A U.S. appeals court has paused enforcement of the Corporate Transparency Act (CTA), a law requiring businesses to disclose their beneficial owners to the Treasury Department. The New Orleans-based 5th Circuit Court of Appeals reinstated a nationwide injunction issued earlier by a Texas federal judge who deemed the law unconstitutional.
The decision reverses a prior ruling by a 5th Circuit panel, which had allowed enforcement while the government appealed. The court explained its latest move was to maintain “constitutional status quo” until a full panel reviews arguments on March 25.
The CTA, enacted in 2021, mandated corporations and LLCs to report ownership details to the Financial Crimes Enforcement Network (FinCEN) by January 13. Following the injunction, FinCEN announced companies are not obligated to file but can do so voluntarily.
The law aimed to combat financial crimes by curbing the use of anonymous corporate entities for laundering illicit funds. However, critics, including the National Federation of Independent Business and the conservative Center for Individual Rights, argued the law imposes unconstitutional federal overreach.
U.S. District Judge Amos Mazzant previously labeled the CTA a “quasi-Orwellian statute,” ruling it likely violates states’ rights under the Tenth Amendment. FinCEN’s enforcement pause will remain until the law’s constitutionality is decided.
Also read: Beloved Orca Tahlequah Welcomes a New Calf Amid Endangered Status Concerns
