A new anti-money-laundering bill, the Corporate Transparency Act, could require thousands of U.S. companies to reveal their owners after the U.S. Court of Appeals removed a block on the legislation. The law was blocked from coming into effect nationwide by an injunction from a Texas judge, but that was overturned by federal courts on Monday. The Corporate Transparency Act requires corporate entities to report information about their ownership and control to the federal government.
The law passed Congress in 2021 with bipartisan support, but it had been barred from coming into effect after a Texas judge issued an injunction on the law over fears that it was unconstitutional. With the injunction now lifted by a panel of three judges in the Fifth Circuit Court of Appeals, U.S. companies will start being required to report ownership data to the federal government, beginning in 2025. This will reveal the identities of owners for thousands of businesses across the U.S., as the law requires the identification of people who own 25 percent or more of the company. The Monday ruling means that the law can now be enforced. Companies will have to supply information on who has significant control of them to the Treasury Department, with a tight deadline of January 2025. The legislation received bipartisan support, with Democrat Senator Sherrod Brown and Republican Senator Marco Rubio both praising the bill. However, Judge Mazzant, of the Eastern District of Texas, passed a nationwide injunction that had banned the enforcement of the legislation, describing it as 'quasi-Orwellian.' The Court of Appeals panel said that the demand for reporting requirements was within Congress' right to regulate economic activity, removing concerns over unconstitutionality