Federal court in Texas halts beneficial ownership reporting rule

A federal judge in Texas has issued a preliminary injunction halting the implementation of a rule requiring businesses to report their beneficial owners to the Financial Crimes Enforcement Network. The requirement was set to take effect on January 1.

The National Federation of Independent Business and its members filed a lawsuit challenging the constitutionality of the Corporate Transparency Act (CTA), the 2021 legislation that created a beneficial ownership information (BOI) registry and mandated business reporting. The plaintiffs contend that the CTA exceeds Congress’s authority to regulate interstate commerce, infringes on the First Amendment by compelling speech and restricting freedom of association, and violates the Fourth Amendment by requiring the disclosure of private information.

Read more on the granted preliminary injunction here.