In recent weeks, the CTA has faced several judicial actions that have led to ongoing changes and uncertainty regarding its reporting obligations. Most recently, on December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit restored a preliminary injunction against the regulation, thereby again suspending all reporting requirements under the CTA.
Summary of recent events:
- On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted the U.S. Government’s emergency motion to stay the district court’s preliminary injunction pending appeal. Consequently, FINCEN issued an update that the CTA’s reporting requirements had been restored, and the deadline had been extended from January 1, 2025 to January 13, 2025
- On December 26, 2024, a different panel of the U.S. Court of Appeals for the Fifth Circuit reviewed the December 23, 2024 decision. The appellate court decided that “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments” the preliminary injunction was to be restored. As such, the court vacated the December 23, 2024 decision to stay the district court’s preliminary injunction against enforcing the CTA. The following day, the court also issued an order expediting the proceeding, requiring the merits briefings to be completed by February 28, 2025, and setting oral arguments for March 25, 2025.
- On December 27, 2024, FINCEN issued an update that the preliminary injunction was again in effect and that reporting companies were not required to file their Beneficial Ownership Information Reports (BOIR).
The ongoing volatility surrounding the CTA does not leave much room for certainty regarding the future of the regulation and its reporting requirements. While the preliminary injunction remains in effect, the regulation’s requirements continue to be suspended, and it is likely this state will continue until the case is heard. However, the U.S. Government may also appeal against the preliminary injunction before then, and the regulation’s requirements may be restored. It is also important to mention that whatever decision the Fifth Circuit makes may be then appealed to the U.S. Supreme Court, and there are also several other cases pending against the CTA in other U.S. courts.
At this stage, we recommend for companies to continue monitoring the situation and be aware that reporting requirements may be reinstated, and a new deadline may be set soon thereafter. It is prudent to continue preparing your submission and gathering the necessary information. However, please note that the submission of all filings is voluntary at this point.
This memorandum contains general information only and does not constitute legal advice or a substitute for legal counsel. This memorandum is provided as a service to our clients, with the clarification that in any specific case, a separate discussion must be held regarding the matter at hand.
For any questions or clarifications, please contact our team responsible for this matter at the email address: CTA@shibolet.com.
