Small business owners shouldn’t forget about a rule — currently in legal limbo — that would require them to register with an agency called the Financial Crimes Enforcement Network, or FinCEN, by Jan. 1.

The recording is part of the Business Transparency Act, an anti-money laundering law passed in 2021. Under the CTA, owners and co-owners of approximately 32.6 million small businesses must record personal information with FinCEN, such as photo identification and home address.

Registration is not difficult, but if a small business owner is not aware of this requirement, they could face penalties of up to $10,000. Businesses with more than 20 employees and a turnover of more than $5 million can benefit from exemptions.

For now, the rule is on hold. On December 3, a Texas federal court issued a preliminary injunction barring enforcement of the rule. FinCen said the registration was voluntary. But the injunction could be overturned on appeal, so small business owners should keep an eye on the case.

The law aimed to peer inside shell companies and crack down on attempts by “criminals, organized crime rings and other illicit actors to hide their identities and launder their money through the financial system”, a said Treasury Secretary Janet Yellen in 2022.

The rules originally took effect in 2024 and gave existing businesses until January 1, 2025 to register. However, businesses that started in 2024 had 90 days to register.

Doris Dike, principal at Dike Law Group in Frisco, Texas, which works with small business clients in the health care industry, said she is concerned about the rule taking effect in 2025.

“FinCEN is intrusive and I am relieved that it is temporarily suspended. I’m not convinced it would combat money laundering,” she said. “There are already laws to register business ownership. FINCEN is a big task and would create fear among small businesses.”

Jennifer Barnes, owner and CEO of San Diego-based accounting firm Optima Office, which has 97 employees, said she might sign up even if the rule is temporarily suspended.

“A recent sojourn regarding FinCen beneficial ownership information reporting is just that: a sojourn. This is not a final determination of the merits of the requirement,” she said in an email. “Therefore, the prudent step is to file before the previously set deadline of January 1, as there is no guarantee of an extension of the deadline if the suspension is rescinded.”