FinCen Seeks Additional Stay of Injunction; Indicates Change of Perspective on CTA

By Richard S. Ekimoto, Esq.

Although the U.S. Supreme Court issued an emergency stay of the CTA injunction in the Texas Top Cop, Inc. v. McHenry case (formerly Texas Top Cop, Inc. v. Garland), FinCen is currently enjoined from enforcing the CTA because of a second injunction in the Smith v. U.S. Department of the Treasury case. FinCen has now appealed the second injunction. However, FinCen’s motion included the following:

If this Court grants the stay, FinCEN intends to announce that it will extend the compliance deadline for thirty days. During that period, FinCEN will assess whether it is appropriate to modify the CTA’s reporting requirements to alleviate the burden on low-risk entities while prioritizing enforcement to address the most significant risks to U.S. national security.

Since the U.S. Supreme Court has already ruled on the substance of the motion, it is likely that the stay will issue. However, FinCen indicated that it will allow reporting companies at least thirty days to file their BOI Reports. More importantly, FinCen has indicated that it is considering changing its approach to BOI Reports and will be evaluating whether “low-risk entities” need to file BOI Reports.

Of interest to community associations is that the Community Associations Institute met with FinCen last year asking that community associations be exempt from Reporting Companies because they are low-risk entities. FinCen, at the time, rejected that approach. It appears that FinCen is now reconsidering whether low-risk entities are required to file BOI Reports.

Community associations that have not filed their BOI Report might hold off on filing until FinCen makes its determination about low-risk entities.