[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 1483 Introduced in Senate (IS)]

112th CONGRESS
  1st Session
                                S. 1483

   To ensure that persons who form corporations in the United States 
   disclose the beneficial owners of those corporations, in order to 
 prevent wrongdoers from exploiting United States corporations in ways 
     that threaten homeland security, to assist law enforcement in 
 detecting, preventing, and punishing terrorism, money laundering, and 
 other misconduct involving United States corporations, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 2, 2011

Mr. Levin (for himself and Mr. Grassley) introduced the following bill; 
which was read twice and referred to the Committee on Homeland Security 
                        and Governmental Affairs

_______________________________________________________________________

                                 A BILL


 
   To ensure that persons who form corporations in the United States 
   disclose the beneficial owners of those corporations, in order to 
 prevent wrongdoers from exploiting United States corporations in ways 
     that threaten homeland security, to assist law enforcement in 
 detecting, preventing, and punishing terrorism, money laundering, and 
 other misconduct involving United States corporations, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Incorporation Transparency and Law 
Enforcement Assistance Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Nearly 2,000,000 corporations and limited liability 
        companies are being formed under the laws of the States each 
        year.
            (2) Very few States obtain meaningful information about the 
        beneficial owners of the corporations and limited liability 
        companies formed under their laws.
            (3) A person forming a corporation or limited liability 
        company within the United States typically provides less 
        information to the State of incorporation than is needed to 
        obtain a bank account or driver's license and typically does 
        not name a single beneficial owner.
            (4) Terrorists and other criminals have exploited the 
        weaknesses in State formation procedures to conceal their 
        identities when forming corporations or limited liability 
        companies in the United States, and have then used the newly 
        created entities to support terrorist organizations, drug 
        trafficking organizations, and international organized crime 
        groups, as well as commit misconduct affecting interstate and 
        international commerce such as trafficking in illicit drugs, 
        illegal arms trafficking, money laundering, tax evasion, 
        Internet-based fraud, securities fraud, financial fraud, 
        intellectual property crimes, and acts of foreign corruption.
            (5) Among those who have abused State incorporation 
        procedures, Victor Bout, a Russian arms dealer now in United 
        States custody on terrorism-related charges, used at least 12 
        companies incorporated in Texas, Florida, and Delaware to carry 
        out his activities, and has been indicted, in part, for 
        conspiring to sell weapons to a terrorist organization trying 
        to kill citizens of the United States and Federal officers and 
        employees.
            (6) Law enforcement efforts to investigate corporations and 
        limited liability companies suspected of wrongdoing that 
        threatens homeland security have been impeded by the lack of 
        available beneficial ownership information, as documented in 
        reports and testimony by officials from the Department of 
        Homeland Security, the Department of Justice, the Financial 
        Crimes Enforcement Network of the Department of the Treasury, 
        the Internal Revenue Service, the Government Accountability 
        Office, and others.
            (7) In July 2006, a leading international anti-money 
        laundering and anti-terrorist financing organization, the 
        Financial Action Task Force on Money Laundering (in this 
        section referred to as the ``FATF''), of which the United 
        States is a member, issued a report that criticized the United 
        States for failing to comply with a FATF standard on the need 
        to collect beneficial ownership information and urged the 
        United States to correct this deficiency by July 2008.
            (8) In response to the FATF report and to strengthen 
        measures to protect homeland security, Federal officials have 
        repeatedly urged the States to improve their formation 
        practices by obtaining beneficial ownership information for the 
        corporations and limited liability companies formed under the 
        laws of such States. But the States continue to form millions 
        of corporations with hidden owners.
            (9) Many States have established automated procedures that 
        allow a person to form a new corporation or limited liability 
        company within the State within 24 hours of filing an online 
        application, without any prior review of the application by a 
        State official. In exchange for a substantial fee, 2 States 
        will form a corporation within 1 hour of a request.
            (10) Dozens of Internet Web sites highlight the anonymity 
        of beneficial owners allowed under the formation practices of 
        some States, point to those practices as a reason to 
        incorporate in those States, and list those States together 
        with offshore jurisdictions as preferred locations for the 
        formation of new corporations, essentially providing an open 
        invitation to terrorists and other wrongdoers to form entities 
        within the United States.
            (11) In contrast to practices in the United States, all 27 
        countries in the European Union are already required to have 
        formation agents identify the beneficial owners of the 
        corporations formed by those agents under the laws of those 
        countries.
            (12) To protect homeland security, reduce the vulnerability 
        of the United States to wrongdoing by United States 
        corporations and limited liability companies with hidden 
        owners, protect interstate and international commerce from 
        terrorists and other criminals misusing United States 
        corporations and limited liability companies, strengthen law 
        enforcement investigations of suspect corporations and limited 
        liability companies, set minimum standards for and level the 
        playing field among State formation practices, and bring the 
        United States into compliance with international anti-money 
        laundering and anti-terrorist financing standards, Federal 
        legislation is needed to require the States to obtain 
        beneficial ownership information for the corporations and 
        limited liability companies formed under the laws of such 
        States.

SEC. 3. TRANSPARENT INCORPORATION PRACTICES.

    (a) Transparent Incorporation Practices.--
            (1) In general.--Subtitle A of title XX of the Homeland 
        Security Act of 2002 (6 U.S.C. 601 et seq.) is amended by 
        adding at the end the following:

``SEC. 2009. TRANSPARENT INCORPORATION PRACTICES.

    ``(a) Incorporation Systems.--
            ``(1) In general.--To protect the security of the United 
        States from corporations and limited liability companies with 
        hidden owners, each State that receives funding from the 
        Department under this title to prevent terrorism shall, not 
        later than the beginning of fiscal year 2014, use an 
        incorporation system that meets the following requirements:
                    ``(A) Identification of beneficial owners.--Except 
                as provided in paragraphs (2) and (4), each applicant 
                to form a corporation or limited liability company 
                under the laws of the State is required to provide to 
                the State during the formation process a list of the 
                beneficial owners of the corporation or limited 
                liability company that--
                            ``(i) identifies each beneficial owner by 
                        name, current residential or business street 
                        address, and a unique identifying number from a 
                        nonexpired passport issued by the United States 
                        or a nonexpired drivers license or 
                        identification card issued by a State;
                            ``(ii) if any beneficial owner exercises 
                        control over the corporation or limited 
                        liability company through another legal entity, 
                        such as a corporation, partnership, or trust, 
                        identifies each such legal entity and each such 
                        beneficial owner who will use that entity to 
                        exercise control over the corporation or 
                        limited liability company; and
                            ``(iii) if the applicant is not a 
                        beneficial owner, provides the identification 
                        information described in clause (i) relating to 
                        the applicant.
                    ``(B) Updated information.--For each corporation or 
                limited liability company formed under the laws of the 
                State--
                            ``(i) the corporation or limited liability 
                        company is required by the State to submit to 
                        the State an updated list of the beneficial 
                        owners of the corporation or limited liability 
                        company and the information described in 
                        subparagraph (A) for each such beneficial owner 
                        not later than 60 days after the date of any 
                        change in the beneficial owners of the 
                        corporation or limited liability company;
                            ``(ii) in the case of a corporation or 
                        limited liability company formed or acquired by 
                        a formation agent and retained by the formation 
                        agent as a beneficial owner for transfer to 
                        another person, the formation agent is required 
                        by the State to submit to the State an updated 
                        list of the beneficial owners and the 
                        information described in subparagraph (A) for 
                        each such beneficial owner not later than 10 
                        days after date on which the formation agent 
                        transfers the corporation or limited liability 
                        company to another person; and
                            ``(iii) the corporation or limited 
                        liability company is required by the State to 
                        submit to the State an annual filing containing 
                        the list of the beneficial owners of the 
                        corporation or limited liability company and 
                        the information described in subparagraph (A) 
                        for each such beneficial owner.
                    ``(C) Retention of information.--Beneficial 
                ownership information relating to each corporation or 
                limited liability company formed under the laws of the 
                State is required to be maintained by the State until 
                the end of the 5-year period beginning on the date that 
                the corporation or limited liability company terminates 
                under the laws of the State.
                    ``(D) Information requests.--Beneficial ownership 
                information relating to each corporation or limited 
                liability company formed under the laws of the State 
                shall be provided by the State upon receipt of--
                            ``(i) a civil, criminal, or administrative 
                        subpoena or summons from a State agency, 
                        Federal agency, or congressional committee or 
                        subcommittee requesting such information;
                            ``(ii) a written request made by a Federal 
                        agency on behalf of another country under an 
                        international treaty, agreement, or convention, 
                        or an order under section 3512 of title 18, 
                        United States Code, or section 1782 of title 
                        28, United States Code, issued in response to a 
                        request for assistance from a foreign country; 
                        or
                            ``(iii) a written request made by the 
                        Financial Crimes Enforcement Network of the 
                        Department of the Treasury.
                    ``(E) No bearer share corporations.--A corporation 
                or limited liability company formed under the laws of 
                the State may not issue a certificate in bearer form 
                evidencing either a whole or fractional interest in the 
                corporation or limited liability company.
            ``(2) States that license formation agents.--
                    ``(A) In general.--To meet the requirements under 
                this section, a State described in subparagraph (B) may 
                permit an applicant to form a corporation or limited 
                liability company under the laws of the State, or a 
                corporation or limited liability company formed under 
                the laws of the State, to provide the required 
                information to a licensed formation agent residing in 
                the State, instead of to the State directly, if the 
                application under paragraph (1)(A) or the update under 
                paragraph (1)(B) contains--
                            ``(i) the name, current business address, 
                        contact information, and licensing number of 
                        the licensed formation agent that has agreed to 
                        maintain the information required under this 
                        section; and
                            ``(ii) a certification by the licensed 
                        formation agent that the licensed formation 
                        agent has possession of the information 
                        required under this section and will maintain 
                        the information in the State licensing the 
                        licensed formation agent in accordance with 
                        State law.
                    ``(B) States described.--A State described in this 
                subparagraph is a State that--
                            ``(i) receives funding from the Department 
                        under this title to prevent terrorism; and
                            ``(ii) maintains a formal licensing system 
                        for formation agents that requires a formation 
                        agent to register with the State, meet 
                        standards for fitness and honesty, maintain a 
                        physical office and records within the State, 
                        undergo regular monitoring, and be subject to 
                        sanctions for noncompliance with State 
                        requirements.
                    ``(C) Licensed formation agent duties.--A licensed 
                formation agent that receives beneficial ownership 
                information under State law in accordance with this 
                paragraph shall--
                            ``(i) maintain the information in the State 
                        in which the corporation or limited liability 
                        company is being or has been formed in the same 
                        manner as required for States under paragraph 
                        (1)(C);
                            ``(ii) provide the information under the 
                        same circumstances as required for States under 
                        paragraph (1)(D); and
                            ``(iii) perform the duties of a formation 
                        agent under paragraph (3).
                    ``(D) Termination of relationship.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a licensed formation agent that 
                        receives beneficial ownership information 
                        relating to a corporation or limited liability 
                        company under State law in accordance with this 
                        paragraph and that resigns, dissolves, or 
                        otherwise ends a relationship with the 
                        corporation or limited liability company shall 
                        promptly--
                                    ``(I) notify the State in writing 
                                that the licensed formation agent has 
                                resigned or ended the relationship; and
                                    ``(II) transmit all beneficial 
                                ownership information relating to the 
                                corporation or limited liability 
                                company in the possession of the 
                                licensed formation agent to the 
                                licensing State.
                            ``(ii) Exception.--If a licensed formation 
                        agent receives written instructions from a 
                        corporation or limited liability company, the 
                        licensed formation agent may transmit the 
                        beneficial ownership information relating to 
                        the corporation or limited liability company to 
                        another licensed formation agent that is within 
                        the same State and has agreed to maintain the 
                        information in accordance with this section.
                            ``(iii) Notice to state.--If a licensed 
                        formation agent provides beneficial ownership 
                        information to another licensed formation agent 
                        under clause (ii), the licensed formation agent 
                        providing the information shall promptly notify 
                        in writing the State under the laws of which 
                        the corporation or limited liability company is 
                        formed of the identity of the licensed 
                        formation agent receiving the information.
            ``(3) Certain beneficial owners.--If an applicant to form a 
        corporation or limited liability company or a beneficial owner, 
        officer, director, or similar agent of a corporation or limited 
        liability company who is required to provide identification 
        information under this section does not have a nonexpired 
        passport issued by the United States or a nonexpired drivers 
        license or identification card issued by a State, each 
        application described in paragraph (1)(A) and each update 
        described in paragraph (1)(B) shall include a certification by 
        a formation agent residing in the State that the formation 
        agent--
                    ``(A) has obtained for each such person a current 
                residential or business street address and a legible 
                and credible copy of the pages of a nonexpired passport 
                issued by the government of a foreign country bearing a 
                photograph, date of birth, and unique identifying 
                information for the person;
                    ``(B) has verified the name, address, and identity 
                of each such person;
                    ``(C) will provide the information described in 
                subparagraph (A) and the proof of verification 
                described in subparagraph (B) upon request under the 
                same circumstances as required for States under 
                paragraph (1)(D); and
                    ``(D) will retain the information and proof of 
                verification under this paragraph in the State in which 
                the corporation or limited liability company is being 
                or has been formed until the end of the 5-year period 
                beginning on the date that the corporation or limited 
                liability company terminates under the laws of the 
                State.
            ``(4) Exempt entities.--
                    ``(A) In general.--An incorporation system 
                described in paragraph (1) shall require that an 
                application for an entity described in subparagraph (C) 
                or (D) of subsection (d)(2) that is proposed to be 
                formed under the laws of a State and that will be 
                exempt from the beneficial ownership disclosure 
                requirements under this section shall include in the 
                application a certification by the applicant, or a 
                prospective officer, director, or similar agent of the 
                entity--
                            ``(i) identifying the specific provision of 
                        subsection (d)(2) under which the entity 
                        proposed to be formed would be exempt from the 
                        beneficial ownership disclosure requirements 
                        under paragraphs (1), (2), and (3);
                            ``(ii) stating that the entity proposed to 
                        be formed meets the requirements for an entity 
                        described under such provision of subsection 
                        (d)(2); and
                            ``(iii) providing identification 
                        information for the applicant or prospective 
                        officer, director, or similar agent making the 
                        certification in the same manner as provided 
                        under paragraph (1) or (3).
                    ``(B) Existing entities.--On and after the date 
                that is 1 year after the effective date of the 
                amendments to the incorporation system of a State made 
                to comply with this section, an entity formed under the 
                laws of the State before such effective date shall be 
                considered to be a corporation or limited liability 
                company for purposes of this subsection unless an 
                officer, director, or similar agent of the entity 
                submits to the State a certification--
                            ``(i) identifying the specific provision of 
                        subsection (d)(2) under which the entity is 
                        exempt from the requirements under paragraphs 
                        (1), (2), and (3);
                            ``(ii) stating that the entity meets the 
                        requirements for an entity described under such 
                        provision of subsection (d)(2); and
                            ``(iii) providing identification 
                        information for the officer, director, or 
                        similar agent making the certification in the 
                        same manner as provided under paragraph (1) or 
                        (3).
                    ``(C) Exempt entities having ownership interest.--
                If an entity described in subparagraph (C) or (D) of 
                subsection (d)(2) has or will have an ownership 
                interest in a corporation or limited liability company 
                formed or to be formed under the laws of a State, the 
                applicant, corporation, or limited liability company in 
                which the entity has or will have the ownership 
                interest shall provide the information required under 
                this subsection relating to the entity, except that the 
                entity shall not be required to provide information 
                regarding any natural person who has an ownership 
                interest in, exercises substantial control over, or 
                receives substantial economic benefits from the entity.
    ``(b) Penalties.--
            ``(1) In general.--It shall be unlawful for any person to 
        affect interstate or foreign commerce or threaten homeland 
        security by failing to comply with State law in accordance with 
        this section by--
                    ``(A) knowingly providing, or attempting to 
                provide, false or fraudulent beneficial ownership 
                information, including a false or fraudulent 
                identifying photograph, to a State or formation agent;
                    ``(B) willfully failing to provide complete or 
                updated beneficial ownership information to a State or 
                formation agent;
                    ``(C) knowingly disclosing the existence of a 
                subpoena, summons, or other request for beneficial 
                ownership information, except--
                            ``(i) to the extent necessary to fulfill 
                        the authorized request; or
                            ``(ii) as authorized by the entity that 
                        issued the subpoena, summons, or other request; 
                        or
                    ``(D) in the case of a formation agent, knowingly 
                failing to obtain or maintain credible, legible, and 
                updated beneficial ownership information, including any 
                required identifying photograph.
            ``(2) Civil and criminal penalties.--In addition to any 
        civil or criminal penalty that may be imposed by a State, any 
        person who violates paragraph (1)--
                    ``(A) shall be liable to the United States for a 
                civil penalty of not more than $10,000; and
                    ``(B) may be fined under title 18, United States 
                Code, imprisoned for not more than 3 years, or both.
    ``(c) Rules.--To carry out this section, the Secretary, the 
Attorney General of the United States, and the Secretary of the 
Treasury may issue joint guidance or a joint rule to clarify 
application of the definitions under subsection (d) or to specify how 
to verify beneficial ownership or other identification information 
provided under this section, including under subsection (a)(3).
    ``(d) Definitions.--For the purposes of this section:
            ``(1) Beneficial owner.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `beneficial owner' means a 
                natural person who, directly or indirectly--
                            ``(i) exercises substantial control over a 
                        corporation or limited liability company; or
                            ``(ii) has a substantial interest in or 
                        receives substantial economic benefits from the 
                        assets of a corporation or limited liability 
                        company.
                    ``(B) Exceptions.--The term `beneficial owner' 
                shall not include--
                            ``(i) a minor child;
                            ``(ii) a person acting as a nominee, 
                        intermediary, custodian, or agent on behalf of 
                        another person;
                            ``(iii) a person acting solely as an 
                        employee of a corporation or limited liability 
                        company and whose control over or economic 
                        benefits from the corporation or limited 
                        liability company derives solely from the 
                        employment status of the person;
                            ``(iv) a person whose only interest in a 
                        corporation or limited liability company is 
                        through a right of inheritance, unless the 
                        person also meets the requirements of 
                        subparagraph (A); or
                            ``(v) a creditor of a corporation or 
                        limited liability company, unless the creditor 
                        also meets the requirements of subparagraph 
                        (A).
                    ``(C) Applicability of exceptions.--The exceptions 
                under subparagraph (B) shall not apply if used for the 
                purpose of evading or circumventing the provisions of 
                subparagraph (A) or subsection (a).
            ``(2) Corporation; limited liability company.--The terms 
        `corporation' and `limited liability company'--
                    ``(A) have the meanings given such terms under the 
                laws of the applicable State;
                    ``(B) include any non-United States entity eligible 
                for registration or registered to do business as a 
                corporation or limited liability company under the laws 
                of the applicable State;
                    ``(C) subject to subsection (a)(4), do not include 
                an entity that is--
                            ``(i) a business concern that is an issuer 
                        of a class of securities registered under 
                        section 12 of the Securities Exchange Act of 
                        1934 (15 U.S.C. 781) or that is required to 
                        file reports under section 15(d) of that Act 
                        (15 U.S.C. 78o(d));
                            ``(ii) a business concern constituted or 
                        sponsored by a State, a political subdivision 
                        of a State, under an interstate compact between 
                        2 or more States, by a department or agency of 
                        the United States, or under the laws of the 
                        United States;
                            ``(iii) a depository institution (as 
                        defined in section 3 of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813));
                            ``(iv) a credit union (as defined in 
                        section 101 of the Federal Credit Union Act (12 
                        U.S.C. 1752));
                            ``(v) a bank holding company (as defined in 
                        section 2 of the Bank Holding Company Act of 
                        1956 (12 U.S.C. 1841));
                            ``(vi) a broker or dealer (as defined in 
                        section 3 of the Securities Exchange Act of 
                        1934 (15 U.S.C. 78c)) that is registered under 
                        section 15 of the Securities and Exchange Act 
                        of 1934 (15 U.S.C. 78o);
                            ``(vii) an exchange or clearing agency (as 
                        defined in section 3 of the Securities Exchange 
                        Act of 1934 (15 U.S.C. 78c)) that is registered 
                        under section 6 or 17A of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78f and 78q-1);
                            ``(viii) an investment company (as defined 
                        in section 3 of the Investment Company Act of 
                        1940 (15 U.S.C. 80a-3)) or an investment 
                        advisor (as defined in section 202(11) of the 
                        Investment Advisors Act of 1940 (15 U.S.C. 80b-
                        2(11))), if the company or adviser is 
                        registered with the Securities and Exchange 
                        Commission, or has filed an application for 
                        registration which has not been denied, under 
                        the Investment Company Act of 1940 (15 U.S.C. 
                        80a-1 et seq.) or the Investment Advisor Act of 
                        1940 (15 U.S.C. 80b-1 et seq.);
                            ``(ix) an insurance company (as defined in 
                        section 2 of the Investment Company Act of 1940 
                        (15 U.S.C. 80a-2));
                            ``(x) a registered entity (as defined in 
                        section 1a of the Commodity Exchange Act (7 
                        U.S.C. 1a)), or a futures commission merchant, 
                        introducing broker, commodity pool operator, or 
                        commodity trading advisor (as defined in 
                        section 1a of the Commodity Exchange Act (7 
                        U.S.C. 1a)) that is registered with the 
                        Commodity Futures Trading Commission;
                            ``(xi) a public accounting firm registered 
                        in accordance with section 102 of the Sarbanes-
                        Oxley Act (15 U.S.C. 7212);
                            ``(xii) a public utility that provides 
                        telecommunications service, electrical power, 
                        natural gas, or water and sewer services within 
                        the United States;
                            ``(xiii) a charity or nonprofit entity that 
                        is described in sections 501(c), 527, or 
                        4947(a)(1) of the Internal Revenue Code of 
                        1986, has not been denied tax exempt status, 
                        and is required to and has filed the most 
                        recently due annual information return with the 
                        Internal Revenue Service;
                            ``(xiv) any business concern that--
                                    ``(I) employs more than 20 
                                employees on a full time basis in the 
                                United States;
                                    ``(II) files income tax returns in 
                                the United States demonstrating more 
                                than $5,000,000 in gross receipts or 
                                sales; and
                                    ``(III) has an operating presence 
                                at a physical location within the 
                                United States; or
                            ``(xv) any corporation or limited liability 
                        company which is owned, in whole or in 
                        substantial part, by an entity described in 
                        clause (i), (ii), (iii), (iv), (v), (vi), 
                        (vii), (viii), (ix), (x), (xi), (xii), (xiii), 
                        or (xiv); and
                    ``(D) do not include any class of business concerns 
                which the Secretary, the Attorney General of the United 
                States, and the Secretary of the Treasury jointly 
                determine in writing, upon the request of a State, and 
                through an order, guidance, or rule should be exempt 
                from the requirements of subsection (a), because 
                requiring beneficial ownership information from the 
                business concern would not serve the public interest 
                and would not assist law enforcement efforts to detect, 
                prevent, or punish terrorism, money laundering, tax 
                evasion, or other misconduct that threatens homeland 
                security.
            ``(3) Formation agent.--The term `formation agent' means a 
        person who, for compensation, acts on behalf of another person 
        to form, or assist in the formation, of a corporation or 
        limited liability company under the laws of a State.''.
            (2) Technical and conforming amendment.--The table of 
        contents in section 1(b) of the Homeland Security Act of 2002 
        (6 U.S.C. 101 et seq.) is amended by inserting after the item 
        relating to section 2008 the following:

``Sec. 2009. Transparent incorporation practices.''.
    (b) Funding Authorization.--
            (1) In general.--To carry out section 2009 of the Homeland 
        Security Act of 2002, as added by this Act, during the 3-year 
        period beginning on the date of enactment of this Act, funds 
        shall be made available to each State (as that term is defined 
        under section 2 of the Homeland Security Act of 2002 (6 U.S.C. 
        101)) to pay reasonable costs relating to compliance with the 
        requirements of such section 2009.
            (2) Funding sources.--To protect the United States against 
        the misuse of United States corporations with hidden owners, 
        funds shall be provided to each State to carry out the purposes 
        described in paragraph (1) from one or more of the following 
        sources:
                    (A) Upon application by a State, after consultation 
                with the Secretary of Homeland Security, and without 
                further appropriation, the Secretary of the Treasury 
                may make available to the State unobligated balances 
                described in section 9703(g)(4)(B) of title 31, United 
                States Code, in the Department of the Treasury 
                Forfeiture Fund established under section 9703(a) of 
                title 31, United States Code.
                    (B) Upon application by a State, after consultation 
                with the Secretary of Homeland Security, and without 
                further appropriation, the Attorney General of the 
                United States may make available to the State excess 
                unobligated balances (as defined in section 
                524(c)(8)(D) of title 28, United States Code) in the 
                Department of Justice Assets Forfeiture Fund 
                established under section 524(c) of title 28, United 
                States Code.
            (3) Maximum amounts.--
                    (A) Department of the treasury.--The Secretary of 
                the Treasury may not make available to States a total 
                of more than $20,000,000 under paragraph (2)(A).
                    (B) Department of justice.--The Attorney General of 
                the United States may not make available to States a 
                total of more than $10,000,000 under paragraph (2)(B).
    (c) State Compliance Report.--Nothing in this section or an 
amendment made by this section authorizes the Secretary of Homeland 
Security to withhold from a State any funding otherwise available to 
the State under title XX of the Homeland Security Act of 2002 (6 U.S.C. 
601 et seq.) because of a failure by that State to comply with section 
2009 of the Homeland Security Act of 2002, as added by this section. 
Not later than June 1, 2015, the Comptroller General of the United 
States shall submit to the Committee on Homeland Security and 
Governmental Affairs of the Senate and the Committee on Homeland 
Security of the House of Representatives a report identifying which 
States are in compliance with section 2009 of the Homeland Security Act 
of 2002 and, for any State not in compliance, what measures must be 
taken by that State to achieve compliance with section 2009 of the 
Homeland Security Act of 2002.
    (d) Effect on State Law.--
            (1) In general.--This Act and the amendments made by this 
        Act do not supersede, alter, or affect any statute, regulation, 
        order, or interpretation in effect in any State, except where a 
        State has elected to receive funding from the Department of 
        Homeland Security under title XX of the Homeland Security Act 
        of 2002 (6 U.S.C. 601 et seq.) to prevent terrorism (as defined 
        in section 2 of the Homeland Security Act of 2002 (6 U.S.C. 
        101)), and then only to the extent that such State statute, 
        regulation, order, or interpretation is inconsistent with this 
        Act or an amendment made by this Act.
            (2) Not inconsistent.--A State statute, regulation, order, 
        or interpretation is not inconsistent with this Act or an 
        amendment made by this Act if such statute, regulation, order, 
        or interpretation--
                    (A) requires additional information, more 
                frequently updated information, or additional measures 
                to verify information related to a corporation, limited 
                liability company, or beneficial owner, than is 
                specified under this Act or an amendment made by this 
                Act; or
                    (B) imposes additional limits on public access to 
                the beneficial ownership information obtained by the 
                State than is specified under this Act or an amendment 
                made by this Act.
            (3) State records.--Nothing in this Act or the amendments 
        made by this Act limits the authority of a State, by statute or 
        otherwise, to disclose or to not disclose to the public all or 
        any portion of the beneficial ownership information provided to 
        the State under section 2009 of the Homeland Security Act of 
        2002, as added by this Act.
            (4) No duty of verification.--This Act and the amendments 
        made by this Act do not impose any obligation on a State to 
        verify the name, address, or identity of a beneficial owner 
        whose information is submitted to such State under section 2009 
        of the Homeland Security Act of 2002, as added by this Act.
    (e) Federal Contractors.--Not later than the beginning of fiscal 
year 2014, the Administrator for Federal Procurement Policy shall 
revise the Federal Acquisition Regulation maintained under section 
1303(a)(1) of title 41, United States Code, to require any contractor 
who is subject to the requirement to disclose beneficial ownership 
information under section 2009 of the Homeland Security Act of 2002, as 
added by this Act, to provide the information required to be disclosed 
under section 2009 of the Homeland Security Act of 2002 to the Federal 
Government as part of any bid or proposal for a contract with a value 
threshold in excess of the simplified acquisition threshold under 
section 134 of title 41, United States Code.

SEC. 4. ANTI-MONEY LAUNDERING AND ANTI-TERRORIST FINANCING OBLIGATIONS 
              OF FORMATION AGENTS.

    (a) Anti-Money Laundering and Anti-Terrorist Financing Obligations 
of Formation Agents.--Section 5312(a)(2) of title 31, United States 
Code, is amended--
            (1) in subparagraph (Y), by striking ``or'' at the end;
            (2) by redesignating subparagraph (Z) as subparagraph (AA); 
        and
            (3) by inserting after subparagraph (Y) the following:
                    ``(Z) any person engaged in the business of forming 
                corporations or limited liability companies; or''.
    (b) Deadline for Implementing Rule for Formation Agents.--
            (1) Proposed rule.--Not later than 120 days after the date 
        of enactment of this Act, the Secretary of the Treasury, in 
        consultation with the Secretary of Homeland Security, the 
        Attorney General of the United States, and the Commissioner of 
        the Internal Revenue Service, shall publish a proposed rule in 
        the Federal Register requiring persons described in section 
        5312(a)(2)(Z) of title 31, United States Code, as amended by 
        this section, to establish anti-money laundering programs under 
        subsection (h) of section 5318 of that title.
            (2) Final rule.--Not later than 270 days after the date of 
        enactment of this Act, the Secretary of the Treasury shall 
        publish the rule described in this subsection in final form in 
        the Federal Register.
            (3) Exclusions.--Any rule promulgated under this subsection 
        shall exclude from the category of persons engaged in the 
        business of forming a corporation or limited liability 
        company--
                    (A) any government agency; and
                    (B) any attorney or law firm that uses a paid 
                formation agent operating within the United States to 
                form the corporation or limited liability company.

SEC. 5. STUDIES AND REPORTS.

    (a) Other Legal Entities.--Not later than 2 years after the date of 
enactment of this Act, the Comptroller General of the United States 
shall conduct a study and submit to the Committee on Homeland Security 
and Governmental Affairs of the Senate and the Committee on Homeland 
Security and the Committee on Financial Services of the House of 
Representatives a report--
            (1) identifying each State that has procedures that enable 
        persons to form or register under the laws of the State 
        partnerships, trusts, charitable organizations, or other legal 
        entities, and the nature of those procedures;
            (2) identifying each State that requires persons seeking to 
        form or register partnerships, trusts, charitable 
        organizations, or other legal entities under the laws of the 
        State to provide information about the beneficial owners (as 
        that term is defined in section 2009 of the Homeland Security 
        Act of 2002, as added by this Act) or beneficiaries of such 
        entities, and the nature of the required information;
            (3) evaluating whether the lack of available beneficial 
        ownership information for partnerships, trusts, charitable 
        organizations, or other legal entities--
                    (A) raises concerns about the involvement of such 
                entities in terrorism, money laundering, tax evasion, 
                securities fraud, trafficking in illicit drugs, or 
                other misconduct or threats to homeland security; and
                    (B) has impeded investigations into entities 
                suspected of such misconduct; and
            (4) evaluating whether the failure of the United States to 
        require beneficial ownership information for partnerships, 
        trusts, charitable organizations, or other legal entities 
        formed or registered in the United States has elicited 
        international criticism and what steps, if any, the United 
        States has taken or is planning to take in response.
    (b) Effectiveness of Incorporation Practices.--Not later than 5 
years after the date of enactment of this Act, the Comptroller General 
of the United States shall conduct a study and submit to the Committee 
on Homeland Security and Governmental Affairs of the Senate and the 
Committee on Homeland Security of the House of Representatives a report 
assessing the effectiveness of incorporation practices implemented 
under this Act and the amendments made by this Act in--
            (1) providing law enforcement agencies with prompt access 
        to reliable, useful, and complete beneficial ownership 
        information; and
            (2) strengthening the capability of law enforcement 
        agencies to combat incorporation abuses, civil and criminal 
        misconduct, and threats to homeland security.
                                 <all>