Reported by Mattathias Schwartz

Millions of corporate entities will not have to share information about their owners with the Treasury Department after an appeals court reversed a decision that would have required them to do so by Jan. 1.

Under the Corporate Transparency Act, an anti-money-laundering law that passed in 2020, companies would have had to turn over the identities of their “beneficial owners,” the people who own 25 percent or more of the company, or exercise significant control over it, by next year. But the law has been challenged in the courts.

Earlier this week, a three-judge panel from the U.S. Court of Appeals for the Fifth Circuit paused an injunction by a lower court, which allowed the law to go into effect.

But on Thursday, the court changed course, vacating its earlier decision “in order to preserve the constitutional status quo,” it said.

The new order means that a nationwide injunction, by Judge Amos L. Mazzant III of the Eastern District of Texas, that bars enforcement of the Corporate Transparency Act while the law’s constitutionality is considered by the courts will remain in force.

In a Tuesday court filing asking the Fifth Circuit to reconsider its stay, opponents of the Corporate Transparency Act called it “a shockingly unconstitutional statute.” They said that by requiring companies to disclose information about their ultimate owners with the Financial Crimes Enforcement Network, or FinCEN, a bureau of the Treasury Department, the law had the potential to “injure tens of millions of Americans by forcing them to incur unrecoverable costs” for paperwork and compliance.

Read full report: https://www.nytimes.com/2024/12/27/us/court-corporate-transparency-act.html