[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1717 Introduced in Senate (IS)]
<DOC>
115th CONGRESS
1st Session
S. 1717
To amend title 31, United States Code, to ensure that persons who form
corporations or limited liability companies in the United States
disclose the beneficial owners of those corporations or limited
liability companies, in order to prevent wrongdoers from exploiting
United States corporations and limited liability companies for criminal
gain, to assist law enforcement in detecting, preventing, and punishing
terrorism, money laundering, and other misconduct involving United
States corporations and limited liability companies, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 2, 2017
Mr. Wyden (for himself and Mr. Rubio) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
A BILL
To amend title 31, United States Code, to ensure that persons who form
corporations or limited liability companies in the United States
disclose the beneficial owners of those corporations or limited
liability companies, in order to prevent wrongdoers from exploiting
United States corporations and limited liability companies for criminal
gain, to assist law enforcement in detecting, preventing, and punishing
terrorism, money laundering, and other misconduct involving United
States corporations and limited liability companies, 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 ``Corporate Transparency Act of
2017''.
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) 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 commit
crimes affecting interstate and international commerce such as
terrorism, drug trafficking, money laundering, tax evasion,
securities fraud, financial fraud, and acts of foreign
corruption.
(5) Law enforcement efforts to investigate corporations and
limited liability companies suspected of committing crimes have
been impeded by the lack of available beneficial ownership
information, as documented in reports and testimony by
officials from the Department of Justice, the Department of
Homeland Security, the Financial Crimes Enforcement Network of
the Department of the Treasury, the Internal Revenue Service,
and the Government Accountability Office, and others.
(6) In July 2006, a leading international anti-money
laundering 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
criticizes 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. In December 2016, FATF issued another
evaluation of the U.S., which found that little progress has
been made over the last ten years to address this problem. It
identified the ``lack of timely access to adequate, accurate
and current beneficial ownership information'' as a fundamental
gap in U.S. efforts to combat money laundering and terrorist
finance.
(7) In response to the 2006 FATF report, the United States
has repeatedly urged the States to strengthen their
incorporation practices by obtaining beneficial ownership
information for the corporations and limited liability
companies formed under the laws of such States.
(8) 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.
(9) Dozens of Internet Web sites highlight the anonymity of
beneficial owners allowed under the incorporation 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 criminals and other wrongdoers to form entities
within the United States.
(10) In contrast to practices in the United States, all 28
countries in the European Union are required to have formation
agents identify the beneficial owners of the corporations
formed under the laws of the country.
(11) To reduce the vulnerability of the United States to
wrongdoing by United States corporations and limited liability
companies with hidden owners, to protect interstate and
international commerce from criminals misusing United States
corporations and limited liability companies, to strengthen law
enforcement investigations of suspect corporations and limited
liability companies, to set minimum standards for and level the
playing field among State incorporation practices, and to bring
the United States into compliance with its international anti-
money laundering standards, Federal legislation is needed to
require the collection of 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.--Chapter 53 of title 31, United States
Code, is amended by inserting after section 5332 the following
new section:
``Sec. 5333. Transparent incorporation practices
``(a) Reporting Requirements.--
``(1) In general.--Not later than the beginning of fiscal
year 2019, the Secretary of the Treasury shall issue
regulations requiring each corporation and limited liability
company formed in a State that does not have a formation system
described under subsection (b) to file with the Financial
Crimes Enforcement Network such information as the corporation
or limited liability company would be required to provide the
State if such State had a formation system described under
subsection (b).
``(2) Disclosure of beneficial ownership information.--
Beneficial ownership information reported to the Financial
Crimes Enforcement Network pursuant to paragraph (1) shall be
provided by the Financial Crimes Enforcement Network upon
receipt of--
``(A) a civil or criminal subpoena or summons from
a State agency, Federal agency, or congressional
committee or subcommittee requesting such information;
``(B) 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 or section 1782 of title 28
issued in response to a request for assistance from a
foreign country; or
``(C) a written request made by a financial
institution, with customer consent, as part of the
institution's compliance with due diligence
requirements imposed under the Bank Secrecy Act (Public
Law 91508; 84 Stat. 1114), the USA PATRIOT Act (Public
Law 10756; 115 Stat. 272), or other applicable Federal
or State law.
``(3) Limitation.--In issuing regulations pursuant to
paragraph (1), the Secretary shall not require such information
to be filed with the Internal Revenue Service.
``(b) Formation System.--
``(1) In general.--With respect to a State, a formation
system is described under this subsection if it meets the
following requirements:
``(A) Identification of beneficial owners.--Except
as provided in paragraphs (2) and (4), and subject to
paragraph (3), 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) except as provided in subparagraph
(F), identifies each beneficial owner by--
``(I) name;
``(II) current residential or
business street address; and
``(III) a unique identifying number
from a non-expired passport issued by
the United States or a non-expired
driver's license issued by a State; and
``(ii) if the applicant is not the
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 update the
list of the beneficial owners of the
corporation or limited liability company by
providing the information described in
subparagraph (A) to the State not later than 60
days after the date of any change in the list
of beneficial owners or the information
required to be provided relating to each
beneficial owner;
``(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 or criminal 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 section 1782 of title 28;
``(iii) a written request made by the
Financial Crimes Enforcement Network; or
``(iv) a written request made by a
financial institution, with customer consent,
as part of the institution's compliance with
due diligence requirements imposed under the
Bank Secrecy Act (Public Law 91508; 84 Stat.
1114), the USA PATRIOT Act (Public Law 10756;
115 Stat. 272), or other applicable Federal or
State law.
``(E) Notice.--The State discloses clearly and
conspicuously that the beneficial ownership information
collected under the formation system may be provided to
the entities described in subparagraph (D), pursuant to
the requirements of such subparagraph.
``(F) No bearer share corporations or limited
liability companies.--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.--Notwithstanding paragraph (1), 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
subsection; and
``(ii) a certification by the licensed
formation agent that the licensed formation
agent has possession of the information
required under this subsection 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 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 subsection does not have a non-expired
passport issued by the United States or a non-expired driver's
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 non-expired
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.--A formation 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
subsection 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 2 years after the effective date of the
amendments to the formation 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, and shall be subject to the
requirements 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.
``(c) Penalties.--
``(1) In general.--It shall be unlawful for--
``(A) any person to affect interstate or foreign
commerce by--
``(i) knowingly providing, or attempting to
provide, false or fraudulent beneficial
ownership information, including a false or
fraudulent identifying photograph, to a State
or licensed formation agent under State law in
accordance with this section;
``(ii) willfully failing to provide
complete or updated beneficial ownership
information to a State or licensed formation
agent under State law in accordance with this
section; or
``(iii) 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;
``(II) as authorized by the entity
that issued the subpoena, summons, or
other request; or
``(III) as prescribed by a State;
or
``(B) 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, imprisoned for
not more than 3 years, or both.
``(d) Definitions.--For the purposes of this section:
``(1) Beneficial owner.--The term `beneficial owner'--
``(A) 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; and
``(B) does 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).
``(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) do not include any entity that is, and
discloses in the application by the entity to form
under the laws of the State or, if the entity was
formed before the date of the enactment of this
section, in a filing with the State under State law--
``(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. 78l) 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 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 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-
2)), 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 Advisers 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 church, charity, or nonprofit
entity that is described in section 501(c),
527, or 4947(a)(1) of the Internal Revenue Code
of 1986, has not been denied tax exempt status,
and has filed the most recently due annual
information return with the Internal Revenue
Service, if required to file such a return;
``(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 office within the United
States; or
``(xv) any corporation or limited liability
company formed and owned 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 individual business
concern or class of business concerns which the
Secretary of the Treasury, with the written concurrence
of the Attorney General of the United States, has
determined in writing 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.
``(3) Formation agent.--The term `formation agent' means a
person who, for compensation--
``(A) acts on behalf of another person to assist in
the formation of a corporation or limited liability
company under the laws of a State; or
``(B) purchases, sells, or transfers the public
records that form a corporation or limited liability
company.''.
(2) Rulemaking.--To carry out this Act and the amendments
made by this Act, the Secretary of the Treasury, in
consultation with the Secretary of Homeland Security and the
Attorney General of the United States, may issue guidance or a
rule to--
(A) clarify the definitions under section 5333(d)
of title 31, United States Code, as added by paragraph
(1); and
(B) specify how to verify beneficial ownership
information or other identification information for
purposes of such section 5333, including whether the
verification procedures specified in section 5333(b)(3)
should apply to all applicants under section 5333(b)(1)
or whether such verification process should require the
notarization of signatures.
(3) Conforming amendments.--Title 31, United States Code,
is amended--
(A) in section 5321(a)--
(i) in paragraph (1), by striking
``sections 5314 and 5315'' each place it
appears and inserting ``sections 5314, 5315,
and 5333''; and
(ii) in paragraph (6), by inserting
``(except section 5333)'' after ``subchapter''
each place it appears; and
(B) in section 5322, by striking ``section 5315 or
5324'' each place it appears and inserting ``section
5315, 5324, or 5333''.
(4) Table of contents.--The table of contents of chapter 53
of title 31, United States Code, is amended by inserting after
the item relating to section 5332 the following:
``Sec. 5333. Transparent incorporation practices.''.
(5) Restrictions on public access.--A State may--
(A) restrict public access to all or any portion of
the beneficial ownership information provided to the
State as described under section 5332 of title 31,
United States Code, as added by this Act; and
(B) by statute, regulation, order, or
interpretation adopted or issued by the State after the
date of enactment of this Act, provide for public
access to all or any portion of such information.
(6) 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 5333
of title 31, United States Code, as added by this Act.
(b) Funding Authorization.--
(1) In general.--To carry out section 5333 of title 31,
United States Code, during the 3-year period beginning on the
date of enactment of this Act, funds shall be made available to
each State to pay reasonable costs relating to compliance with
the requirements of such section.
(2) Funding sources.--To protect the United States against
the misuse of United States corporations and limited liability
companies 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, and without
further appropriation, the Secretary of the Treasury
shall 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 the Treasury, and without further
appropriation, the Attorney General of the United
States shall 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 $30,000,000 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).
(4) Rulemaking.--Not later than the end of the 180-day
period beginning on the date of the enactment of this Act, the
Secretary of the Treasury and the Attorney General shall,
jointly, issue regulations setting forth the procedures for
States to apply for funds under this subsection, including
determining which State measures should be funded to assess,
plan, develop, test, or implement relevant policies,
procedures, or system modifications.
(c) Compliance Report.--Nothing in this section or the amendments
made by this section authorizes the Secretary of the Treasury to
withhold from a State any funding otherwise available to the State
because of a failure by that State to comply with section 5333 of title
31, United States Code. Not later than the end of the 42-month period
beginning on the date of the enactment of this Act, the Comptroller
General of the United States shall submit to the Committee on Financial
Services of the House of Representatives and the Committee on Homeland
Security and Governmental Affairs of the Senate a report--
(1) identifying which States obtain beneficial ownership
information as described in such section 5333;
(2) with respect to each State that does not obtain such
information, whether corporations and limited liability
companies formed under the laws of such State are in compliance
with such section 5333 and providing the specified beneficial
ownership information to the Financial Crimes Enforcement
Network; and
(3) whether the Department of the Treasury is in compliance
with such section 5333 and, if not, what steps it must take to
come into compliance with this section.
(d) Federal Contractors.--Not later than the first day of the first
full fiscal year beginning at least 1 year after the date of the
enactment of this Act, 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 5333 of title 31, United States
Code, to provide the information required to be disclosed under such
section 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.
(e) Anti-Money Laundering Obligations of Formation Agents.--
(1) In general.--Section 5312(a)(2) of title 31, United
States Code, is amended--
(A) in subparagraph (Y), by striking ``or'' at the
end;
(B) by redesignating subparagraph (Z) as
subparagraph (AA); and
(C) by inserting after subparagraph (Y) the
following:
``(Z) any person who, for compensation--
``(i) acts on behalf of another person to
form, or assist in formation of, a corporation
or limited liability company under the laws of
a State; or
``(ii) purchases, sells, or transfers the
public records that form a corporation or
limited liability company; or''.
(2) Deadline for anti-money laundering rule for formation
agents.--
(A) Proposed rule.--Not later than 120 days after
the date of enactment of this Act, the Secretary of the
Treasury, in consultation with 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 subsection, to establish anti-money
laundering programs under subsection (h) of section
5318 of that title.
(B) 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.
(C) Exclusions.--Any rule promulgated under this
subsection shall exclude from the category of persons
involved in forming a corporation or limited liability
company--
(i) any government agency; and
(ii) 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. 4. 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 Congress a report--
(1) identifying each State that has procedures that enable
persons to form or register under the laws of the State
partnerships, trusts, or other legal entities, and the nature
of those procedures;
(2) identifying each State that requires persons seeking to
form or register partnerships, trusts, or other legal entities
under the laws of the State to provide information about the
beneficial owners (as that term is defined in section
5333(d)(1) of title 31, United States Code, 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, or other legal
entities--
(A) raises concerns about the involvement of such
entities in terrorism, money laundering, tax evasion,
securities fraud, or other misconduct; 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 and
trusts 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 Congress 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 detect, prevent, or punish terrorism, money
laundering, tax evasion, or other misconduct.
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