On February 5, the U.S. Department of Justice (DOJ) filed a notice of appeal and a motion to stay the preliminary injunction against enforcement of the Corporate Transparency Act (CTA) entered in Smith v. Department of the Treasury in the Eastern District of Texas (Smith). DOJ is asking the Court of Appeals to stay the injunction pending disposition of the appeal. If DOJ’s motion is granted, beneficial owner information report (BOIR) filing requirements under the CTA would be reinstated and remain in effect unless the District Court’s decision were to be affirmed.

Financial Crimes Enforcement Network (FinCEN) has announced on its website that if the injunction in Smith is lifted pending DOJ’s appeal, reporting companies will only have 30 days from the day the stay is lifted to comply with the CTA reporting requirement and file BOIRs. At its option, FinCEN may, during that 30-day period, choose to modify further deadlines or reporting requirements for “lower-risk entities, including many U.S. small businesses, while prioritizing reporting for those entities that pose the most significant national security risks.” Currently, FinCEN is accepting voluntary filings of BOIRs; filing is not now mandatory. However, given the short 30-day compliance window if the injunction is lifted, we would caution reporting companies under the CTA to, at a minimum, begin to compile the requisite information to meet the filing deadline, and to keep abreast of developments in the fast-moving maelstrom of CTA enforcement related rulings and orders, and FinCEN filing deadlines.