Supreme Court Reinstates Anti-Money-Laundering Statute In Emergency Ruling

Supreme Court Reinstates Anti-Money-Laundering Statute In Emergency Ruling

The U.S. Supreme Court has agreed to temporarily reinstate a federal anti-money laundering law, granting a request from the federal government as a legal challenge continues in a lower court.

The court issued an emergency stay that blocks a federal judge’s injunction against the Corporate Transparency Act (CTA). The law, which requires millions of business entities to disclose personal information about their owners, will remain in effect as the case moves forward, The Hill reported. Justice Ketanji Brown Jackson was the only dissenting vote.

Last month, the Biden Justice Department urged the Supreme Court to intervene, and the court’s decision came just three days after President Trump’s inauguration. While Trump’s administration did not rescind the Justice Department’s application, he had opposed the law during his first term.

Enacted in early 2021 as part of an annual defense bill, the CTA mandates that millions of small business owners submit personal details, such as birth dates and addresses, to the Financial Crimes Enforcement Network. The law aims to combat financial crimes, including money laundering, The Hill noted.

Business groups and anti-regulatory advocates have voiced strong opposition to the law and are pushing to delay its enforcement deadline.

“The case will now return to the 5th U.S. Circuit Court of Appeals, where the Justice Department will defend the law as a valid exercise of Congress’s constitutional authority over interstate commerce,” The Hill reported. “In the meantime, the Supreme Court’s decision allows officials to move forward with implementing the disclosure requirement, which was set to take effect this month.”

Justice Jackson, appointed by former President Biden, dissented, arguing that the government had not shown “sufficient exigency” to warrant the Supreme Court’s intervention, particularly as the 5th Circuit was already expediting the appeal.

“The Government deferred implementation on its own accord—setting an enforcement date of nearly four years after Congress enacted the law—despite the fact that the harms it now says warrant our involvement were likely to occur during that period,” she wrote in her dissent.

Jackson further argued that delaying implementation would not cause significant harm. “The Government has provided no indication that injury of a more serious or significant nature would result if the Act’s implementation is further delayed while the litigation proceeds in the lower courts. I would therefore deny the application and permit the appellate process to run its course.”

The Justice Department contended that further delays would result in irreparable harm.

“It prevents the government from executing a duly enacted Act of Congress, impedes efforts to prevent financial crime and protect national security, undermines the United States’ ability to press other countries to improve their own anti-money laundering regimes, and severely disrupts the ongoing implementation of the Act,” former Solicitor General Elizabeth Prelogar wrote in the application to the Supreme Court.

The court declined Prelogar’s alternative suggestion to place the case on its regular docket, which would have allowed the justices to address the broader issue of federal district judges’ authority to issue nationwide injunctions, The Hill reported.

Such “universal injunctions” have become increasingly common in legal battles challenging laws and regulations implemented by both Republican and Democratic administrations. Resolving this issue could have significant implications for future challenges.

Justice Neil Gorsuch, a Trump appointee, expressed concern about these types of injunctions and suggested that the court take up the broader issue.

“I agree with the Court that the government is entitled to a stay of the district court’s universal injunction. I would, however, go a step further and, as the government suggests, take this case now to resolve definitively the question whether a district court may issue universal injunctive relief,” Gorsuch wrote in a concurring opinion.

The legal challenge against the CTA was brought by several groups, including a firearms dealer, a dairy farm, an IT company, one of its owners, the National Federation of Independent Business (NFIB), and the Libertarian Party of Mississippi. They argue that the law exceeds Congress’s constitutional authority.


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