[Congressional Record Volume 164, Number 94 (Thursday, June 7, 2018)]
[Senate]
[Pages S3345-S3348]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 2459. Mr. WHITEHOUSE (for himself, Mr. Grassley, and Mr. Cassidy)
submitted an amendment intended to be proposed by him to the bill H.R.
5515, to authorize appropriations for fiscal year 2019 for military
activities of the Department of Defense, for military construction, and
for defense activities of the Department of Energy, to prescribe
military personnel strengths for such fiscal year, and for other
purposes; which was ordered to lie on the table; as follows:
At the end of subtitle F of title X, add the following:
SEC. 1086. BENEFICIAL OWNERSHIP INFORMATION.
(a) 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, sex trafficking, money laundering,
tax evasion, health care fraud, Internet-based fraud,
securities fraud, financial fraud, intellectual property
crimes, and acts of corruption.
(5) Among those who have abused State incorporation
procedures is Victor Bout, a Russian arms dealer who used at
least 12 companies incorporated in Texas, Florida, and
Delaware to carry out his activities, and has been convicted,
in part, for conspiring to sell weapons to a terrorist
organization trying to kill citizens of the United States and
Federal officers and employees. In addition, Iranian
interests used a shell company formed in New York to purchase
a 36-story building on Fifth Avenue in Manhattan and
forwarded millions of dollars in rent each year to Iran until
authorities in the United States learned of the transfers and
seized the building.
(6) Law enforcement efforts to investigate corporations and
limited liability companies suspected of wrongdoing 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, the Government Accountability Office, and others.
(7) In December 2016, a leading international anti-money
laundering and anti-terrorist financing organization, the
Financial Action Task Force on Money Laundering (in
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this subsection referred to as ``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. The
report called the United States framework in this area
``seriously deficient'' and urged the United States to
correct this deficiency.
(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.
(10) Dozens of Internet websites 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 inviting
terrorists and other wrongdoers to form entities within the
United States.
(11) In contrast to practices in the United States,
countries around the world are working to collect beneficial
ownership information. The United Kingdom now collects
beneficial ownership information for all companies formed
under its laws and makes the information available to the
public. All 28 countries in the European Union are required
to create, maintain, and update registries of the beneficial
ownership information of the corporations formed under the
laws of those countries. The information must be freely
available to law enforcement agencies, financial
institutions, and third parties that can demonstrate a
legitimate interest in the information. Afghanistan, Ghana,
Kenya, Nigeria, South Africa, the Ukraine, and many other
countries are in the process of establishing mechanisms to
collect beneficial ownership information for the companies
created under their laws.
(12) To 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.
(b) Transparent Incorporation Practices.--
(1) Transparent incorporation practices.--Part E of title I
of the Omnibus Crime Control and Safe Streets Act of 1968 (42
U.S.C. 3750 et seq.) is amended by adding at the end the
following:
``Subpart 4--Transparent Incorporation Practices
``SEC. 531. TRANSPARENT INCORPORATION PRACTICES.
``(a) Incorporation Systems.--
``(1) In general.--To protect the United States from the
misuse affecting interstate or foreign commerce of
corporations and limited liability companies with hidden
owners, each State that receives funding under subpart 1
shall, not later than 3 years after the date of enactment of
this subpart, use an incorporation system that meets the
following requirements:
``(A) Identification of beneficial owners.--Except as
provided in 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 information on the beneficial owners of the
corporation or limited liability company that includes--
``(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 the
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 not later than 30 days after receipt of--
``(i) a civil, criminal, or administrative subpoena or a
summons, or an equivalent of such a subpoena or summons, from
a local, State, or Federal agency or a congressional
committee or subcommittee;
``(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;
``(iii) a written request made by the Financial Crimes
Enforcement Network of the Department of the Treasury; or
``(iv) a written request made by a financial institution,
with the consent of the customer, for purposes of compliance
by the financial institution with customer due diligence
requirements under subsections (a)(2) and (h)(2) of section
5318 of title 31, United States Code, which the requesting
financial institution shall maintain and safeguard in
accordance with all applicable Federal and State laws related
to bank records, and destroy upon satisfaction of those due
diligence requirements, consistent with all applicable
Federal and State laws related to bank records.
``(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) 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.
``(3) Exempt entities.--
``(A) In general.--An incorporation system described in
paragraph (1) shall require that an application for an entity
described in clause (i) or (ii) of subsection (d)(2)(B) 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)(B) under which the entity proposed to be formed would
be exempt from the beneficial ownership disclosure
requirements under paragraphs (1) and (2);
``(ii) stating that the entity proposed to be formed meets
the requirements for an entity
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described under such provision of subsection (d)(2)(B); 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).
``(B) Existing entities.--On and after the date that is 2
years after the date on which a State begins requiring
beneficial ownership information in compliance 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)(B) under which the entity is exempt from the
requirements under paragraphs (1) and (2);
``(ii) stating that the entity meets the requirements for
an entity described under such provision of subsection
(d)(2)(B); and
``(iii) providing identification information for the
officer, director, or similar agent making the certification
in the same manner as provided under paragraph (1).
``(C) Exempt entities with an ownership interest.--As part
of the beneficial ownership information required under
subsection (a)(1), neither an applicant seeking to form a
corporation or limited liability company nor a corporation or
limited liability company providing updated information is
required to identify the beneficial owners of any entity that
qualifies as an exempt entity under subsection (d)(2)(B).
``(b) Penalties.--
``(1) In general.--It shall be unlawful for any person to
affect interstate or foreign commerce by failing to comply
with this subpart 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 or
summons (or the equivalent of a subpoena or summons) or a
request for beneficial ownership information described in
subsection (a)(1)(D), except--
``(i) to the extent necessary to fulfill the authorized
request; or
``(ii) as authorized by the entity that issued the request
described in subsection (a)(1)(D); 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 $1,000,000; and
``(B) may be fined under title 18, United States Code,
imprisoned for not more than 3 years, or both.
``(c) Rules.--
``(1) In general.--To carry out this subpart, the Attorney
General of the United States, the Secretary of Homeland
Security, and the Secretary of the Treasury may issue joint
guidance or a joint rule to specify how to verify beneficial
ownership or other identification information provided under
this section, including under subsection (a)(2).
``(2) Limitation.--Any guidance or rule issued under
paragraph (1)--
``(A) may explain and clarify the definition of the term
`beneficial owner'; but
``(B) may not amend or alter the definition of the term
`beneficial owner' through changes to the definition directly
or through the manner of implementation.
``(3) No guidance.--A failure to issue guidance or a rule
under paragraph (1) shall not delay the effective date of the
requirements under this subpart.
``(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 each natural person who,
directly or indirectly--
``(i) exercises substantial control over a corporation or
limited liability company through ownership interests, voting
rights, agreement, or otherwise; or
``(ii) has a substantial interest in or receives
substantial economic benefits from the assets of a
corporation or the assets of a 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; or
``(iv) a creditor of a corporation or limited liability
company, unless the creditor also meets the requirements of
subparagraph (A).
``(C) Anti-abuse rule.--The exceptions under subparagraph
(B) shall not apply if used for the purpose of evading,
circumventing, or abusing the provisions of subparagraph (A)
or subsection (a).
``(2) Corporation; limited liability company.--
``(A) In general.--Subject to subparagraph (B), the terms
`corporation' and `limited liability company'--
``(i) have the meanings given such terms under the laws of
the applicable State; and
``(ii) 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.
``(B) Exempt entities.--Subject to subsection (a)(3), the
terms `corporation' and `limited liability company' do not
include an entity that--
``(i) 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 two or more States, by a
department or agency of the United States, under the laws of
the United States, or by an international organization of
which the United States is a member;
``(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(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)) which is
formed under the laws of and regulated by a State;
``(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 religious institution or nonprofit entity that
is described in section 501(c)(3) or 527 of the Internal
Revenue Code of 1986;
``(XIV) any business concern that--
``(aa) employs more than 20 employees on a full-time basis
in the United States;
``(bb) files income tax returns in the United States
demonstrating more than $5,000,000 in gross receipts or
sales;
``(cc) has an operating presence at a physical location
within the United States; and
``(dd) has more than 100 shareholders; or
``(XV) any corporation or limited liability company which
is owned, in whole or in substantial part, by an entity
described in subclause (I), (II), (III), (IV), (V), (VI),
(VII), (VIII), (IX), (X), (XI), (XII), (XIII), or (XIV); or
``(ii) is within any class of business concerns which the
Attorney General of the United States, the Secretary of
Homeland Security, 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 criminal or
civil misconduct.
``(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) Funding authorization.--
(A) In general.--To carry out section 531 of title I of the
Omnibus Crime Control and Safe Streets Act of 1968, as added
by this section, and to protect the United States against the
misuse affecting interstate or foreign commerce of
corporations or limited liability companies with hidden
owners, during the 3-year period beginning on the date of
enactment of this Act, funds shall be made
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available to each State (as that term is defined under
section 901(a)(2) of the Omnibus Crime Control and Safe
Streets Act of 1968 (42 U.S.C. 3791(a)(2))), to pay
reasonable costs to comply with the requirements of such
section 531 from one or more of the following sources:
(i) Upon written request by a State, and without further
appropriation, the Attorney General of the United States
shall make available or transfer to the State funds from
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.
(ii) Upon written request by a State, after consultation
with the Attorney General of the United States, and without
further appropriation, the Secretary of the Treasury shall
make available or transfer to the State funds from
unobligated balances described in section 9705(g)(4)(B) of
title 31, United States Code, in the Department of the
Treasury Forfeiture Fund.
(B) Eligible costs.--The Attorney General and Secretary of
the Treasury, in their sole discretion, shall determine what
costs are reasonable for purposes of subparagraph (A), taking
into account the maximum amount of funds available for
distribution to States under subparagraph (C).
(C) Maximum amounts.--
(i) 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 subparagraph (A)(1).
(ii) Department of the treasury.--The Secretary of the
Treasury may not make available to States a total of more
than $30,000,000 under subparagraph (A)(2).
(D) Funding availability.--The amounts available to be
provided to, and any amounts provided to, a State under
subparagraph (A) shall be exempt from, and shall not be
reduced under, any order under section 251A of the Balanced
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C.
901a).
(3) State compliance report.--Nothing in this section or an
amendment made by this section authorizes the Attorney
General of the United States to withhold from a State any
funding otherwise available to the State under subpart 1 of
part E of title I of the Omnibus Crime Control and Safe
Streets Act of 1968 (42 U.S.C. 3750 et seq.) because of a
failure by that State to comply with subpart 4 of part E of
title I of the Omnibus Crime Control and Safe Streets Act of
1968, as added by this section. Not later than 42 months
after the date of enactment of this Act, the Comptroller
General of the United States shall submit to the Committee on
the Judiciary of the Senate and the Committee on the
Judiciary of the House of Representatives a report
identifying which States are in compliance with subpart 4 of
part E of title I of the Omnibus Crime Control and Safe
Streets Act of 1968 and, for any State not in compliance,
what measures must be taken by that State to achieve
compliance with such subpart 4.
(4) Effect on state law.--
(A) In general.--This section and the amendments made by
this section 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 Justice under subpart 1 of part E of title I of
the Omnibus Crime Control and Safe Streets Act of 1968 (42
U.S.C. 3750 et seq.), and then only to the extent that such
State statute, regulation, order, or interpretation is
inconsistent with this section or an amendment made by this
section.
(B) Not inconsistent.--A State statute, regulation, order,
or interpretation is not inconsistent with this section or an
amendment made by this section if such statute, regulation,
order, or interpretation--
(i) 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
section or an amendment made by this section; or
(ii) imposes additional limits on public access to the
beneficial ownership information obtained by the State than
is specified under this section or an amendment made by this
section.
(C) State records.--Nothing in this section or the
amendments made by this section 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 subpart 4
of part E of title I of the Omnibus Crime Control and Safe
Streets Act of 1968, as added by this section.
(D) No duty of verification.--This section and the
amendments made by this section 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 subpart 4 of part E of title I of the Omnibus Crime
Control and Safe Streets Act of 1968, as added by this
section.
(5) Federal contractors.--Not later than the first day of
the first full fiscal year beginning at least 1 year after
the date of 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 bidder who is
subject to the requirement to disclose beneficial ownership
information under subpart 4 of part E of title I of the
Omnibus Crime Control and Safe Streets Act of 1968, as added
by this section, to provide the information required to be
disclosed under such subpart 4 to the Federal Government, or
why it is exempt under section 531(d)(2)(B) of title I of the
Omnibus Crime Control and Safe Streets Act of 1968, as added
by this section, as part of any bid or proposal for a
contract.
(c) Anti-money Laundering and Anti-terrorist Financing
Obligations of Formation Agents.--
(1) Anti-money laundering and anti-terrorist financing
obligations of formation agents.--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 engaged in the business of forming
corporations or limited liability companies; or''.
(2) Deadline for implementing 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 Secretary of Homeland Security and the
Attorney General of the United States, 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 paragraph in final form in
the Federal Register.
(C) Exclusions.--Any rule promulgated under this paragraph
shall exclude from the category of persons engaged in the
business of 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.
(d) Studies and Reports.--
(1) 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 the Judiciary of the Senate and the Committee on
the Judiciary of the House of Representatives a report--
(A) 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;
(B) 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 531 of title I of the Omnibus
Crime Control and Safe Streets Act of 1968, as added by this
section) or beneficiaries of such entities, and the nature of
the required information;
(C) evaluating whether the lack of available beneficial
ownership information for partnerships, trusts, charitable
organizations, or other legal entities--
(i) raises concerns about the involvement of such entities
in terrorism, money laundering, tax evasion, securities
fraud, trafficking in illicit drugs, or other criminal or
civil misconduct; and
(ii) has impeded investigations into entities suspected of
such misconduct; and
(D) 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.
(2) 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 the Judiciary of the
Senate and the Committee on the Judiciary of the House of
Representatives a report assessing the effectiveness of
incorporation practices implemented under this section and
the amendments made by this section in--
(A) providing law enforcement agencies with prompt access
to reliable, useful, and complete beneficial ownership
information; and
(B) strengthening the capability of law enforcement
agencies to combat incorporation abuses and other civil and
criminal misconduct.
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