They indeed shelved the plan {1}, and have also introduced iCloud Advanced Data Protection (their branding for end to end encryption) {2}.

There is still the opt-in Communication Safety {3} that tries to interdict sending or receiving media containing nudity if enabled, but Apple doesn’t get notified of any hits (and assuming I’m reading it right the parent doesn’t even get a notification unless the child sends one!).

1: https://archive.ph/x6z0K (WIRED article)

2: https://support.apple.com/en-us/102651 (Adv Data Protection)

3: https://support.apple.com/en-us/105069 (Comm Safety)