Judge issues injunction blocking enforcement of beneficial ownership reporting rule

A federal judge in Texas has issued a preliminary injunction to block enforcement of the requirement for businesses to report their beneficial owners to the Financial Crimes Enforcement Network.

The injunction comes less than a month before the requirement’s Jan. 1 deadline. It states covered companies nationwide do not need to comply with the Jan. 1 reporting deadline, unless a higher court reverses the order.

The judge’s order comes in response to a lawsuit filed by the National Federation of Independent Business and several of its members earlier this year. The suit challenged the constitutionality of the Corporate Transparency Act, the 2021 bill that established a beneficial ownership information, or BOI, registry and the requirement for businesses to report. The lawsuit argued the CTA exceeded Congress’s authority to regulate interstate commerce, it violates the First Amendment by compelling speech and infringing freedom of association and it violates the Fourth Amendment by forcing the disclosure of private information.