The U.S. Supreme Court agreed to reinstate a federal anti-money laundering law at the request of the federal government while a legal challenge continues in a lower court.
The court’s emergency stay temporarily halts a federal judge’s injunction that had blocked the Corporate Transparency Act (CTA), which mandates that millions of business entities disclose personal information about their owners, noting that Justice Ketanji Brown Jackson was the lone dissenter.
Late last month, the Biden-era Justice Department requested the high court’s intervention, and the court issued its ruling just three days after President Trump’s inauguration. While Trump’s Justice Department did not withdraw the application, he had opposed the new law during his first term in office.
Passed as part of the annual defense bill in early 2021, the Corporate Transparency Act (CTA) requires millions of small business owners to provide personal information, such as dates of birth and addresses, to the Financial Crimes Enforcement Network, which aims to combat money laundering and other crimes, the report continued.
The dispute has drawn significant attention from business groups and anti-regulatory advocates, who are working to delay the impending deadline, the outlet added.
“The case will now return to the 5th U.S. Circuit Court of Appeals, which will weigh the Justice Department’s defense of the law as a valid exercise of Congress’s constitutional authority over interstate commerce,” The Hill said. “In the meantime, the justices’ order paves the way for officials to implement the disclosure requirement, which had been set to go into effect this month.”
Jackson, the only justice appointed to the court by former President Biden, was the sole dissenter, arguing that the government had not demonstrated “sufficient exigency” and pointing out that the 5th Circuit was already hearing the government’s appeal on an expedited schedule.
“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.
“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,” Brown Jackson continued.
The DOJ, meanwhile, argued that pausing the deadline would cause 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 government’s application to the Supreme Court.
The Supreme Court rejected an alternative proposal from Prelogar to move the case to the justices’ regular docket, which would have allowed them to address the broader issue of federal district judges’ authority to block laws nationwide, noted The Hill.
“Universal injunctions” have become an increasingly common tool used to challenge laws and regulations implemented by both Democratic and Republican presidents. Addressing this issue would have had significant implications for legal challenges to future administrations.
Justice Neil Gorsuch, Trump’s first appointee who has voiced previous concerns about such injunctions, said he would have looked at the 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 noted in a brief concurrence with the majority.
The case began when a firearms dealer, a dairy farm, an information technology company, one of its owners, the National Federation of Independent Business (NFIB), and the Libertarian Party of Mississippi challenged the Corporate Transparency Act, arguing that it exceeded Congress’s authority.
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