A recent US District Court ruling has drawn attention in Wyoming, where many businesses are structured as shell companies, as the court blocked enforcement of the Corporate Transparency Act (CTA), The Cheyenne Post reports.
The Act, which was intended to require businesses to disclose their ownership information, has been met with mixed reactions in the state.
Judge Amos L. Mazzant III of the US District Court for the Eastern District of Texas issued an injunction against the CTA, ruling that it exceeded Congress’ authority under the Commerce Clause of the US Constitution. Specifically, Judge Mazzant stated that requiring businesses to disclose ownership information for law enforcement purposes was not within the scope of the federal government’s power to regulate interstate commerce.
The Corporate Transparency Act, which was passed in 2021, was aimed at increasing transparency to combat money laundering, terrorism financing, and other illicit activities by targeting anonymous shell companies. The US Treasury Department had issued regulations to enforce the Act, with the goal of curbing illegal financial activity by requiring businesses to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
However, Wyoming, which is home to many businesses that are often classified as shell companies, has been a vocal opponent of the CTA. Secretary of State Chuck Gray, whose office oversees business registrations in Wyoming, expressed support for the court’s decision.
“I am extremely pleased with the US District Court’s injunction to stop the enforcement of the CTA. I have been clear in my opposition to the CTA and its implementation, which is an unconstitutional intrusion into small business owners across the country, including Wyoming,” he said in a statement.
Secretary Gray also urged the Fifth Circuit Court of Appeals to uphold the injunction, which temporarily halts the enforcement of the Act while legal challenges continue.
