[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>