Judge’s Ruling Sets Back Law Meant to Fight Money Laundering

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In a blow to government efforts to combat money laundering, a federal court has ruled that the Treasury Department cannot require some small businesses to report personal details about their owners. Under a section of a 2020 law that took effect Jan. 1, small businesses must share details about their so-called beneficial owners, individuals who hold financial stakes in a company or have significant power over their business decisions. The law, the Corporate Transparency Act, passed with bipartisan support in Congress and was intended to help the Treasury Department’s financial-crimes division identify money launderers who hide behind shell corporations. But in a ruling issued late Friday, Judge Liles C. Burke of the U.S. District Court in Huntsville, Ala., sided with critics of the law. They argue that asking a company’s owners to present personal data — names, addresses and copies of their identification documents — was a case of congressional overreach, however well intended. “Congress sometimes enacts smart laws that violate the Constitution,” Judge Burke wrote in a 53-page filing. “This case, which concerns the constitutionality of the Corporate Transparency Act, illustrates that principle.”