New rules that would have required most companies and organizations, including family offices, to disclose information about their owners and controllers have been declared unconstitutional by a federal judge.
The Corporate Transparency Act’s impact on family offices has been previously reported by Crain Currency.
On Friday, U.S. District Judge Liles C. Burke issued a 53-page opinion that found the Corporate Transparency Act “exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals.”
“Congress sometimes enacts smart laws that violate the Constitution,” Burke wrote in the filing. “This case, which concerns the constitutionality of the Corporate Transparency Act, illustrates that principle.”
The court also prevented the government from enforcing the law against the National Small Business Association, the plaintiff in the case. As a result, compliance with this new regulatory regime can be set aside for now.
The CTA, which went into effect Jan. 1, required family offices and many family wealth management firms to report beneficial-ownership information for certain owners and control persons to the U.S. Treasury Department’s Financial Crimes Enforcement Network.