Shell companies have long served as vehicles for financial crime, concealing the identities of bad actors behind the corporate veil. By shielding the identities of their owners, these entities enable money laundering, terrorism financing, and a host of other illicit activities. In response, Congress enacted the Corporate Transparency Act (CTA) in 2021, requiring millions of business entities operating in the United States to report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). Critics have mounted constitutional challenges arguing that Congress exceeded its legislative powers in enacting the CTA. District courts in both Texas and Alabama have agreed, holding the statute unconstitutional. The
Department of the Treasury also faces potential challenges regarding issues of statutory interpretation and enforcement.
This Comment argues that the district courts in both Texas and Alabama erred. Under the Necessary and Proper Clause, Congress possesses broad authority to enact legislation rationally related to the foreign affairs power. The plain text and legislative history of the CTA establish that the statute is intended to detect and disrupt the use of anonymous business entities by foreign criminal actors. This Comment further argues that potential administrative law challenges to the Treasury’s interpretive authority over the statute should also fail, and that the Major Questions Doctrine presents no bar to enforcement. Under Loper Bright Enterprises v. Raimondo, the “best reading” of the CTA is that the Treasury has authority to interpret the statute and to enforce the reporting regime.
