Recently, the U.S. Court of Appeals for the 11th Circuit reversed a lower court’s ruling and upheld the constitutionality of the Corporate Transparency Act (CTA), a federal law requiring certain corporations, limited liability companies, and similar entities to report beneficial ownership information to the Treasury and FinCEN.

The case arose when a business association and a real-estate manager challenged the CTA, arguing that it exceeded congressional authority under the Commerce Clause and violated the Fourth Amendment’s prohibition on unreasonable searches. The district court sided with the plaintiffs, holding that the CTA did not regulate economic activity and therefore was not an appropriate exercise of Congress’s power to regulate interstate commerce under the Commerce Clause, thus declining to address other constitutional claims.

On appeal, the 11th Circuit disagreed. The court found that the CTA “facially regulates economic activities” because it requires commercial entities to report beneficial ownership information and targets anonymous business dealings that may have a substantial aggregate effect on interstate commerce. The court also concluded that the CTA’s reporting requirements are routine, limited in scope, and supported by privacy safeguards, making them reasonable under the Fourth Amendment. The appellate court’s decision remanded the case to the lower court for further proceedings consistent with the appellate ruling.