Fortunately, there is some reassurance with incoming Treasury Secretary Scott Bessent; and legal action against CTA is (for now) gaining if not winning. But gambling on these offramps is risky in light of the crippling fines for non-compliance and the quickly approaching deadline.
Treasury is implementing its desired federal business registry through its new Financial Crimes Enforcement Network (FinCEN), and will include the full legal name, date of birth, home address, and passport/license/ID number of all “beneficial owners” of a business. (Nearly all of your personally identifiable information, placed in a government database that certainly won’t get hacked.)
FinCEN’s reporting website went live on 1 January 2024. Owners of the euphemistically-termed “reporting companies” must submit their reporting data by 13 January 2025, or face $591/day fines and up to two years of prison for willful failure to comply.
Despite Treasury claims to the contrary, there is little practical evidence (e.g., direct-mail letters, phone calls, emails, ads, X videos, etc.) that the Department has made sincere attempts to inform businesses of this requirement. Many business owners might not know about it, especially those without a full-time accountant to warn them.
Perhaps this is because Yellen’s Treasury does not clearly define which businesses qualify as a “reporting company”: FinCEN’s applicability flowchart terminates only in “No” or “Maybe.” The “exemptions” table permits a more edifying process of elimination: CTA does not apply to the government, banks, insurance companies, large corporations, etc.
Worse than the daily fine for non-compliance is, arguably, the cost of complying. The law’s name includes “transparency,” but FinCEN’s database will be exempt from FOIA. We the people will not have transparency into this database, but the database asks business owners to be even more transparent than they have already been with their state registrations (which are in the public domain). This is not transparency; it’s domestic spying on those who submit to it. Such a database could be used as a backdoor visibility an individual’s side sources of income, or to monitor the firearms industry.
The Treasury’s vague applicability rules and bankruptcy-inducing penalties, outsourced to FinCEN to administer, seem designed to funnel honest business owners into a surveillance trap. FinCEN and CTA could be obliterated by the court-ordered injunctions any day now, but Treasury (and by extension, the Department of Justice) will get their hands on peoples’ juicy personal and business data a la the Lois Lerner scandal in the meantime.
Peter McIlvenna, a UK-based free-speech advocate and host of Hearts of Oak, spoke about FinCEN and the CTA at a September 2024 symposium of the American Freedom Alliance, and subsequently wrote about it with unique and important insight. Mr. McIlvenna warns us from the global frontlines of a censorious, surveillance-oriented government; and he considers CTA to be a brick in the primrose path toward total state control.
Incidentally concerning is the spurious stated purpose of CTA. We are told that warrantless surveillance of law-abiding business owners is required to prevent crimes – such as money laundering – facilitated by anonymized LLCs. But Secretary Yellen’s press release does not cite historical crimes or specifics about LLC business registration abuse. We are just to take Yellen’s word at face value – because that worked so well for her with “transitory inflation.”
In reality, there are high-profile examples of LLC-facilitated money-laundering crimes illustrating that law enforcement goes for years without prosecuting these criminals.
Nothing substantive has come of Jacqueline Fine-Breger’s stunning February 2023 testimony to a joint meeting of the Arizona House and Senate Elections Committees. Ms. Fine-Breger spent 42 minutes walking through four years of investigations into the Sinaloa Cartel’s use of LLCs to launder drug money into real estate purchases, facilitated by Arizona government’s failure to prosecute and alleged involvement.
In Maine, the Maine State Police and Governor Mills have declined for over a year to act on overwhelming investigative evidence from local sheriffs, The Maine Wire, and the Department of Homeland Security regarding the CCP-linked Triad Weed criminal organization’s use of LLCs to re-purpose hundreds of houses across the state for cultivation of black market marijuana.
To any common-sense observer, these would be key targets for an effort to curb illicit uses of LLCs: criminal, foreign entities using business registrations to obfuscate drug propagation and profit. Of course for the Biden administration, the answer is never prosecuting the unlawful; the answer is always to spy more on the lawful.
The odd numbers associated with the CTA/FinCEN initiative – 13 January deadline vs. 1 January; $591 daily fine vs. $500 or $600 – reflect this law’s long and troubled past. The CTA was enacted in 2021 (following a 2020 veto by President Trump, and a subsequent Congressional overturning of his veto). As originally written, the per-day non-reporting fine would be $500. But inflation since just 2020 has adjusted that value to $591 – according to the same Treasury Department responsible for the inflation! Let that sink in.
The unusual filing deadline of 13 January 2025 is the result of the legal and ethical tug’o’war between constitutional judges and unconstitutional federal bureaucrats. On 3 December 2024, the US District Court for the Eastern District of Texas ordered a nation-wide injunction against Merrick Garland’s Department of Justice’s (DOJ) enforcement of CTA. Merrick Garland’s DOJ responded on 5 December with a requested stay on the injunction. The Fifth Circuit Appeals Court granted a temporary stay on 23 December, which upholds CTA enforcement (for now) with an extended filing deadline relative to the original 1 January deadline. But as of 26 December, the Fifth Circuit Appeals Court has changed its mind and vacated the stay, re-instating the injunction. What does this mean? It means don’t gamble on Schrödinger's cat.
Incoming Treasury Secretary Scott Bessent must take definitive action against this DOA law. Ideally, Bessent will be inclined, and legally able to, concede or conclude the Texas injunction in the plaintiffs’ favor if this injunction is not already found in their favor. Regardless of how Bessent may support the cancellation of CTA, ideally he will also abolish FinCEN.
Until then, affected business owners must do what they see fit. Submit to CTA, fight it, or both. As Mr. McIlvenna had noted, several business owners and commerce groups have filed lawsuits similar to the one that resulted in the Texas injunction. Lawsuits have been filed through Alabama, Ohio, Maine, Michigan, Texas, and Massachusetts. Impacted business owners in states other than these should consider adding their state to the list of dissenting states with legal action.
For so many of the abominations of the Biden administration, we assume that Trump will fix it on Day One. This one will likely take more grassroots elbow grease.
