The US Department of the Treasury has announced that it plans not to enforce the provisions of the Corporate Transparency Act (CTA) that were to go into effect next month requiring owners and principals of all corporations to file copies of government-issued ID credentials, including photos, with the Financial Crimes Enforcement Network (FinCEN).

The Treasury Department also says it plans to propose revisions to the CTA regulations that would limit the ID-filing requirement to principals of “foreign reporting companies”, a term that doesn’t appear in the statute and isn’t defined in the announcement.

We don’t want the government to try to enforce the CTA reporting requirement. But if the law isn’t going to be enforced, it should be repealed, not left on the books as a Sword of Damocles available to prosecutors to threaten or persecute disfavored businesspeople. And the proposed regulations, redefining which entities must file CTA reports, would appear to be contrary to the explicit language of the CTA statute as to who must file.

Press releases like this one form the Treasury Department aren’t binding on Federal prosecutors, even now, much less in the future. Regardless of this announcement, nobody subject to the CTA is safe from prosecution if they don’t file the reports required by the law.

There are few legal constraints on prosecutorial discretion. Many laws — including those that impose reporting and filing requirements — are routinely ignored and unenforced. Police and prosecutors, especially those with malign intentions, love to have laws like this on the books that everybody violates. That allows anyone to be prosecuted at any time, with the government claiming truthfully that it is merely “enforcing the law”. Only in rare cases is the government required to explain the real reasons why some people are prosecuted while others who are known to have violated the same laws are not.

To word it a little differently, the combination of unlimited prosecutorial discretion and universally violated laws is central to the phenomena of pretextual police action and pretextual prosecution. An essential part of the solution is the repeal of unenforced laws.

We welcome, in the short term, the nonenforcement of CTA reporting rules. And we urge Congress to address the problem, promptly, by repealing the CTA in its entirety.

The US Supreme Court has stayed the nationwide injunction against enforcement of a Federal law requiring owners or principals of all corporations to submit copies of ID documents, including photos, to the  Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury.

The Supreme Court’s ruling leaves business owners and officers, and FinCEN, scrambling to figure out what to do — at a moment when how the Federal government might use personal information in ways that weren’t anticipated when it was collected is a hot topic.

The original deadline for filing of Beneficial Owner InformatIon (BOI) with FINCEN was to be January 1, 2025. But by then, multiple lawsuits against the Corporate Transparency Act had been filed, and the judge in one of those caseS had issued a nationwide injunction against enforcement of the law while the lawsuits were pending.

The Supreme Court’s decision to overturn that injunction allows the lawsuits and appeals to continue, but in the meantime allows the government to enforce the filing requirement.

Following the stay of the District Court injunction pursuant to the Supreme Court’s decision, FinCEN announced a new deadline of March 21, 2025, for filing of BOI (including copies of IDs) for most companies. Another injunction from a different judge in a different Federal court district remains in effect, but it applies only to the plaIntiffs in that case.

FinCen estimates that collecting and submitting the required information will require, on average, 90 to 650 minutes per company. That’s a far from trvial burden for, for example, a  sole proprietor with a personal LLC. The cost could be much higher for even a small business thta has to hire a lawyer to figure out who is considered a “beneficial owner” or officer subject ton the reporting requirement.

Those who search for information on the Web about BOI filing requirments are likely to be led to the flood of scam sites set up to rip off would-be BOI filers with excessive facilitation fees as intermediaries, while harvesting personal information for identity theft.  What does it say about the purposrted justification for this rule that the requirements of the “Financial Crimes Enforcement Network” are providing a windfall for financial fraudsters?

The purported limitations and controls on access to and use of BOI filings ring hollow in light of the access to and use of personal information from Federal databases in unanticipated ways and by entities and by newly-created entities with ambiguous authority, such as the White House Department Of Government Efficiency (DOGE).

With concern growing about how this informaiton might be misused, legislation is pending in Congress to repeal the Corporate Transparency Act or postpone its effective date.

On February 10th, the House of Representatives approved H.R. 736, a bill to extend the BOI filing deadline until January 1, 2026, by a unanimous vote of 408 to 0. The same or a similar bill is likely to be introduced in the Senate. Postponement might give time for the pending appeals in the lawsuits challenging the law to play out, or for Congress to repeal the law.

A bill to repeal the Corporate Transparency Act and the BOI reporting requirement has been introduced in the House as H.R. 425 and in the Senate as  S. 100, “Repealing Big Brother Overreach Act”. No action has yet been taken on this bill in either chamber.

A Federal District Court in Texas has issued a nationwide injunction against enforcement of the Corporate Transparency Act (CTA) of 2021.

This injunction is only temorary, pending a decision by the court on the merits of a lawsuit challenging the Constitutionality of the law, which could take months or years. But until that ruling, the preliminary nationwide injunction stays the January 1, 2025, deadline for officers and owners of all types of corporations to obtain ID documents from government agencies and submit copies of those documents, including photos, to the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury.

Another US District Court in Alabama has already ruled that the Corporate Transparency Act is unconstitutional. But that ruling only applied to the plaintiffs in that case.

The Texas District Court’s detailed ruling on the motion for a preliminary nationwide injuction focuses primarily on issues of federalism. It doesn’t mention the issue of corporate officers or owners who don’t have any of the required ID documents, or the implications of requiring  mug shots as well as document numbers and other written information.

The government argued that the plaintiffs in the case against the CTA had not suffered sufficient damage to give them a cause of action, because the reporting burden would be “de minimus” (minmal). The Court rejected that argument, noting that, according to the regulations implmenting the CTA reporting requirement, ” FinCEN estimates that the total cost of filing BOI [Beneficial Owner Information] reports is approximately $22.7 billion in the first year and $5.6 billion in the years after.”

The Court noted with a footnote that, “FinCEN also estimates that it will take approximately twenty minutes to read a beneficial ownership report form and understand it, thirty minutes to collect information about a company’s beneficial owners, and twenty minutes to fill out and file the report, resulting in a seventy-minute endeavor. But the Court notes that as a practical matter, it takes far longer than seventy minutes simply to read the CTA and Reporting Rule alone.”

What we find espcially significant and encouraging in this ruling is that it recognizes explicly that requiring ID is a law enforcement and investigatory device — as FinCEN’s very name, the Financial “Crimes Enforcement” Network, makes clear:

In other words, the CTA is a law enforcement tool—not an instrument calibrated to protect commerce; an exercise of police power, rather than a regulation of an activity…. The CTA regulates reporting companies, simply because they are registered entities, and compels the disclosure of information for a law enforcement purpose.

The Court rightly rejected the government’s argument that mandatory reporting of identifying information (and photos, although that wasn’t mentioned) about all corporate principals is “useful” for law enforcement. Unconstitutional general warrants, dragnet surveillance, or suspiconless, warrantless, house-to-house searches would undoubtedly enable the government to find evidence of crimes, some of which would otherwise have gone undetected, in many homes. But the effectiveness of these police tactics, from the point of view of the police, does not make them Constitutional.

FinCEN hasn’t updated its website yet to mention the nationawide injunction. The Texas case and other legal challenges to the CTA remain pending, and the injunction is likely to be appealed. For now, however, you can ignore the CTA reporting requirements and the January 1, 2025, compliance deadline.

A new effort is being made by some Senators to restrict the use of facial recognition by the Transportation Security Administration (TSA), airlines, and airports in the US.

But the proposed cure may be worse than the disease. The latest version of the proposed legislation, while undoubtedly well intentioned, includes a provision that would, for the first time, provide a basis in Federal law for “identity verification” of airline passengers.

The problem with facial recognition is that it’s a tool for identifying people. Legalizing (unjustified and previously unlawful) demands for travelers to identify ourselves in other ways is not a solution to the problems of either facial recognition or ID demands.

S. 3361, the “Travel Privacy Protection Act of 2023”, was introduced in the Senate in November 2023, and remains pending. But standalone bills like this have very little chance of being considered, especially in the current Congress.

With Congress acting on only a few bills that are considered essential to keep the  government operating, other legislation is likely to be acted on only if it can be attached to one of these “must-pass” bills. So some of the sponsors of S. 3361 have incorporated provisions to restrict the use of facial recognition, plus new provisions for alternative means of “identity verification” of travelers, into an amendment to the pending  bill to authorize continued operations of the Federal Aviation Administration (FAA).

We assume that the new “identity verification” provisions in the proposed amendment to the FAA reauthorization bill were added to the previous version of the legislation to address objections from the TSA, the airline industry, and airport operators, all of whom have invested heavily in shared infrastructure for facial recognition at airports on the assumption that it has already been agreed to as a government and industry standard.

The proposed amendment to the FAA reauthorization bill would explicitly authorize the use of facial recognition at US airports, provided that the TSA “provides each protected individual, at the request of the protected individual, with the option to choose between identity verification with or without facial recognition or facial matching software.”

This would be a major change, since no provision of current law authorizes the TSA to operate, or to require travelers to submit to, any sort of ID verification.

Congress should not be intimidated by the threat of facial recognition into authorizing the TSA, airlines, or airport operators to  require travelers to identify ourselves.

A choice between submitting to facial recognition so that we can be identified, and showing documents so that we can be identified, is not a choice we should have to make.

Regardless of how we are identified, we know how our identity will be used by the TSA and its commercial and governmental partners in the US and around the world.

The TSA will check our identity against the million and a half mostly Muslim names on the TSA’s no-fly blacklist, use our identity as one of the inputs to the algorithmic black box they use to decide whether to send the airline a Boarding Press Printing Result (BPPR) that “permits” the airline to issue a boarding pass for each of our flights, and use it to link its record of our flight to the permanent file it keeps about each of us. None of this is lawful or serves any legitimate purpose. Congress should put a stop to all of this.

The TSA offers the misleading reassurance that unless we are determined to pose a threat, it won’t retain facial images and other information about our travel. But since the threat-assessment algorithms and outcomes are secret, there’s no way to know whether information about us and any particular flight we take has been retained.

Compelled warrantless, suspicionless ID requirements violate the Fourth and Fifth Amendments to the US Constitution and international treaties protecting the right to freedom of movement both internationally and within the US.

If Congress wants to rein in the TSA and its use of facial recognition, Congress can and should explicitly prohibit the TSA from requiring travelers to identify ourselves, regardless of whether that identity verification is conducted by inspection of ID documents, facial recognition, or other means. Unless our right to travel has been restricted by court order, who we are is irrelevant to our right to travel by common carrier.