Anti-money laundering law: A U.S. appeals court has halted enforcement of an anti-money laundering law that requires corporate entities to disclose the identities of their real beneficial owners to the U.S. Treasury Department ahead of a deadline for most companies to do so.

The New Orleans-based 5th U.S. Circuit Court of Appeals reinstated late Thursday a nationwide injunction that had been issued this month by a federal judge in Texas who had concluded 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 put the injunction on hold 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 decided to keep enforcement of the law paused "to preserve the constitutional status quo while the merits panel considers the parties' weighty substantive arguments."

Those arguments will be heard on March 25, the court said Friday. Before Thursday's order, most companies had faced a Jan. 13 deadline to submit their initial reports to the Treasury Department's Financial Crimes Enforcement Network (FinCEN).

The injunction had been obtained by the National Federation of Independent Business, which along with several small businesses challenged the law through lawyers at the conservative Center for Individual Rights.

"Given that we have established that the CTA is likely unconstitutional, this intrusive form of government surveillance should be halted until the law's fate is finally resolved," Todd Gaziano, the Center for Individual Rights' president, said in a statement.

FinCEN did not respond to requests for comment.

Under the law, which was enacted in 2021, corporations and LLCs were required to report information concerning their beneficial owners to FinCEN, which collects and analyzes information about financial transactions to combat money laundering and other crimes.

The measure's supporters said it was designed to address the country's growing popularity as a venue for criminals to launder illicit funds by setting up entities such as limited liability companies under state laws without disclosing their involvement.

U.S. District Judge Amos Mazzant in Sherman, Texas, on Dec. 3 ruled Congress had no authority under its powers to regulate commerce, taxes and foreign affairs to adopt the "quasi-Orwellian statute" and that it likely violated states' rights under the U.S. Constitution's 10th Amendment. VOA/SP