Subject to Inquiry

Subject to Inquiry

THE LATEST ON GOVERNMENT INQUIRIES AND ENFORCEMENT ACTIONS

Government Investigations and White Collar Litigation Group
Anti-Bribery and Corruption

Major Shift on Foreign Corrupt Practices Act: Trump Signs EO Pausing Enforcement

Last night, in a move with wide-ranging implications for American companies doing business abroad, President Trump issued an executive order (Order) temporarily halting enforcement of the Foreign Corrupt Practices Act (FCPA).  The Order directs Attorney General (AG) Pam Bondi to review guidelines and policies governing FCPA investigations and enforcement actions in the next 180 days, with an option to extend the review another 180 days if appropriate.  During that time, no new FCPA investigations or enforcement actions will be opened, unless AG Bondi determines an exemption is appropriate, and all currently pending FCPA investigations and enforcement actions will be reviewed to “restore proper bounds on FCPA enforcement and preserve Presidential foreign policy prerogatives.”  After new guidance is issued, new FCPA investigations initiated or current actions that are continued must follow the new guidelines, with new matters requiring the approval of AG Bondi.  At the end of the review period, AG Bondi will also consider if additional action is appropriate, including possible remedial measures with respect to past FCPA investigations and enforcement actions.

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Compliance, Fraud, Deception and False Claims

State Attorneys General Poised to Crack Down On Price Gouging Amid Market Pressure

This past Thursday, New York Attorney General Letitia James issued a warning to businesses against price gouging for eggs and poultry. The current bird flu outbreak began in March 2024 but has become a topic of increasing concern for consumers and businesses in the new year after more than 13 million hens—necessary to the success of the egg and poultry industry—died or were slaughtered within the last two months.

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Sanctions, Trade Embargo, and Export Controls

Trump Tariffs on Canada, Mexico, and China

On February 1, 2025, the Trump Administration imposed long-expected tariffs on imports from Canada, Mexico, and China through the issuance of three executive orders (“EOs”).  While some recent reporting suggested that implementation of these tariffs may be delayed to March 1, 2025, the White House confirmed on January 31, 2025 that these tariffs would be implemented according to a previously-set deadline. However, following a flurry of threats of counter-tariffs and phone calls between President Trump and his counterparts in Canada and Mexico, on February 3, 2025, the leaders of Canada and Mexico confirmed that the United States will delay tariffs for a month while both countries work towards more long-term agreements.  The tariff imposed on China went into effect on February 4.

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Sanctions, Trade Embargo, and Export Controls

Trump Administration Tariff Regime: Uncertainty and Expectations

As he enters his second week in office, President Donald Trump is forecasting a desire to implement a muscular trade policy leaning heavily on the imposition of tariffs—potentially on a global basis—as a means of extracting favorable trade deals and other economic and political concessions from trading partners across the globe. As of this writing, much remains uncertain with respect to tariff implementation.  What is clear is that President Trump’s tariff-related warnings have commercial and political parties around the world on edge. 

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Anti-Bribery and Corruption

U. S. Supreme Court Vacates National Injunction Staying the CTA in One Case, But a Separate Nationwide Stay Against Enforcement Stands

Here we go again – another CTA update hot off the press. 

  • In our last update, we reported that the U.S. Department of Justice (DOJ) filed with the U.S. Supreme Court an emergency application to stay the injunction preventing FinCEN from enforcing the CTA, asking the Court to either stay the Texas district court’s December 3, 2024, injunction pending the Fifth Circuit’s merits review in Texas Top Cop Shop v. Garland (4:24-cv-00478-ALM), or, in the alternative, to treat the application as a “petition for a writ of certiorari before judgment presenting the question whether the district court erred in entering preliminary relief on a universal basis.” 
  • On January 7, 2025, in a separate Texas case – Smith v. United States Department of Treasury (6:24-cv-00336) –  a federal judge in the Eastern District issued a separate order enjoining enforcement of the CTA against the plaintiffs in that case and staying the Reporting Rule on a nationwide basis. At this time, the government has not appealed in that matter.  

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Fraud, Deception and False Claims

Second Circuit Joins Other Circuits with AKS One Purpose Test

Second Circuit Court of Appeals building

On December 27, 2024, the United States Court of Appeals for the Second Circuit decided United States ex rel. Camburn v. Novartis Pharmaceuticals Corporation and joined a growing list of federal circuit courts that have adopted what the Second Circuit called the “at least one purpose rule”. This rule provides that defendants have violated the Anti-Kickback Statute (“AKS”), 42 U.S.C. §1320a-7b so long as at least one purpose of the alleged remuneration at issue (as opposed to the sole or main purpose) was to induce patient referrals, even if there were other, legitimate reasons for the payment. 

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Anti-Bribery and Corruption

DOJ Seeks Supreme Court Review of CTA Injunction

Another flurry of court activity has further muddied the Corporate Transparency Act (CTA) waters, leaving additional uncertainty about its enforceability. 

You may recall that on December 26, 2024, the Fifth Circuit vacated its own order granting the Government’s motion to stay the district court’s preliminary injunction, leaving FinCEN unable to enforce the CTA and lifting any filing obligations.  FinCEN has acknowledged the stay and is accepting voluntary beneficial ownership reports.  Though the Fifth Circuit’s expedited briefing schedule provided Reporting Companies some sense of timing to analyze their reporting obligations (oral arguments are scheduled for late March), there is a possibility that Reporting Companies may have even less time than expected. 

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Anti-Bribery and Corruption

Corporate Transparency Act Reporting Obligations: On Hold Until At Least Late March 2025

A flurry of activity in the Fifth Circuit this holiday season left clients asking the same questions about the Corporate Transparency Act (CTA): “Do we report Beneficial Ownership Information?”  “If so, when is the deadline?”  “Will this Act survive judicial review?”

You may recall that on December 26, 2024, the Fifth Circuit vacated the “part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA,” as well as the Reporting Rule.  In other words, FinCEN cannot enforce the CTA and there is no reporting obligation until this gets resolved.

The Fifth Circuit has issued an expedited briefing.  Briefing will occur in February, and the court has scheduled oral argument on March 25, 2025, after which it will need time to issue an opinion.  As with the temporary lifting of the injunction precluding enforcement, FinCEN would likely provide additional time to file should the law go back into effect.  In light of this schedule, Reporting Companies now have some clarity on the time – likely Q2 2025 – they have to analyze their compliance obligations. 

McGuireWoods will continue to monitor developments and publish updates as the case proceeds.  Our team stands ready to assist.  For questions about the CTA or anti-money laundering (AML) compliance generally, including customer due diligence and beneficial ownership rules, contact the authors of this article or another member of McGuireWoods’ Financial Services & Securities Enforcement, Government Investigations & White Collar Litigation, Healthcare, Tax & Employment Benefits, or Corporate & Private Equity teams.

Anti-Money Laundering

Here We Go Again – Fifth Circuit Lifts the CTA Order Lifting the Injunction

Just what you wanted – another holiday edition of Subject to Inquiry tracking the legal wrangling around the Corporate Transparency Act (CTA).  If you’ve just joined our program:

  • On December 3, the District Court in the Eastern District of Texas issued a preliminary injunction that enjoined the Financial Crimes Enforcement Network (FinCEN) from enforcing the Act or holding the statutory December 31 deadline to report for non-exempt companies.  Emphasis on preliminary.
  • Then, on December 23, the United States Court of Appeals for the Fifth Circuit granted the government’s emergency motion for a stay, which lifted the injunction.  Our alert on that news, which required companies who reasonably thought they had some breathing room, was an unwelcome stocking stuff.
  • And in another stunner, last night the same Fifth Circuit has pulled a Vice Versa.  No, not a screening of the hit 1988 body swap film starring Judge Reinhold and Fred Savage.  Instead, the court decided to “preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.”  The Fifth Circuit vacated the “part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA,” as well as the Reporting Rule.  The case is now with the merits panel on an expedited basis, and “a briefing schedule will issue forthwith.” 

McGuireWoods will be closely monitoring developments and publishing alerts as the case proceeds.  As with the message following the December 3 injunction, it is reasonable to slow down on the analysis and preparation.  That holds more true here given that briefing will now occur. However, FinCEN granted only 13 extra days to file when the December 23 order was granted.  Accordingly, clients – especially those who are unlikely to have an available exemption from reporting – should consider substantially completing the analysis so they are prepared when or if beneficial ownership reporting is required under the CTA.

Our team is ready to assist.  For questions about the CTA or anti-money laundering (AML) compliance generally, including customer due diligence and beneficial ownership rules, contact the authors of this article or another member of McGuireWoods’ Financial Services & Securities EnforcementGovernment Investigations & White Collar LitigationHealthcareTax & Employment Benefits, or Corporate & Private Equity teams.

Anti-Money Laundering

Reporting Companies Have Less Than Three Weeks to File Beneficial Ownership Info With FinCEN

On Dec. 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted the government’s emergency motion for a stay of a District Court’s nationwide preliminary injunction against enforcement of the Corporate Transparency Act (CTA). The appellate court’s unpublished order in Texas Top Cop Shop v. Garland reinstates the act, which has a year-end deadline for non-exempt companies to comply.

However, in an alert published on its beneficial ownership information (BOI) page, FinCEN extended the reporting deadline for companies formed before September 2024 to Jan. 13, 2025.

McGuireWoods will monitor developments closely. However, companies now have less than three weeks to conduct the analysis and, if non-exempt, gather the required information and file a BOI report. McGuireWoods has counseled dozens of clients on this analysis and stands ready to assist.

For questions about this decision, the CTA or anti-money laundering rules compliance, including customer due diligence and beneficial ownership rules, contact the authors of this article or another member of McGuireWoods’ Financial Services & Securities Enforcement, Government Investigations & White Collar Litigation, HealthcareTax & Employment Benefits, or Corporate & Private Equity teams.

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