An Alabama judge barred the government from collecting certain company ownership data to help the Treasury Department identify money launderers, and called the effort a case of congressional overreach.
By Kate Kelly | New York Times
In a blow to government efforts to combat money laundering, a federal court has ruled that the Treasury Department cannot require some small businesses to report personal details about their owners.
Under a section of a 2020 law that took effect Jan. 1, small businesses must share details about their so-called beneficial owners, individuals who hold financial stakes in a company or have significant power over their business decisions. The law, the Corporate Transparency Act, passed with bipartisan support in Congress and was intended to help the Treasury Department’s financial-crimes division identify money launderers who hide behind shell corporations.
But in a ruling issued late Friday, Judge Liles C. Burke of the U.S. District Court in Huntsville, Ala., sided with critics of the law. They argue that asking a company’s owners to present personal data — names, addresses and copies of their identification documents — was a case of congressional overreach, however well intended.
“This ruling further complicates the already complex landscape of the Corporate Transparency Act.”
-Shruti Gurudanti, Rose Law Group partner and director of corporate transactions
