Texas Judge Lifts Block on Corporate Transparency Act, Reinstating Reporting Requirements

A federal judge in Texas has lifted an order that had previously blocked enforcement of an anti-money laundering law requiring millions of business entities to disclose their real beneficial owners to the U.S. Treasury Department.

Following the decision, the Financial Crimes Enforcement Network (FinCEN), the anti-money laundering (AML) unit of the U.S. Treasury, confirmed that businesses must now comply with the law and file beneficial ownership information. “With a new deadline of March 21, 2025 for most companies,” FinCEN stated.

U.S. District Judge Jeremy Kernodle, based in Tyler, Texas, had originally halted enforcement of the Corporate Transparency Act but later put that ruling on hold after the Trump administration vowed to reassess the law’s regulations “to alleviate the burden on low-risk entities.”

Tuesday’s ruling permits the law’s enforcement to resume while the U.S. Department of Justice appeals Kernodle’s earlier determination that the law was unconstitutional.

The Corporate Transparency Act, enacted in 2021, mandates corporations and limited liability companies (LLCs) to report information about their beneficial owners to FinCEN. The agency is responsible for collecting and analyzing financial transaction data to combat money laundering and related crimes.

On January 7, Kernodle ruled that the law was unconstitutional, stating that it overreached by imposing federal regulations on private companies formed under state law, even if they did not engage in interstate commerce.

However, in Tuesday’s order, Kernodle—who was appointed by former President Donald Trump during his first term—acknowledged that just days after his initial ruling, the U.S. Supreme Court temporarily blocked a similar ruling by Texas-based U.S. District Judge Amos Mazzant, who had also deemed the law unconstitutional and barred its enforcement.

The Supreme Court’s January 23 decision only addressed Mazzant’s injunction, meaning that Kernodle’s ruling remained in effect until it was either paused or overturned.

The Trump administration had requested that Kernodle suspend his ruling, arguing that if he did so, FinCEN would extend the reporting deadline by 30 days to allow time for reconsidering modifications to the requirements.

However, the plaintiffs in the case—two corporate entity owners represented by the conservative Texas Public Policy Foundation—opposed reinstating the law’s enforcement. They contended that the ruling should remain in place until the 5th U.S. Circuit Court of Appeals in New Orleans, and ultimately the U.S. Supreme Court, had the opportunity to “evaluate its novel expansion of federal power.”

Attorneys representing both the plaintiffs and FinCEN did not immediately respond to requests for comment.

By fLEXI tEAM