners, like their dates of birth and addresses, to the Financial Crimes Enforcement Network (FinCEN), an arm of the Treasury Department aimed at combatting money laundering and other crimes. Violations can carry civil and criminal penalties.

The Biden administration argued that, at minimum, the lower court overreached by blocking the law universally, not just the parties who sued over the law.

The proper scope of such injunctions has been a recurring issue, and the government’s new filing floats that the Supreme Court could choose to immediately take up the new case to lay down the ground rules for lower judges. If the justices agree, the case would pose much broader implications for lawsuits challenging federal laws.

“This case, in its current posture, would provide an ideal vehicle for addressing the lawfulness of universal relief if the Court concludes, in light of the persistence of the practice and the ample percolation of the relevant issues, that the time has come to resolve the propriety of such relief,” U.S. Solicitor General Elizabeth Prelogar wrote in the filing.

Four entities subject to the new law — a firearms dealer, an information technology company, a dairy farm and the Libertarian Party of Mississippi — as well as an owner of the tech company and the National Federation of Independent Business (NFIB) sued over the law in May 2024.

“At a minimum, the injunction should be stayed except to the extent it protects respondents and the members of NFIB identified in the complaint,” the emergency application states.

The CTA has been the subject of multiple challenges, but courts have largely sided with the government in the other cases.