On March 1st, 2024, the Northern District Court of Alabama issued a judgment prohibiting the Financial Crimes Enforcement Network (FinCEN), the agency in charge of combating and preventing financial crimes and money laundering in the United States, from imposing the obligation to report ultimate beneficiaries, in compliance with the Corporate Transparency Act (CTA), on the National Small Business Association (NSBA) or any of its members.
The NSBA based its lawsuit on the alleged unconstitutionality of the Act, arguing that it infringed upon the privacy rights of American citizens by requiring the disclosure of highly personal information intended for the prevention of criminal activities. It was also argued that the Act imposed an excessive and costly administrative burden to comply with this requirement.
Although FinCEN has committed to comply with the judgment, it is important to note that the court specifically prohibited FinCEN from enforcing the CTA to the plaintiffs, and there is no national ban in effect. Therefore, non-involved parties must continue to comply with the CTA. It is anticipated that the case will be brought before the US Supreme Court, where a decision will be made regarding the constitutionality of the mentioned Law.
