Vancouver, Canada — A significant development in U.S. corporate compliance has unfolded as enforcement of the Corporate Transparency Act (CTA) has been temporarily paused due to ongoing federal litigation. The CTA, which became effective on January 1, 2024, was hailed as a landmark measure in the fight against illicit finance. It required companies to disclose their beneficial owners to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
Now, with constitutional challenges working their way through the courts, obligations for millions of businesses have been suspended, creating uncertainty across industries. Amicus International Consulting has updated its clean-entity formation guidance to help clients navigate the pause responsibly, ensuring that new and existing structures remain compliant with both present risks and future obligations.
The CTA aimed to close loopholes exploited by anonymous shell companies. Under its provisions, beneficial owners defined as individuals who own or control at least 25 percent of a company or exercise substantial control were to be identified in a federal database accessible to regulators, law enforcement, and certain financial institutions.
Advocates argued this would curtail money laundering, terrorism financing, and tax evasion. Critics countered that it imposed disproportionate burdens on small businesses, raised privacy concerns, and created risks of data misuse.
Now, litigation has brought the law to a halt in key respects. Federal courts are reviewing arguments that Congress overstepped its authority, violated constitutional protections, and failed to safeguard sensitive ownership data adequately. For business owners and international investors, the result is a legal limbo where obligations are paused, but global transparency trends remain very much alive.
Why the CTA is Being Challenged
Litigation against the CTA has centered on two central claims. The first is constitutional: plaintiffs argue that forcing millions of small companies to disclose ownership to the federal government exceeds Congress’s enumerated powers. They contend that regulating corporate filings in this manner intrudes into state-controlled territory. The second is privacy-based: critics argue that the law compels individuals to disclose sensitive information without adequate safeguards, creating risks of leaks and misuse.
Preliminary injunctions have already been issued, pausing enforcement in certain jurisdictions. While the outcome remains uncertain, Amicus stresses that the pause does not represent a repeal. It is, at most, a delay. “Clients must assume that beneficial ownership disclosure will remain a global priority,” an Amicus employee said.
“Whether in the current form or through amended legislation, transparency will return. Our goal is to help clients prepare clean structures now so they do not face chaos later.”
The Case for Clean-Entity Formation During the Pause
Clean-entity formation refers to designing corporate structures that remain ready for compliance even when filings are suspended. Rather than treating the litigation pause as a loophole, Amicus recommends that clients document beneficial ownership internally, adopt privacy-preserving legal vehicles, and harmonize structures with other jurisdictions.
Key principles include:
- Transparency by Design: Create and maintain clear ownership records even if not currently required by FinCEN.
- Separation of Functions: Distinguish between beneficial owners, managers, and agents to avoid confusion.
- Privacy Preservation: Utilize lawful privacy tools, such as trusts, limited liability partnerships, or nominee arrangements, structured in accordance with specific rules.
- Cross-Jurisdictional Harmonization: Align structures with EU, UK, and Caribbean registry requirements to avoid mismatches.
- Audit Readiness: Maintain documentation so that if reporting resumes suddenly, compliance can be achieved within days.
Case Study: Real Estate Holding Company
A family office planning to form multiple LLCs in New York questioned whether it should proceed without filing beneficial ownership reports. Amicus advised documenting beneficial owners internally, preparing reports in the required format, but holding them in escrow until obligations resume. This ensured that when filings restart, the office will be ready to comply instantly.
Case Study: European Entrepreneur
A European entrepreneur expanding into the U.S. during the pause worried that privacy would be compromised if reporting resumed. Amicus recommended forming the entity with a clean ownership chain, supported by trust arrangements in the entrepreneur’s home jurisdiction. This approach balanced transparency with privacy, ensuring compliance readiness while preserving confidentiality.
Small Businesses at Risk of Misinterpretation
Some small businesses have wrongly interpreted the pause as permanent relief. Amicus warns that this is a dangerous misunderstanding. Banks, counterparties, and regulators outside the U.S. continue to demand beneficial ownership disclosures. Even if FinCEN cannot enforce filings today, private-sector requirements remain binding.
Case Study: Small Contractor Faces Bank Demands
A family-owned construction business formed during the pause attempted to open accounts without beneficial ownership disclosures. Their bank refused, citing global anti-money laundering compliance obligations. The company was forced to assemble records, causing delays and raising compliance flags retroactively. Amicus emphasizes that banks are already operating as though the CTA is in effect, even if FinCEN cannot enforce it.
Global Transparency Trends Continue
While U.S. enforcement is paused, the global direction is clear. The European Union requires member states to maintain beneficial ownership registries, though some have limited public access after privacy rulings. The United Kingdom mandates Companies House filings for ownership transparency. In the Caribbean, regional organizations are moving toward consolidated oversight of citizenship-by-investment structures.
Amicus stresses that multinational clients cannot treat the CTA pause as a safe harbor. “Global regulators are converging on ownership transparency,” said an Amicus consultant. “The choice is not whether to disclose, but how to disclose responsibly across multiple frameworks.”
Case Study: Caribbean Investment Structure
An investor using Caribbean citizenship-by-investment programs asked Amicus to design a structure resilient to both local due diligence and U.S. requirements. Amicus created dual-record keeping systems: ownership was disclosed locally under regional frameworks, while internal documentation was preserved for potential future CTA filings. The structure remained compliant in both jurisdictions.
Case Study: Private Equity Syndicate
A private equity syndicate planning to establish a Delaware feeder fund questioned whether beneficial ownership records needed to be filed. Amicus recommended assembling detailed ownership schedules internally, structuring reporting commitments into investor agreements, and preparing draft filings for FinCEN. This readiness strategy preserved investor confidence while avoiding compliance gaps.
Family Office Considerations
Family offices face unique pressures, balancing privacy with compliance. During the pause, Amicus advises creating layered structures that combine trusts, partnerships, and holding companies while documenting control clearly. This approach ensures that family offices can adapt quickly when obligations resume.
Case Study: Multigenerational Family Office
A U.S.-based family office with investments across multiple states wanted to restructure during the pause. Amicus recommended consolidating records, documenting beneficial ownership agreements in board minutes, and aligning reporting with EU rules, as several family members held dual citizenship. The office is now positioned to comply globally without reactive scrambling.
Risks of Avoidance
Entities that exploit the pause to form opaque structures may face retroactive scrutiny. Regulators could impose backdated penalties, while banks and partners may flag suspicious entities. Amicus advises that transparency, even when paused, is the safer long-term strategy.
Clean-Entity Guidance in Practice
Amicus’s updated guidance includes practical steps:
- Document ownership and control in a secure file at formation.
- Draft but withhold CTA filings for future submission.
- Use trusts or partnerships to manage privacy without hiding control.
- Create compliance calendars for potential deadlines in case obligations resume quickly.
- Harmonize disclosures with other jurisdictions to prevent mismatches.
Looking Ahead
The litigation pause has created uncertainty, but the broader global trend is undeniable: beneficial ownership transparency is here to stay. Whether through the CTA or a revised framework, disclosure obligations will likely return. Amicus International Consulting emphasizes that clients who form clean entities now will avoid costly disruptions later.
“The pause is not a loophole,” an Amicus employee concluded. “It is an opportunity to prepare smarter. By building transparency into structures today, businesses can adapt to whatever shape the law takes tomorrow.”
Contact Information
Phone: +1 (604) 200-5402
Email: info@amicusint.ca
Website: www.amicusint.ca
