You may remember I was jubilant over a Dec. 3, U.S. District Court decision in Texas which overruled a provision of the Corporate Transparency Act requiring small business managers to submit ownership information to the Financial Crimes Enforcement Network.
Then, on Dec. 23, the Fifth Circuit Court of Appeals reinstated the obligation to file the information. While the deadline was moved back to Jan. 13 from Jan. 1, I decided to file immediately on behalf of NFR Communications, which publishes Pulse, because I feared the FinCEN website might crash if I waited until the deadline when many of the other 32 million small business owners in America might be filing. After all, filing late can result in big fines and even jail time.
Then, on Dec. 26, a panel of Fifth Circuit judges re-affirmed the Dec. 3 decision, suspending the obligation to file!
But that’s not even the end of it. On Dec. 31, the Justice Department filed a motion seeking the Supreme Court’s intervention. It wants CTA implementation put back on track. But many people see that as a problem, and on Jan. 9, attorneys from 25 states filed an amicus brief seeking to deny the Justice Department’s motion. It is unclear when a decision will come.
But maybe the courts aren’t the best vehicle to resolve all this. Congress, which passed the Corporate Transparency Act in 2020, should repeal the law altogether. Saddling small business owners with another bureaucratic obligation is a very expensive, and likely ineffective tactic, to fight money laundering.
None of this, of course, affects any banks, which are exempt from the CTA’s reporting requirements. But I think community bankers can strengthen their role within the small shop economy by championing small businesses. Nobody knows the oppressive effect of forced data-reporting better than community bankers. It shouldn’t be difficult for you to empathize with your small business customers and prospects. Your support means something to us, possibly enough to cement a business relationship.