The US Court of Appeals for the Fifth Circuit on Thursday temporarily blocked the enforcement of an anti-money laundering law that mandates corporate entities to disclose to the US Treasury Department the identities of their true beneficial owners.

The court, which is based in New Orleans, made the decision just before the deadline for most corporations to comply with the law. The decision stated that the government had initially requested a “stay of preliminary injunction,” asking for the law to be enforced while the case against it was still in appeal, which the court rejected.

Additionally, the court emphasized that it had paused enforcement of the law “to preserve the constitutional status quo” while the merits panel reviewed the substantive legal arguments raised in the appeal.

The measure has been largely supported on the grounds that it addresses the country’s “growing popularity as a venue for criminals to launder illicit funds,” with LLCs (limited liability companies) and corporations used for such operations, and which under state laws might not be obligated to disclose their involvement.

The Corporate Transparency Act (CTA) is a federal law aimed at combating money laundering, terrorism financing, and other illicit activities by increasing transparency about who controls and owns corporations and LLCs. Enacted as part of the National Defense Authorization Act (NDAA) in 2021, the law requires corporate entities to disclose detailed information about their beneficial owners to the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

In December 2024, Texas Top Cop Shop, Inc., challenged the CTA and its reporting rule in Texas Top Cop Shop, Inc. v. Garland, with the plaintiff arguing that the law was unconstitutional or otherwise unlawful. Specifically, the plaintiffs raised concerns about the burden and privacy implications of requiring businesses to disclose their beneficial owners.