By admin 
By Nate Raymond
(Reuters) – A U.S. appeals court has halted enforcement of an anti-money laundering law that requires corporate entities to reveal the identities of their true beneficial owners to the U.S. Treasury Department, ahead of a deadline that most companies are required to meet.
The New Orleans-based 5th U.S. Circuit Court of Appeals late Thursday reinstated a nationwide injunction issued earlier this month by a federal judge in Texas that had concluded that the Corporate Transparency Act was unconstitutional.
The order marked a change of course for the court. On Monday, a three-judge panel of the 5th Circuit, at the urging of the U.S. Department of Justice, stayed the order while the government appealed the Texas judge’s decision.
But a different panel will ultimately decide whether to uphold the judge’s ruling, and in Thursday’s order the court said it has decided to keep enforcement of the law on hold “to preserve the constitutional status quo while the merits panel examines the considers important substantive arguments of the parties. “
Most companies before Thursday’s order faced a Jan. 13 deadline to file their first reports with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
The order was obtained by the National Federation of Independent Business, which along with several small businesses challenged the law through attorneys from the conservative Center for Individual Rights.
“Given that we have determined that the CTA is likely unconstitutional, this intrusive form of government surveillance must cease until the fate of the law is finally resolved,” Todd Gaziano, president of the Center for Individual Rights, said in a statement.
FinCEN did not respond to requests for comment.
The law, which took effect in 2021, required companies and LLCs to report information about their beneficial owners to FinCEN, which collects and analyzes information about financial transactions to combat money laundering and other crimes.
Supporters of the measure said it was intended to address the country’s growing popularity as a location for criminals to launder illicit funds by setting up entities such as limited liability companies under state law without disclosing their involvement.
U.S. District Judge Amos Mazzant in Sherman, Texas, ruled on December 3 that Congress lacked the authority to regulate commerce, taxes and foreign affairs to adopt the “quasi-Orwellian statute” and that it likely violated states’ rights under the US violated. The Tenth Amendment to the Constitution.
(Reporting by Nate Raymond in Boston; Editing by Chizu Nomiyama)