The Eleventh Circuit Tuesday lifted a longstanding court order blocking the US Treasury Department from enforcing the Corporate Transparency Act against companies that were members of the National Small Business Association.
The act—which requires companies to report their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network—"facially regulates economic activity,” the US Court of Appeals for the Eleventh Circuit said. Therefore, the constitutional challenges to the law fail, the appeals court said, remanding the case to the US District Court for the Northern District of Alabama and lifting that court’s stay on enforcement.
“By requiring these corporate entities to provide beneficial ownership information, the CTA regulates how they operate and the level of secrecy with which they do business,” Judge Andrew L. Brasher wrote for the court. “The maintenance and operation of a separate corporate entity is comparable to other regulated activities the Supreme Court has found commercial in nature.”
The federal government brought its appeal after an Alabama federal judge ruled in March 2024 in favor of the business association, concluding that Congress had overstepped its powers by directly regulating the process of incorporating a business, without respect to whether the formed entity would engage in interstate commerce. The Trump administration rewrote the Biden-era rule one year later, significantly reducing the number of entities subject to the law’s embattled reporting requirements.
The CTA sought to create a registry identifying the individuals who owned or controlled anonymous shell companies operating in the US, maintained by FinCEN to crack down on money laundering, drug trafficking, and other illicit financial schemes. The law’s disclosure obligations prompted a wave of legal challenges that delayed full enforcement. In March 2025, the Trump administration revised its implementing regulation to completely exempt US citizens and domestic companies from having to make disclosures.
Early estimates said the law would have required disclosures from about 32 million companies operating in the US. According to Treasury, the new rule is expected to only collect beneficial ownership information from about 12,000 foreign entities.
Brasher said the CTA’s “many carveouts will likely exempt” corporate entities not involved in commerce, negating challenges that it violated the Fourth Amendment’s prohibition against unreasonable seizure.
The government argued the reduced scope of the reporting rule only further undermined NSBA’s constitutional challenge by demonstrating how the law plainly fell within Congress’s authority to regulate foreign commerce. NSBA argued the change in regulations did nothing to change the CTA statute’s inherent constitutional problems, expanding the Commerce Clause to intrude on state regulatory authority.
Judges
Hughes Hubbard & Reed LLP and Maynard Nexsen PC represent National Small Business United, operating as NSBA.
The case is Nat’l Small Bus. United v. Dep’t of Treasury, 11th Cir., No. 24-10736, 12/16/25.
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