[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4075 Introduced in Senate (IS)]
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117th CONGRESS
2d Session
S. 4075
To prevent money laundering, the financing of terrorism, or other forms
of illicit finance through United States real estate and vehicle
transactions, including by Russian oligarchs, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 7, 2022
Mr. Whitehouse (for himself, Mr. Cassidy, Ms. Warren, and Mr. Wicker)
introduced the following bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To prevent money laundering, the financing of terrorism, or other forms
of illicit finance through United States real estate and vehicle
transactions, including by Russian oligarchs, 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 ``Kleptocrat Liability for Excessive
Property Transactions and Ownership Act'' or the ``KLEPTO Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Federal Aviation Administration.
(2) Bank secrecy act.--The term ``Bank Secrecy Act''
means--
(A) section 21 of the Federal Deposit Insurance Act
(12 U.S.C. 1829b);
(B) chapter 2 of title I of Public Law 91-508 (12
U.S.C. 1951 et seq.); and
(C) subchapter II of chapter 53 of title 31, United
States Code.
(3) Beneficial owner.--The term ``beneficial owner'' has
the meaning given the term in section 5336(a) of title 31,
United States Code.
(4) Covered entity.--The term ``covered entity'' means a
non-natural person, association, or arrangement, including any
trust, partnership, foundation, corporation, limited liability
company, or other public or private entity.
(5) Director.--The term ``Director'' means the Director of
FinCEN.
(6) FinCEN.--The term ``FinCEN'' means the Financial Crimes
Enforcement Network of the Department of the Treasury.
(7) Foreign person.--The term ``foreign person'' means an
individual who is not--
(A) a United States person; or
(B) an alien lawfully admitted for permanent
residence into the United States.
(8) Real estate professional.--The term ``real estate
professional''--
(A) means a person described in section
5312(a)(2)(U) of title 31, United States Code; and
(B) may include a loan broker, lender, title
insurance company, title insurance agent, escrow agent,
developer, investment company, investment adviser, real
estate investment trust, real estate agent, attorney,
law firm, or other financial, real estate, or legal
professional.
(9) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(10) State.--The term ``State'' means any State of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, the Commonwealth of the Northern Mariana Islands,
American Samoa, Guam, the United States Virgin Islands, and any
other commonwealth, territory, or possession of the United
States.
(11) United states person.--The term ``United States
person'' means a natural person who is a citizen of the United
States or who owes permanent allegiance to the United States.
SEC. 3. ANTI-MONEY LAUNDERING SAFEGUARDS FOR REAL ESTATE TRANSACTIONS.
(a) Rulemaking.--Not later than 1 year after the date of enactment
of this Act, in conjunction with the authority under section 5318(a)(2)
of title 31, United States Code, the Director shall issue a final rule
to guard against money laundering, the financing of terrorism, or other
forms of illicit finance through commercial and residential real estate
transactions under the Bank Secrecy Act, including by--
(1) requiring real estate professionals to collect and
report to the Director beneficial ownership information for
each commercial and residential real estate transaction
involving real estate located in a State and involving a buyer
or seller that is a covered entity, regardless of the transfer
price;
(2) in collecting and reporting the information under
paragraph (1), defining commercial or residential real estate
transactions to include direct and indirect transfers of real
estate, including through the direct or indirect transfer of
the ownership or control of a covered entity that directly or
indirectly owns or controls the real estate that is the subject
of the transaction;
(3) establishing a system to determine which real estate
professionals must collect and report the information under
paragraph (1);
(4) requiring the Director to validate the information
reported under paragraph (1);
(5) requiring real estate professionals reporting
information under paragraph (1) to take reasonable measures to
verify the accuracy of the information reported under this
subsection; and
(6) using the definition of ``beneficial owner'' in section
5336(a) of title 31, United States Code.
(b) Report.--Not later than 360 days after the date of enactment of
this Act, the Secretary shall submit to the appropriate congressional
committees a report on how digital ledger technology can be implemented
to create a tamper-proof permanent record of direct and indirect
transfers of real estate, including through direct or indirect transfer
of ownership or control of a covered entity that directly or indirectly
owns or controls the real estate that is subject to the transaction.
(c) Anti-Money Laundering Requirements for Real Estate
Professionals.--In the rule required under subsection (a), the Director
shall require the 1 or more real estate professionals determined under
subsection (a)(3) to--
(1) report suspicious transactions under section 5318(g)(1)
of title 31, United States Code;
(2) establish anti-money laundering programs under section
5318(h) of title 31, United States Code;
(3) establish customer due diligence policies, procedures,
and controls under section 5318(i) of title 31, United States
Code; and
(4) establish written procedures reasonably designed to
identify and verify under section 5318(l) of title 31, United
States Code, the identity of customers, including the
beneficial owners of any covered entity, involved in commercial
and residential real estate transactions.
SEC. 4. REAL ESTATE PILOT PROGRAM.
(a) In General.--Not later than 2 years after the date of enactment
of this Act, the Secretary shall pilot a comprehensive e-governance
framework for the transparency of commercial and residential real
estate sales and purchases in the United States, which shall--
(1) designate a pilot locale for the implementation of the
pilot program after obtaining the consent of the relevant
State; and
(2) design a cloud-based distributed ledger for real estate
in the pilot locale, which shall--
(A) consist of a cloud-based network for digital
governance that--
(i) provides real-time integrated
information to users, which may include
individuals, entities, and governments; and
(ii) allows users to conduct economic and
other activity through an internet website or
mobile application;
(B) be designed to minimize corruption and maximize
transparency for persons engaged in real estate
transactions, investment, assistance, and any other
activities under section 3; and
(C) include the integration with other systems
required under subsection (b) and the capabilities
described in subsection (c).
(b) Integration With Other Systems.--The Secretary shall design the
framework established under subsection (a) to be capable of integration
with--
(1) the Bank Secretary Act databases maintained by FinCEN,
including--
(A) the beneficial ownership information collected
by FinCEN under Geographic Targeting Orders;
(B) the directory of beneficial ownership
information collected under section 5336 of title 31,
United States Code; and
(C) any other Bank Secrecy Act database as
determined by the Director;
(2) the sanctions lists maintained by the Department of the
Treasury's Office of Foreign Assets Control;
(3) the information exchanging systems of the Egmont Group
of Financial Intelligence Units;
(4) the digital business registry databases of other
countries;
(5) the real estate registries of States and political
subdivisions of States;
(6) the beneficial ownership information collected under
section 3(a); and
(7) any other system as determined by the Secretary.
(c) Other Requirements.--
(1) Open source.--The Secretary shall ensure that the code
used for the framework established under subsection (a) is open
source and capable of being audited.
(2) Multi-lingual functionality.--The Secretary shall
ensure that the framework established under subsection (a) is
functional in--
(A) English, Spanish, French, and Portuguese; and
(B) any other language as determined by the
Secretary.
(3) Standards.--The Secretary shall include in the
framework established under subsection (a) standards for
entities seeking to create their own e-governance systems.
SEC. 5. CERTIFICATION OF AIRCRAFT REGISTRATION.
(a) In General.--Before approving a certificate of registration
issued under section 44103 of title 49, United States Code, with a
covered entity, the Administrator of the Federal Aviation
Administration shall require the covered entity to--
(1) identify each beneficial owner of the covered entity
by--
(A) name;
(B) current residential or business street address;
(C) a unique identifying number from a nonexpired
passport issued by the United States or a nonexpired
drivers license issued by a State or if neither is
available, 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;
(D) nationality; and
(E) the make, model, and serial number of the
aircraft to be registered;
(2) in the case of a covered entity that is owned or
controlled by more than 1 entity--
(A) identify how each entity relates to every other
entity, including--
(i) the extent to which each entity holds
an ownership interest in or exercises control
over another entity; and
(ii) the relationship of each such entity
with the beneficial owners who are natural
persons; and
(B) identify each trust grantor, trustee, trust
protector, and beneficiary of the covered entity that
is a foreign person;
(3) in the case of a trust or association, identify the
chain of control within the trust or association, including
with respect to the beneficial owners, any trust grantor,
trustee, trust protector, and beneficiary, and any association
director, officer, or manager; and
(4) disclose to the Administrator any beneficial owner of
the covered entity that is a foreign person.
(b) Timing.--
(1) In general.--The Administrator shall require a covered
entity to provide the information described in subsection (a)
when submitting an application for aircraft certification.
(2) Existing registrants.--For a covered entity that
submitted an application for aircraft certification prior to
enactment of this Act, the Administrator shall require the
covered entity to provide the information described in
subsection (a) in a new submission to the Administrator not
later than 180 days after the date of enactment of this Act.
(3) Updates.--The Administrator shall require a covered
entity to update a submission of the information described in
subsection (a) not later than 60 days after the date of any
change in--
(A) the list of beneficial owners of the covered
entity; or
(B) the information required to be provided
relating to each such beneficial owner.
SEC. 6. ANTI-MONEY LAUNDERING REQUIREMENTS FOR BUSINESSES ENGAGED IN
VEHICLE SALES.
Not later than 1 year after the date of enactment of this Act, in
conjunction with the authority under section 5318(a)(2) of title 31,
United States Code, the Secretary shall issue a final rule that
requires all businesses described in section 5312(a)(2)(T) of title 31,
United States Code, to comply with the due diligence and reporting
requirements applicable to financial institutions under subchapter II
of chapter 53 of title 31, United States Code, including--
(1) reporting suspicious transactions under section
5318(g)(1) of title 31, United States Code;
(2) establishing anti-money laundering programs under
section 5318(h) of title 31, United States Code;
(3) establishing customer due diligence policies,
procedures, and controls under section 5318(i) of title 31,
United States Code; and
(4) establishing written procedures reasonably designed to
identify and verify under section 5318(l) of title 31, United
States Code, the identity of customers, including the
beneficial owners of any covered entity, involved in a vehicle
sale.
SEC. 7. BENEFICIAL OWNERSHIP DIRECTORY.
If an entity formed under the law of a foreign country takes
ownership or control of real estate located within the United States
through a real estate transaction carried out by a real estate
professional subject to this Act, and if that entity would have
qualified as a reporting company under section 5336(a)(11)(A)(ii) of
title 31, United States Code, except that a State exempted the entity
from a State registration requirement because the only business of the
entity within the State is to purchase or hold real estate within a
State, that entity shall nevertheless be deemed a reporting company
under section 5336(a)(11)(A)(ii) of such title and shall file the
reports required under section 5336(b) of such title.
SEC. 8. APPLICABILITY.
This Act and the rules issued under this Act shall apply to
beneficial owners of covered entities regardless of whether the covered
entity is a reporting company, as defined in section 5336(a) of title
31, United States Code.
SEC. 9. PROGRAM COST ESTIMATION.
Not later than 120 days after the date of enactment of this Act,
the Secretary and the Administrator shall each submit to Congress a
cost estimate for implementing this Act.
SEC. 10. EFFECTIVE DATE.
The effective date of each rule issued under this Act shall be 1
year after the date on which the final rule is issued.
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