Corporate Transparency Update

As of the end of January, the Corporate Transparency Act's filing requirements are on hold, due to an injunction in Smith v. U.S. Department of the Treasury, in a Tyler, Texas case.  On February 5, the government appealed the injunction and asked the Fifth Circuit to play a "stay" (a hold) against the Smith order.  If the Smith order is stayed, the government has announced a 30-day extension of filing deadlines.  FinCEN has also announced it will reprioritize its enforcement efforts to bigger companies.  Bills in both houses of Congress aim to repeal the law.

My opinion is that this law is clearly unconstitutional, and it is not even close.  Of course, I want the government to fight money laundering of profits from illegal activity; it does, and it will continue.  However, the government cannot knock on everyone's home door and require a search of the home for evidence of crimes.  This law's effect is the same.  The Fourth Amendment to the U.S. Constitution provides that "the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation..."  Thus, the same right to prevent the government from searching your home without a warrant protects your papers from searches without a warrant too.

An investment in a company is a paper asset.  If the government were to investigate a person for money laundering involving the paper asset, it would need a search warrant.  The CTA requires the person to file a report and tell the government what is in the paper asset for purposes of crime fighting, without a warrant.  How is that constitutional?  I believe it is obvious the law circumvents the requirement to obtain a warrant to search the papers, and this problem is in addition to what the courts discuss with whether Congress had the authority to pass this law in the regulation of commerce (even if it did, it cannot violate the Fourth Amendment).