[House Report 118-303]
[From the U.S. Government Publishing Office]


118th Congress }                                          { Report 
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 118-303

======================================================================
 
   PROTECT SMALL BUSINESS AND PREVENT ILLICIT FINANCIAL ACTIVITY ACT

                                _______
                                

 December 11, 2023.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5119]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 5119) to amend title 31, United States Code, to 
provide small businesses with additional time to file 
beneficial ownership information, and for other purposes, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Protect Small Business and Prevent 
Illicit Financial Activity Act''.

SEC. 2. BENEFICIAL OWNERSHIP INFORMATION REPORTING DEADLINES FOR SMALL 
                    BUSINESSES.

  Section 5336(b)(1) of title 31, United States Code, is amended--
          (1) in subparagraph (B)--
                  (A) by inserting ``(but which may not adjust the 
                report submission deadline)'' after ``Treasury''; and
                  (B) by striking ``in a timely manner, and'';
          (2) in subparagraph (C)--
                  (A) by inserting ``(but which may not adjust the 
                report submission deadline)'' after ``Treasury''; and
                  (B) by striking ``at the time of'' and inserting 
                ``not later than 90 days after the date of such'';
          (3) in subparagraph (D)--
                  (A) by inserting ``(but which may not adjust the 
                report submission deadline)'' after ``Treasury''; and
                  (B) by striking ``in a timely manner, and not later 
                than 1 year'' and inserting ``not later than 90 days''; 
                and
          (4) by adding at the end the following:
                  ``(H) Unable to obtain.--FinCEN may not by rule, 
                guidance, or otherwise, permit a reporting company from 
                submitting a report relating to the inability of the 
                reporting company to obtain or identify information in 
                the alternative to submitting a report required under 
                this subsection.''.

                          Purpose and Summary

    Introduced on August 1, 2023, by Representative Zach Nunn, 
H.R. 5119, the Protect Small Business and Prevent Illicit 
Financial Activity Act of 2023, would revert the Financial 
Crimes Enforcement Network (FinCEN) beneficial ownership filing 
deadline for existing small businesses from January 1, 2024, to 
the statutorily mandated two years after the effective date of 
the regulation for initial filing.
    Additionally, it would extend the filing deadline for 
updating beneficial ownership for registered small businesses 
to 90 days, which was shortened to 30 days in FinCEN's final 
rule. Finally, this legislation would close a loophole created 
by FinCEN's filing form notice and comment that would allow a 
reporting company to obfuscate its beneficial owners by 
allowing alternative identification to be submitted.

                  Background and Need for Legislation

    The Anti Money Laundering Act of 2020 provided existing 
small businesses two years to file their beneficial ownership 
information with FinCEN. However, through the rulemaking 
process FinCEN shortened this timeline to one year. As such, 
this legislation will restore the reporting timelines to 
Congress' intended timeframe. This will provide small 
businesses with the much-needed time to fully grasp the new 
requirements and comply.
    Additionally, this legislation will close a loophole 
created by FinCEN filing form notice and comment that could 
create opportunities for bad actors to exploit and that could 
create confusion for small reporting entities.

                                Hearing

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 5119: The Subcommittee on 
National Security, Illicit Finance, and International Financial 
Institutions of the Committee on Financial Services held a 
hearing on July 18, 2023, titled ``Potential Consequences of 
FinCEN's Beneficial Ownership Rulemaking.''

                        Committee Consideration

    The Committee on Financial Services met in open session on 
September 20, 2023, and ordered H.R. 5119 to be reported 
favorably to the House as amended by a recorded vote of 47 ayes 
to 0 nays (Record vote no. FC-101), a quorum being present. 
Before the question was called to order the bill favorably 
reported, the Committee adopted an amendment in the nature of a 
substitute offered by Mr. Nunn by voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the order to report legislation and amendments thereto. H.R. 
5119 was ordered reported favorably to the House as amended by 
a recorded vote of 47 ayes to 0 nays (Record vote no. FC-101), 
a quorum being present.


                      Committee Oversight Findings

    Pursuant to clause 3(c) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 5119 is to revert 
the FinCEN beneficial ownership filing deadline for existing 
small businesses from January 1, 2024, to the statutorily 
mandated two years after the effective date of the regulation 
for initial filing.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 402 of the Congressional Budget Act of 1974.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1973.

                       Federal Mandates Statement

    Pursuant to section 423 of the Unfunded Mandates Reform 
Act, the Committee adopts as its own the estimate of the 
Federal mandates prepared by the Director of the Congressional 
Budget Office.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, the Committee has carefully reviewed the 
provisions of the bill and states that the provisions of the 
bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This Act may be cited as the ``Protect Small Business and 
Prevent Illicit Financial Activity Act''.

Section 2. Beneficial ownership information reporting deadlines for 
        small businesses

    Section 2 reverts the rule to Congressional intent, giving 
small businesses two years after the effective date of the 
regulation for initial filing. This section also extends the 
filing deadline for updating beneficial ownership for 
registered small businesses to 90 days. Finally, this section 
allows for alternative identification of beneficial owners to 
be submitted for FinCEN's reporting regime.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 31, UNITED STATES CODE



           *       *       *       *       *       *       *
SUBTITLE IV--MONEY

           *       *       *       *       *       *       *


CHAPTER 53--MONETARY TRANSACTIONS

           *       *       *       *       *       *       *


SUBCHAPTER II--RECORDS AND REPORTS ON MONETARY INSTRUMENTS TRANSACTIONS

           *       *       *       *       *       *       *


Sec. 5336. Beneficial ownership information reporting requirements

  (a) Definitions.--In this section:
          (1) Acceptable identification document.--The term 
        ``acceptable identification document'' means, with 
        respect to an individual--
                  (A) a nonexpired passport issued by the 
                United States;
                  (B) a nonexpired identification document 
                issued by a State, local government, or Indian 
                Tribe to the individual acting for the purpose 
                of identification of that individual;
                  (C) a nonexpired driver's license issued by a 
                State; or
                  (D) if the individual does not have a 
                document described in subparagraph (A), (B), or 
                (C), a nonexpired passport issued by a foreign 
                government.
          (2) Applicant.--The term ``applicant'' means any 
        individual who--
                  (A) files an application to form a 
                corporation, limited liability company, or 
                other similar entity under the laws of a State 
                or Indian Tribe; or
                  (B) registers or files an application to 
                register a corporation, limited liability 
                company, or other similar entity formed under 
                the laws of a foreign country to do business in 
                the United States by filing a document with the 
                secretary of state or similar office under the 
                laws of a State or Indian Tribe.
          (3) Beneficial owner.--The term ``beneficial 
        owner''--
                  (A) means, with respect to an entity, an 
                individual who, directly or indirectly, through 
                any contract, arrangement, understanding, 
                relationship, or otherwise--
                          (i) exercises substantial control 
                        over the entity; or
                          (ii) owns or controls not less than 
                        25 percent of the ownership interests 
                        of the entity; and
                  (B) does not include--
                          (i) a minor child, as defined in the 
                        State in which the entity is formed, if 
                        the information of the parent or 
                        guardian of the minor child is reported 
                        in accordance with this section;
                          (ii) an individual acting as a 
                        nominee, intermediary, custodian, or 
                        agent on behalf of another individual;
                          (iii) an individual acting solely as 
                        an employee of a corporation, limited 
                        liability company, or other similar 
                        entity and whose control over or 
                        economic benefits from such entity is 
                        derived solely from the employment 
                        status of the person;
                          (iv) an individual whose only 
                        interest in a corporation, limited 
                        liability company, or other similar 
                        entity is through a right of 
                        inheritance; or
                          (v) a creditor of a corporation, 
                        limited liability company, or other 
                        similar entity, unless the creditor 
                        meets the requirements of subparagraph 
                        (A).
          (4) Director.--The term ``Director'' means the 
        Director of FinCEN.
          (5) FinCEN.--The term ``FinCEN'' means the Financial 
        Crimes Enforcement Network of the Department of the 
        Treasury.
          (6) FinCEN identifier.--The term ``FinCEN 
        identifier'' means the unique identifying number 
        assigned by FinCEN to a person under this section.
          (7) Foreign person.--The term ``foreign person'' 
        means a person who is not a United States person, as 
        defined in section 7701(a) of the Internal Revenue Code 
        of 1986.
          (8) Indian tribe.--The term ``Indian Tribe'' has the 
        meaning given the term ``Indian tribe'' in section 102 
        of the Federally Recognized Indian Tribe List Act of 
        1994 (25 U.S.C. 5130).
          (9) Lawfully admitted for permanent residence.--The 
        term ``lawfully admitted for permanent residence'' has 
        the meaning given the term in section 101(a) of the 
        Immigration and Nationality Act (8 U.S.C. 1101(a)).
          (10) Pooled investment vehicle.--The term ``pooled 
        investment vehicle'' means--
                  (A) any investment company, as defined in 
                section 3(a) of the Investment Company Act of 
                1940 (15 U.S.C. 80a-3(a)); or
                  (B) any company that--
                          (i) would be an investment company 
                        under that section but for the 
                        exclusion provided from that definition 
                        by paragraph (1) or (7) of section 3(c) 
                        of that Act (15 U.S.C. 80a-3(c)); and
                          (ii) is identified by its legal name 
                        by the applicable investment adviser in 
                        its Form ADV (or successor form) filed 
                        with the Securities and Exchange 
                        Commission.
          (11) Reporting company.--The term ``reporting 
        company''--
                  (A) means a corporation, limited liability 
                company, or other similar entity that is--
                          (i) created by the filing of a 
                        document with a secretary of state or a 
                        similar office under the law of a State 
                        or Indian Tribe; or
                          (ii) formed under the law of a 
                        foreign country and registered to do 
                        business in the United States by the 
                        filing of a document with a secretary 
                        of state or a similar office under the 
                        laws of a State or Indian Tribe; and
                  (B) does not include--
                          (i) an issuer--
                                  (I) of a class of securities 
                                registered under section 12 of 
                                the Securities Exchange Act of 
                                1934 (15 U.S.C. 78l); or
                                  (II) that is required to file 
                                supplementary and periodic 
                                information under section 15(d) 
                                of the Securities Exchange Act 
                                of 1934 (15 U.S.C. 78o(d));
                          (ii) an entity--
                                  (I) established under the 
                                laws of the United States, an 
                                Indian Tribe, a State, or a 
                                political subdivision of a 
                                State, or under an interstate 
                                compact between 2 or more 
                                States; and
                                  (II) that exercises 
                                governmental authority on 
                                behalf of the United States or 
                                any such Indian Tribe, State, 
                                or political subdivision;
                          (iii) a bank, as defined in--
                                  (I) section 3 of the Federal 
                                Deposit Insurance Act (12 
                                U.S.C. 1813);
                                  (II) section 2(a) of the 
                                Investment Company Act of 1940 
                                (15 U.S.C. 80a-2(a)); or
                                  (III) section 202(a) of the 
                                Investment Advisers Act of 1940 
                                (15 U.S.C. 80b-2(a));
                          (iv) a Federal credit union or a 
                        State credit union (as those terms are 
                        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)) or a savings and loan holding 
                        company (as defined in section 10(a) of 
                        the Home Owners' Loan Act (12 U.S.C. 
                        1467a(a)));
                          (vi) a money transmitting business 
                        registered with the Secretary of the 
                        Treasury under section 5330;
                          (vii) a broker or dealer (as those 
                        terms are defined in section 3 of the 
                        Securities Exchange Act of 1934 (15 
                        U.S.C. 78c)) that is registered under 
                        section 15 of that Act (15 U.S.C. 78o);
                          (viii) an exchange or clearing agency 
                        (as those terms are 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 
                        that Act (15 U.S.C. 78f, 78q-1);
                          (ix) any other entity not described 
                        in clause (i), (vii), or (viii) that is 
                        registered with the Securities and 
                        Exchange Commission under the 
                        Securities Exchange Act of 1934 (15 
                        U.S.C. 78a et seq.);
                          (x) an entity that--
                                  (I) is an investment company 
                                (as defined in section 3 of the 
                                Investment Company Act of 1940 
                                (15 U.S.C. 80a-3)) or an 
                                investment adviser (as defined 
                                in section 202 of the 
                                Investment Advisers Act of 1940 
                                (15 U.S.C. 80b-2)); and
                                  (II) is registered with the 
                                Securities and Exchange 
                                Commission 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.);
                          (xi) an investment adviser--
                                  (I) described in section 
                                203(l) of the Investment 
                                Advisers Act of 1940 (15 U.S.C. 
                                80b-3(l)); and
                                  (II) that has filed Item 10, 
                                Schedule A, and Schedule B of 
                                Part 1A of Form ADV, or any 
                                successor thereto, with the 
                                Securities and Exchange 
                                Commission;
                          (xii) an insurance company (as 
                        defined in section 2 of the Investment 
                        Company Act of 1940 (15 U.S.C. 80a-2));
                          (xiii) an entity that--
                                  (I) is an insurance producer 
                                that is authorized by a State 
                                and subject to supervision by 
                                the insurance commissioner or a 
                                similar official or agency of a 
                                State; and
                                  (II) has an operating 
                                presence at a physical office 
                                within the United States;
                          (xiv)(I) a registered entity (as 
                        defined in section 1a of the Commodity 
                        Exchange Act (7 U.S.C. 1a)); or
                          (II) an entity that is--
                                  (aa)(AA) a futures commission 
                                merchant, introducing broker, 
                                swap dealer, major swap 
                                participant, commodity pool 
                                operator, or commodity trading 
                                advisor (as those terms are 
                                defined in section 1a of the 
                                Commodity Exchange Act (7 
                                U.S.C. 1a)); or
                                  (BB) a retail foreign 
                                exchange dealer, as described 
                                in section 2(c)(2)(B) of that 
                                Act (7 U.S.C. 2(c)(2)(B)); and
                                  (bb) registered with the 
                                Commodity Futures Trading 
                                Commission under the Commodity 
                                Exchange Act (7 U.S.C. 1 et 
                                seq.);
                          (xv) a public accounting firm 
                        registered in accordance with section 
                        102 of the Sarbanes-Oxley Act of 2002 
                        (15 U.S.C. 7212);
                          (xvi) a public utility that provides 
                        telecommunications services, electrical 
                        power, natural gas, or water and sewer 
                        services within the United States;
                          (xvii) a financial market utility 
                        designated by the Financial Stability 
                        Oversight Council under section 804 of 
                        the Payment, Clearing, and Settlement 
                        Supervision Act of 2010 (12 U.S.C. 
                        5463);
                          (xviii) any pooled investment vehicle 
                        that is operated or advised by a person 
                        described in clause (iii), (iv), (vii), 
                        (x), or (xi);
                          (xix) any--
                                  (I) organization that is 
                                described in section 501(c) of 
                                the Internal Revenue Code of 
                                1986 (determined without regard 
                                to section 508(a) of such Code) 
                                and exempt from tax under 
                                section 501(a) of such Code, 
                                except that in the case of any 
                                such organization that loses an 
                                exemption from tax, such 
                                organization shall be 
                                considered to be continued to 
                                be described in this subclause 
                                for the 180-day period 
                                beginning on the date of the 
                                loss of such tax-exempt status;
                                  (II) political organization 
                                (as defined in section 
                                527(e)(1) of such Code) that is 
                                exempt from tax under section 
                                527(a) of such Code; or
                                  (III) trust described in 
                                paragraph (1) or (2) of section 
                                4947(a) of such Code;
                          (xx) any corporation, limited 
                        liability company, or other similar 
                        entity that--
                                  (I) operates exclusively to 
                                provide financial assistance 
                                to, or hold governance rights 
                                over, any entity described in 
                                clause (xix);
                                  (II) is a United States 
                                person;
                                  (III) is beneficially owned 
                                or controlled exclusively by 1 
                                or more United States persons 
                                that are United States citizens 
                                or lawfully admitted for 
                                permanent residence; and
                                  (IV) derives at least a 
                                majority of its funding or 
                                revenue from 1 or more United 
                                States persons that are United 
                                States citizens or lawfully 
                                admitted for permanent 
                                residence;
                          (xxi) any entity that--
                                  (I) employs more than 20 
                                employees on a full-time basis 
                                in the United States;
                                  (II) filed in the previous 
                                year Federal income tax returns 
                                in the United States 
                                demonstrating more than 
                                $5,000,000 in gross receipts or 
                                sales in the aggregate, 
                                including the receipts or sales 
                                of--
                                          (aa) other entities 
                                        owned by the entity; 
                                        and
                                          (bb) other entities 
                                        through which the 
                                        entity operates; and
                                  (III) has an operating 
                                presence at a physical office 
                                within the United States;
                          (xxii) any corporation, limited 
                        liability company, or other similar 
                        entity of which the ownership interests 
                        are owned or controlled, directly or 
                        indirectly, by 1 or more entities 
                        described in clause (i), (ii), (iii), 
                        (iv), (v), (vii), (viii), (ix), (x), 
                        (xi), (xii), (xiii), (xiv), (xv), 
                        (xvi), (xvii) (xix), or (xxi);
                          (xxiii) any corporation, limited 
                        liability company, or other similar 
                        entity--
                                  (I) in existence for over 1 
                                year;
                                  (II) that is not engaged in 
                                active business;
                                  (III) that is not owned, 
                                directly or indirectly, by a 
                                foreign person;
                                  (IV) that has not, in the 
                                preceding 12-month period, 
                                experienced a change in 
                                ownership or sent or received 
                                funds in an amount greater than 
                                $1,000 (including all funds 
                                sent to or received from any 
                                source through a financial 
                                account or accounts in which 
                                the entity, or an affiliate of 
                                the entity, maintains an 
                                interest); and
                                  (V) that does not otherwise 
                                hold any kind or type of 
                                assets, including an ownership 
                                interest in any corporation, 
                                limited liability company, or 
                                other similar entity;
                          (xxiv) any entity or class of 
                        entities that the Secretary of the 
                        Treasury, with the written concurrence 
                        of the Attorney General and the 
                        Secretary of Homeland Security, has, by 
                        regulation, determined should be exempt 
                        from the requirements of subsection (b) 
                        because requiring beneficial ownership 
                        information from the entity or class of 
                        entities--
                                  (I) would not serve the 
                                public interest; and
                                  (II) would not be highly 
                                useful in national security, 
                                intelligence, and law 
                                enforcement agency efforts to 
                                detect, prevent, or prosecute 
                                money laundering, the financing 
                                of terrorism, proliferation 
                                finance, serious tax fraud, or 
                                other crimes.
          (12) 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.
          (13) Unique identifying number.--The term ``unique 
        identifying number'' means, with respect to an 
        individual or an entity with a sole member, the unique 
        identifying number from an acceptable identification 
        document.
          (14) United states person.--The term ``United States 
        person'' has the meaning given the term in section 
        7701(a) of the Internal Revenue Code of 1986.
  (b) Beneficial Ownership Information Reporting.--
          (1) Reporting.--
                  (A) In general.--In accordance with 
                regulations prescribed by the Secretary of the 
                Treasury, each reporting company shall submit 
                to FinCEN a report that contains the 
                information described in paragraph (2).
                  (B) Reporting of existing entities.--In 
                accordance with regulations prescribed by the 
                Secretary of the Treasury (but which may not 
                adjust the report submission deadline), any 
                reporting company that has been formed or 
                registered before the effective date of the 
                regulations prescribed under this subsection 
                shall, [in a timely manner, and] not later than 
                2 years after the effective date of the 
                regulations prescribed under this subsection, 
                submit to FinCEN a report that contains the 
                information described in paragraph (2).
                  (C) Reporting at time of formation or 
                registration.--In accordance with regulations 
                prescribed by the Secretary of the Treasury 
                (but which may not adjust the report submission 
                deadline), any reporting company that has been 
                formed or registered after the effective date 
                of the regulations promulgated under this 
                subsection shall, [at the time of] not later 
                than 90 days after the date of such formation 
                or registration, submit to FinCEN a report that 
                contains the information described in paragraph 
                (2).
                  (D) Updated reporting for changes in 
                beneficial ownership.--In accordance with 
                regulations prescribed by the Secretary of the 
                Treasury (but which may not adjust the report 
                submission deadline), a reporting company 
                shall, [in a timely manner, and not later than 
                1 year] not later than 90 days after the date 
                on which there is a change with respect to any 
                information described in paragraph (2), submit 
                to FinCEN a report that updates the information 
                relating to the change.
                  (E) Treasury review of updated reporting for 
                changes in beneficial ownership.--The Secretary 
                of the Treasury, in consultation with the 
                Attorney General and the Secretary of Homeland 
                Security, shall conduct a review to evaluate--
                          (i) the necessity of a requirement 
                        for corporations, limited liability 
                        companies, or other similar entities to 
                        update the report on beneficial 
                        ownership information in paragraph (2), 
                        related to a change in ownership, 
                        within a shorter period of time than 
                        required under subparagraph (D), taking 
                        into account the updating requirements 
                        under subparagraph (D) and the 
                        information contained in the reports;
                          (ii) the benefit to law enforcement 
                        and national security officials that 
                        might be derived from, and the burden 
                        that a requirement to update the list 
                        of beneficial owners within a shorter 
                        period of time after a change in the 
                        list of beneficial owners would impose 
                        on corporations, limited liability 
                        companies, or other similar entities; 
                        and
                          (iii) not later than 2 years after 
                        the date of enactment of this section, 
                        incorporate 2 into the 
                        regulations, as appropriate, any 
                        changes necessary to implement the 
                        findings and determinations based on 
                        the review required under this 
                        subparagraph.
                  (F) Regulation requirements.--In promulgating 
                the regulations required under subparagraphs 
                (A) through (D), the Secretary of the Treasury 
                shall, to the greatest extent practicable--
                          (i) establish partnerships with 
                        State, local, and Tribal governmental 
                        agencies;
                          (ii) collect information described in 
                        paragraph (2) through existing Federal, 
                        State, and local processes and 
                        procedures;
                          (iii) minimize burdens on reporting 
                        companies associated with the 
                        collection of the information described 
                        in paragraph (2), in light of the 
                        private compliance costs placed on 
                        legitimate businesses, including by 
                        identifying any steps taken to mitigate 
                        the costs relating to compliance with 
                        the collection of information; and
                          (iv) collect information described in 
                        paragraph (2) in a form and manner that 
                        ensures the information is highly 
                        useful in--
                                  (I) facilitating important 
                                national security, 
                                intelligence, and law 
                                enforcement activities; and
                                  (II) confirming beneficial 
                                ownership information provided 
                                to financial institutions to 
                                facilitate the compliance of 
                                the financial institutions with 
                                anti-money laundering, 
                                countering the financing of 
                                terrorism, and customer due 
                                diligence requirements under 
                                applicable law.
                  (G) Regulatory simplification.--To simplify 
                compliance with this section for reporting 
                companies and financial institutions, the 
                Secretary of the Treasury shall ensure that the 
                regulations prescribed by the Secretary under 
                this subsection are added to part 1010 of title 
                31, Code of Federal Regulations, or any 
                successor thereto.
                  (H) Unable to obtain.--FinCEN may not by 
                rule, guidance, or otherwise, permit a 
                reporting company from submitting a report 
                relating to the inability of the reporting 
                company to obtain or identify information in 
                the alternative to submitting a report required 
                under this subsection.
          (2) Required information.--
                  (A) In general.--In accordance with 
                regulations prescribed by the Secretary of the 
                Treasury, a report delivered under paragraph 
                (1) shall, except as provided in subparagraph 
                (B), identify each beneficial owner of the 
                applicable reporting company and each applicant 
                with respect to that reporting company by--
                          (i) full legal name;
                          (ii) date of birth;
                          (iii) current, as of the date on 
                        which the report is delivered, 
                        residential or business street address; 
                        and
                          (iv)(I) unique identifying number 
                        from an acceptable identification 
                        document; or
                          (II) FinCEN identifier in accordance 
                        with requirements in paragraph (3).
                  (B) Reporting requirement for exempt entities 
                having an ownership interest.--If an exempt 
                entity described in subsection (a)(11)(B) has 
                or will have a direct or indirect ownership 
                interest in a reporting company, the reporting 
                company or the applicant--
                          (i) shall, with respect to the exempt 
                        entity, only list the name of the 
                        exempt entity; and
                          (ii) shall not be required to report 
                        the information with respect to the 
                        exempt entity otherwise required under 
                        subparagraph (A).
                  (C) Reporting requirement for certain pooled 
                investment vehicles.--Any corporation, limited 
                liability company, or other similar entity that 
                is an exempt entity described in subsection 
                (a)(11)(B)(xviii) and is formed under the laws 
                of a foreign country shall file with FinCEN a 
                written certification that provides 
                identification information of an individual 
                that exercises substantial control over the 
                pooled investment vehicle in the same manner as 
                required under this subsection.
                  (D) Reporting requirement for exempt 
                subsidiaries.--In accordance with the 
                regulations promulgated by the Secretary, any 
                corporation, limited liability company, or 
                other similar entity that is an exempt entity 
                described in subsection (a)(11)(B)(xxii), 
                shall, at the time such entity no longer meets 
                the criteria described in subsection 
                (a)(11)(B)(xxii), submit to FinCEN a report 
                containing the information required under 
                subparagraph (A).
                  (E) Reporting requirement for exempt 
                grandfathered entities.--In accordance with the 
                regulations promulgated by the Secretary, any 
                corporation, limited liability company, or 
                other similar entity that is an exempt entity 
                described in subsection (a)(11)(B)(xxiii), 
                shall, at the time such entity no longer meets 
                the criteria described in subsection 
                (a)(11)(B)(xxiii), submit to FinCEN a report 
                containing the information required under 
                subparagraph (A).
          (3) FinCEN identifier.--
                  (A) Issuance of fincen identifier.--
                          (i) In general.--Upon request by an 
                        individual who has provided FinCEN with 
                        the information described in paragraph 
                        (2)(A) pertaining to the individual, or 
                        by an entity that has reported its 
                        beneficial ownership information to 
                        FinCEN in accordance with this section, 
                        FinCEN shall issue a FinCEN identifier 
                        to such individual or entity.
                          (ii) Updating of information.--An 
                        individual or entity with a FinCEN 
                        identifier shall submit filings with 
                        FinCEN pursuant to paragraph (1) 
                        updating any information described in 
                        paragraph (2) in a timely manner 
                        consistent with paragraph (1)(D).
                          (iii) Exclusive identifier.--FinCEN 
                        shall not issue more than 1 FinCEN 
                        identifier to the same individual or to 
                        the same entity (including any 
                        successor entity).
                  (B) Use of fincen identifier for 
                individuals.--Any person required to report the 
                information described in paragraph (2) with 
                respect to an individual may instead report the 
                FinCEN identifier of the individual.
                  (C) Use of fincen identifier for entities.--
                If an individual is or may be a beneficial 
                owner of a reporting company by an interest 
                held by the individual in an entity that, 
                directly or indirectly, holds an interest in 
                the reporting company, the reporting company 
                may report the FinCEN identifier of the entity 
                in lieu of providing the information required 
                by paragraph (2)(A) with respect to the 
                individual.
          (4) Regulations.--The Secretary of the Treasury 
        shall--
                  (A) by regulation prescribe procedures and 
                standards governing any report under paragraph 
                (2) and any FinCEN identifier under paragraph 
                (3); and
                  (B) in promulgating the regulations under 
                subparagraph (A) to the extent practicable, 
                consistent with the purposes of this section--
                          (i) minimize burdens on reporting 
                        companies associated with the 
                        collection of beneficial ownership 
                        information, including by eliminating 
                        duplicative requirements; and
                          (ii) ensure the beneficial ownership 
                        information reported to FinCEN is 
                        accurate, complete, and highly useful.
          (5) Effective date.--The requirements of this 
        subsection shall take effect on the effective date of 
        the regulations prescribed by the Secretary of the 
        Treasury under this subsection, which shall be 
        promulgated not later than 1 year after the date of 
        enactment of this section.
          (6) Report.--Not later than 1 year after the 
        effective date described in paragraph (5), and annually 
        thereafter for 2 years, the Secretary of the Treasury 
        shall submit to Congress a report describing the 
        procedures and standards prescribed to carry out 
        paragraph (2), which shall include an assessment of--
                  (A) the effectiveness of those procedures and 
                standards in minimizing reporting burdens 
                (including through the elimination of 
                duplicative requirements) and strengthening the 
                accuracy of reports submitted under paragraph 
                (2); and
                  (B) any alternative procedures and standards 
                prescribed to carry out paragraph (2).
  (c) Retention and Disclosure of Beneficial Ownership 
Information by FinCEN.--
          (1) Retention of information.--Beneficial ownership 
        information required under subsection (b) relating to 
        each reporting company shall be maintained by FinCEN 
        for not fewer than 5 years after the date on which the 
        reporting company terminates.
          (2) Disclosure.--
                  (A) Prohibition.--Except as authorized by 
                this subsection and the protocols promulgated 
                under this subsection, beneficial ownership 
                information reported under this section shall 
                be confidential and may not be disclosed by--
                          (i) an officer or employee of the 
                        United States;
                          (ii) an officer or employee of any 
                        State, local, or Tribal agency; or
                          (iii) an officer or employee of any 
                        financial institution or regulatory 
                        agency receiving information under this 
                        subsection.
                  (B) Scope of disclosure by fincen.--FinCEN 
                may disclose beneficial ownership information 
                reported pursuant to this section only upon 
                receipt of--
                          (i) a request, through appropriate 
                        protocols--
                                  (I) from a Federal agency 
                                engaged in national security, 
                                intelligence, or law 
                                enforcement activity, for use 
                                in furtherance of such 
                                activity; or
                                  (II) from a State, local, or 
                                Tribal law enforcement agency, 
                                if a court of competent 
                                jurisdiction, including any 
                                officer of such a court, has 
                                authorized the law enforcement 
                                agency to seek the information 
                                in a criminal or civil 
                                investigation;
                          (ii) a request from a Federal agency 
                        on behalf of a law enforcement agency, 
                        prosecutor, or judge of another 
                        country, including a foreign central 
                        authority or competent authority (or 
                        like designation), under an 
                        international treaty, agreement, 
                        convention, or official request made by 
                        law enforcement, judicial, or 
                        prosecutorial authorities in trusted 
                        foreign countries when no treaty, 
                        agreement, or convention is available--
                                  (I) issued in response to a 
                                request for assistance in an 
                                investigation or prosecution by 
                                such foreign country; and
                                  (II) that--
                                          (aa) requires 
                                        compliance with the 
                                        disclosure and use 
                                        provisions of the 
                                        treaty, agreement, or 
                                        convention, publicly 
                                        disclosing any 
                                        beneficial ownership 
                                        information received; 
                                        or
                                          (bb) limits the use 
                                        of the information for 
                                        any purpose other than 
                                        the authorized 
                                        investigation or 
                                        national security or 
                                        intelligence activity;
                          (iii) a request made by a financial 
                        institution subject to customer due 
                        diligence requirements, with the 
                        consent of the reporting company, to 
                        facilitate the compliance of the 
                        financial institution with customer due 
                        diligence requirements under applicable 
                        law; or
                          (iv) a request made by a Federal 
                        functional regulator or other 
                        appropriate regulatory agency 
                        consistent with the requirements of 
                        subparagraph (C).
                  (C) Form and manner of disclosure to 
                financial institutions and regulatory 
                agencies.--The Secretary of the Treasury shall, 
                by regulation, prescribe the form and manner in 
                which information shall be provided to a 
                financial institution under subparagraph 
                (B)(iii), which regulation shall include that 
                the information shall also be available to a 
                Federal functional regulator or other 
                appropriate regulatory agency, as determined by 
                the Secretary, if the agency--
                          (i) is authorized by law to assess, 
                        supervise, enforce, or otherwise 
                        determine the compliance of the 
                        financial institution with the 
                        requirements described in that 
                        subparagraph;
                          (ii) uses the information solely for 
                        the purpose of conducting the 
                        assessment, supervision, or authorized 
                        investigation or activity described in 
                        clause (i); and
                          (iii) enters into an agreement with 
                        the Secretary providing for appropriate 
                        protocols governing the safekeeping of 
                        the information.
          (3) Appropriate protocols.--The Secretary of the 
        Treasury shall establish by regulation protocols 
        described in paragraph (2)(A) that--
                  (A) protect the security and confidentiality 
                of any beneficial ownership information 
                provided directly by the Secretary;
                  (B) require the head of any requesting 
                agency, on a non-delegable basis, to approve 
                the standards and procedures utilized by the 
                requesting agency and certify to the Secretary 
                semi-annually that such standards and 
                procedures are in compliance with the 
                requirements of this paragraph;
                  (C) require the requesting agency to 
                establish and maintain, to the satisfaction of 
                the Secretary, a secure system in which such 
                beneficial ownership information provided 
                directly by the Secretary shall be stored;
                  (D) require the requesting agency to furnish 
                a report to the Secretary, at such time and 
                containing such information as the Secretary 
                may prescribe, that describes the procedures 
                established and utilized by such agency to 
                ensure the confidentiality of the beneficial 
                ownership information provided directly by the 
                Secretary;
                  (E) require a written certification for each 
                authorized investigation or other activity 
                described in paragraph (2) from the head of an 
                agency described in paragraph (2)(B)(i)(I), or 
                their designees, that--
                          (i) states that applicable 
                        requirements have been met, in such 
                        form and manner as the Secretary may 
                        prescribe; and
                          (ii) at a minimum, sets forth the 
                        specific reason or reasons why the 
                        beneficial ownership information is 
                        relevant to an authorized investigation 
                        or other activity described in 
                        paragraph (2);
                  (F) require the requesting agency to limit, 
                to the greatest extent practicable, the scope 
                of information sought, consistent with the 
                purposes for seeking beneficial ownership 
                information;
                  (G) restrict, to the satisfaction of the 
                Secretary, access to beneficial ownership 
                information to whom disclosure may be made 
                under the provisions of this section to only 
                users at the requesting agency--
                          (i) who are directly engaged in the 
                        authorized investigation or activity 
                        described in paragraph (2);
                          (ii) whose duties or responsibilities 
                        require such access;
                          (iii) who--
                                  (I) have undergone 
                                appropriate training; or
                                  (II) use staff to access the 
                                database who have undergone 
                                appropriate training;
                          (iv) who use appropriate identity 
                        verification mechanisms to obtain 
                        access to the information; and
                          (v) who are authorized by agreement 
                        with the Secretary to access the 
                        information;
                  (H) require the requesting agency to 
                establish and maintain, to the satisfaction of 
                the Secretary, a permanent system of 
                standardized records with respect to an 
                auditable trail of each request for beneficial 
                ownership information submitted to the 
                Secretary by the agency, including the reason 
                for the request, the name of the individual who 
                made the request, the date of the request, any 
                disclosure of beneficial ownership information 
                made by or to the agency, and any other 
                information the Secretary of the Treasury 
                determines is appropriate;
                  (I) require that the requesting agency 
                receiving beneficial ownership information from 
                the Secretary conduct an annual audit to verify 
                that the beneficial ownership information 
                received from the Secretary has been accessed 
                and used appropriately, and in a manner 
                consistent with this paragraph and provide the 
                results of that audit to the Secretary upon 
                request;
                  (J) require the Secretary to conduct an 
                annual audit of the adherence of the agencies 
                to the protocols established under this 
                paragraph to ensure that agencies are 
                requesting and using beneficial ownership 
                information appropriately; and
                  (K) provide such other safeguards which the 
                Secretary determines (and which the Secretary 
                prescribes in regulations) to be necessary or 
                appropriate to protect the confidentiality of 
                the beneficial ownership information.
          (4) Violation of protocols.--Any employee or officer 
        of a requesting agency under paragraph (2)(B) that 
        violates the protocols described in paragraph (3), 
        including unauthorized disclosure or use, shall be 
        subject to criminal and civil penalties under 
        subsection (h)(3)(B).
          (5) Department of the treasury access.--
                  (A) In general.--Beneficial ownership 
                information shall be accessible for inspection 
                or disclosure to officers and employees of the 
                Department of the Treasury whose official 
                duties require such inspection or disclosure 
                subject to procedures and safeguards prescribed 
                by the Secretary of the Treasury.
                  (B) Tax administration purposes.--Officers 
                and employees of the Department of the Treasury 
                may obtain access to beneficial ownership 
                information for tax administration purposes in 
                accordance with this subsection.
          (6) Rejection of request.--The Secretary of the 
        Treasury--
                  (A) shall reject a request not submitted in 
                the form and manner prescribed by the Secretary 
                under paragraph (2)(C); and
                  (B) may decline to provide information 
                requested under this subsection upon finding 
                that--
                          (i) the requesting agency has failed 
                        to meet any other requirement of this 
                        subsection;
                          (ii) the information is being 
                        requested for an unlawful purpose; or
                          (iii) other good cause exists to deny 
                        the request.
          (7) Suspension.--The Secretary of the Treasury may 
        suspend or debar a requesting agency from access for 
        any of the grounds set forth in paragraph (6), 
        including for repeated or serious violations of any 
        requirement under paragraph (2).
          (8) Security protections.--The Secretary of the 
        Treasury shall maintain information security 
        protections, including encryption, for information 
        reported to FinCEN under subsection (b) and ensure that 
        the protections--
                  (A) are consistent with standards and 
                guidelines developed under subchapter II of 
                chapter 35 of title 44; and
                  (B) incorporate Federal information system 
                security controls for high-impact systems, 
                excluding national security systems, consistent 
                with applicable law to prevent the loss of 
                confidentiality, integrity, or availability of 
                information that may have a severe or 
                catastrophic adverse effect.
          (9) Report by the secretary.--Not later than 1 year 
        after the effective date of the regulations prescribed 
        under this subsection, and annually thereafter for 5 
        years, the Secretary of the Treasury shall submit to 
        the Committee on Banking, Housing, and Urban Affairs of 
        the Senate and the Committee on Financial Services of 
        the House of Representatives a report, which--
                  (A) may include a classified annex; and
                  (B) shall, with respect to each request 
                submitted under paragraph (2)(B)(i)(II) during 
                the period covered by the report, and 
                consistent with protocols established by the 
                Secretary that are necessary to protect law 
                enforcement sensitive, tax-related, or 
                classified information, include--
                          (i) the date on which the request was 
                        submitted;
                          (ii) the source of the request;
                          (iii) whether the request was 
                        accepted or rejected or is pending; and
                          (iv) a general description of the 
                        basis for rejecting the such request, 
                        if applicable.
          (10) Audit by the comptroller general.--Not later 
        than 1 year after the effective date of the regulations 
        prescribed under this subsection, and annually 
        thereafter for 6 years, the Comptroller General of the 
        United States shall--
                  (A) audit the procedures and safeguards 
                established by the Secretary of the Treasury 
                under those regulations, including duties for 
                verification of requesting agencies systems and 
                adherence to the protocols established under 
                this subsection, to determine whether such 
                safeguards and procedures meet the requirements 
                of this subsection and that the Department of 
                the Treasury is using beneficial ownership 
                information appropriately in a manner 
                consistent with this subsection; and
                  (B) submit to the Secretary of the Treasury, 
                the Committee on Banking, Housing, and Urban 
                Affairs of the Senate, and the Committee on 
                Financial Services of the House of 
                Representatives a report that contains the 
                findings and determinations with respect to any 
                audit conducted under this paragraph.
          (11) Department of the treasury testimony.--
                  (A) In general.--Not later than March 31 of 
                each year for 5 years beginning in 2022, the 
                Director shall be made available to testify 
                before the Committee on Banking, Housing, and 
                Urban Affairs of the Senate and the Committee 
                on Financial Services of the House of 
                Representatives, or an appropriate subcommittee 
                thereof, regarding FinCEN issues, including, 
                specifically, issues relating to--
                          (i) anticipated plans, goals, and 
                        resources necessary for operations of 
                        FinCEN in implementing the requirements 
                        of the Anti-Money Laundering Act of 
                        2020 and the amendments made by that 
                        Act;
                          (ii) the adequacy of appropriations 
                        for FinCEN in the current and the 
                        previous fiscal year to--
                                  (I) ensure that the 
                                requirements and obligations 
                                imposed upon FinCEN by the 
                                Anti-Money Laundering Act of 
                                2020 and the amendments made by 
                                that Act are completed as 
                                efficiently, effectively, and 
                                expeditiously as possible; and
                                  (II) provide for robust and 
                                effective implementation and 
                                enforcement of the provisions 
                                of the Anti-Money Laundering 
                                Act of 2020 and the amendments 
                                made by that Act;
                          (iii) strengthen 2 FinCEN 
                        management efforts, as necessary and as 
                        identified by the Director, to meet the 
                        requirements of the Anti-Money 
                        Laundering Act of 2020 and the 
                        amendments made by that Act;
                          (iv) provide 2 for the 
                        necessary public outreach to ensure the 
                        broad dissemination of information 
                        regarding any new program requirements 
                        provided for in the Anti-Money 
                        Laundering Act of 2020 and the 
                        amendments made by that Act, 
                        including--
                                  (I) educating the business 
                                community on the goals and 
                                operations of the new 
                                beneficial ownership database; 
                                and
                                  (II) disseminating to the 
                                governments of countries that 
                                are allies or partners of the 
                                United States information on 
                                best practices developed by 
                                FinCEN related to beneficial 
                                ownership information retention 
                                and use;
                          (v) any policy recommendations that 
                        could facilitate and improve 
                        communication and coordination between 
                        the private sector, FinCEN, and the 
                        Federal, State, and local agencies and 
                        entities involved in implementing 
                        innovative approaches to meet their 
                        obligations under the Anti-Money 
                        Laundering Act of 2020 and the 
                        amendments made by that Act, the Bank 
                        Secrecy Act (as defined in section 6003 
                        of the Anti-Money Laundering Act of 
                        2020), and other anti-money laundering 
                        compliance laws; and
                          (vi) any other matter that the 
                        Director determines is appropriate.
                  (B) Testimony classification.--The testimony 
                required under subparagraph (A)--
                          (i) shall be submitted in 
                        unclassified form; and
                          (ii) may include a classified 
                        portion.
  (d) Agency Coordination.--
          (1) In general.--The Secretary of the Treasury shall, 
        to the greatest extent practicable, update the 
        information described in subsection (b) by working 
        collaboratively with other relevant Federal, State, and 
        Tribal agencies.
          (2) Information from relevant federal, state, and 
        tribal agencies.--Relevant Federal, State, and Tribal 
        agencies, as determined by the Secretary of the 
        Treasury, shall, to the extent practicable, and 
        consistent with applicable legal protections, cooperate 
        with and provide information requested by FinCEN for 
        purposes of maintaining an accurate, complete, and 
        highly useful database for beneficial ownership 
        information.
          (3) Regulations.--The Secretary of the Treasury, in 
        consultation with the heads of other relevant Federal 
        agencies, may promulgate regulations as necessary to 
        carry out this subsection.
  (e) Notification of Federal Obligations.--
          (1) Federal.--The Secretary of the Treasury shall 
        take reasonable steps to provide notice to persons of 
        their obligations to report beneficial ownership 
        information under this section, including by causing 
        appropriate informational materials describing such 
        obligations to be included in 1 or more forms or other 
        informational materials regularly distributed by the 
        Internal Revenue Service and FinCEN.
          (2) States and indian tribes.--
                  (A) In general.--As a condition of the funds 
                made available under this section, each State 
                and Indian Tribe shall, not later than 2 years 
                after the effective date of the regulations 
                promulgated under subsection (b)(4), take the 
                following actions:
                          (i) The secretary of a State or a 
                        similar office in each State or Indian 
                        Tribe responsible for the formation or 
                        registration of entities created by the 
                        filing of a public document with the 
                        office under the law of the State or 
                        Indian Tribe shall periodically, 
                        including at the time of any initial 
                        formation or registration of an entity, 
                        assessment of an annual fee, or renewal 
                        of any license to do business in the 
                        United States and in connection with 
                        State or Indian Tribe corporate tax 
                        assessments or renewals--
                                  (I) notify filers of their 
                                requirements as reporting 
                                companies under this section, 
                                including the requirements to 
                                file and update reports under 
                                paragraphs (1) and (2) of 
                                subsection (b); and
                                  (II) provide the filers with 
                                a copy of the reporting company 
                                form created by the Secretary 
                                of the Treasury under this 
                                subsection or an internet link 
                                to that form.
                          (ii) The secretary of a State or a 
                        similar office in each State or Indian 
                        Tribe responsible for the formation or 
                        registration of entities created by the 
                        filing of a public document with the 
                        office under the law of the State or 
                        Indian Tribes shall update the 
                        websites, forms relating to 
                        incorporation, and physical premises of 
                        the office to notify filers of their 
                        requirements as reporting companies 
                        under this section, including providing 
                        an internet link to the reporting 
                        company form created by the Secretary 
                        of the Treasury under this section.
                  (B) Notification from the department of the 
                treasury.--A notification under clause (i) or 
                (ii) of subparagraph (A) shall explicitly state 
                that the notification is on behalf of the 
                Department of the Treasury for the purpose of 
                preventing money laundering, the financing of 
                terrorism, proliferation financing, serious tax 
                fraud, and other financial crime by requiring 
                nonpublic registration of business entities 
                formed or registered to do business in the 
                United States.
  (f) No Bearer Share Corporations or Limited Liability 
Companies.--A corporation, limited liability company, or other 
similar entity formed under the laws of a State or Indian Tribe 
may not issue a certificate in bearer form evidencing either a 
whole or fractional interest in the entity.
  (g) Regulations.--In promulgating regulations carrying out 
this section, the Director shall reach out to members of the 
small business community and other appropriate parties to 
ensure efficiency and effectiveness of the process for the 
entities subject to the requirements of this section.
  (h) Penalties.--
          (1) Reporting violations.--It shall be unlawful for 
        any person to--
                  (A) willfully provide, or attempt to provide, 
                false or fraudulent beneficial ownership 
                information, including a false or fraudulent 
                identifying photograph or document, to FinCEN 
                in accordance with subsection (b); or
                  (B) willfully fail to report complete or 
                updated beneficial ownership information to 
                FinCEN in accordance with subsection (b).
          (2) Unauthorized disclosure or use.--Except as 
        authorized by this section, it shall be unlawful for 
        any person to knowingly disclose or knowingly use the 
        beneficial ownership information obtained by the person 
        through--
                  (A) a report submitted to FinCEN under 
                subsection (b); or
                  (B) a disclosure made by FinCEN under 
                subsection (c).
          (3) Criminal and civil penalties.--
                  (A) Reporting violations.--Any person that 
                violates subparagraph (A) or (B) of paragraph 
                (1)--
                          (i) shall be liable to the United 
                        States for a civil penalty of not more 
                        than $500 for each day that the 
                        violation continues or has not been 
                        remedied; and
                          (ii) may be fined not more than 
                        $10,000, imprisoned for not more than 2 
                        years, or both.
                  (B) Unauthorized disclosure or use 
                violations.--Any person that violates paragraph 
                (2)--
                          (i) shall be liable to the United 
                        States for a civil penalty of not more 
                        than $500 for each day that the 
                        violation continues or has not been 
                        remedied; and
                          (ii)(I) shall be fined not more than 
                        $250,000, or imprisoned for not more 
                        than 5 years, or both; or
                          (II) while violating another law of 
                        the United States or as part of a 
                        pattern of any illegal activity 
                        involving more than $100,000 in a 12-
                        month period, shall be fined not more 
                        than $500,000, imprisoned for not more 
                        than 10 years, or both.
                  (C) Safe harbor.--
                          (i) Safe harbor.--
                                  (I) In general.--Except as 
                                provided in subclause (II), a 
                                person shall not be subject to 
                                civil or criminal penalty under 
                                subparagraph (A) if the 
                                person--
                                          (aa) has reason to 
                                        believe that any report 
                                        submitted by the person 
                                        in accordance with 
                                        subsection (b) contains 
                                        inaccurate information; 
                                        and
                                          (bb) in accordance 
                                        with regulations issued 
                                        by the Secretary, 
                                        voluntarily and 
                                        promptly, and in no 
                                        case later than 90 days 
                                        after the date on which 
                                        the person submitted 
                                        the report, submits a 
                                        report containing 
                                        corrected information.
                                  (II) Exceptions.--A person 
                                shall not be exempt from 
                                penalty under clause (i) if, at 
                                the time the person submits the 
                                report required by subsection 
                                (b), the person--
                                          (aa) acts for the 
                                        purpose of evading the 
                                        reporting requirements 
                                        under subsection (b); 
                                        and
                                          (bb) has actual 
                                        knowledge that any 
                                        information contained 
                                        in the report is 
                                        inaccurate.
                          (ii) Assistance.--FinCEN shall 
                        provide assistance to any person 
                        seeking to submit a corrected report in 
                        accordance with clause (i)(I).
          (4) User complaint process.--
                  (A) In general.--The Inspector General of the 
                Department of the Treasury, in coordination 
                with the Secretary of the Treasury, shall 
                provide public contact information to receive 
                external comments or complaints regarding the 
                beneficial ownership information notification 
                and collection process or regarding the 
                accuracy, completeness, or timeliness of such 
                information.
                  (B) Report.--The Inspector General of the 
                Department of the Treasury shall submit to 
                Congress a periodic report that--
                          (i) summarizes external comments or 
                        complaints and related investigations 
                        conducted by the Inspector General 
                        related to the collection of beneficial 
                        ownership information; and
                          (ii) includes recommendations, in 
                        coordination with FinCEN, to improve 
                        the form and manner of the 
                        notification, collection and updating 
                        processes of the beneficial ownership 
                        information reporting requirements to 
                        ensure the beneficial ownership 
                        information reported to FinCEN is 
                        accurate, complete, and highly useful.
          (5) Treasury office of inspector general 
        investigation in the event of a cybersecurity breach.--
                  (A) In general.--In the event of a 
                cybersecurity breach that results in 
                substantial unauthorized access and disclosure 
                of sensitive beneficial ownership information, 
                the Inspector General of the Department of the 
                Treasury shall conduct an investigation into 
                FinCEN cybersecurity practices that, to the 
                extent possible, determines any vulnerabilities 
                within FinCEN information security and 
                confidentiality protocols and provides 
                recommendations for fixing those deficiencies.
                  (B) Report.--The Inspector General of the 
                Department of the Treasury shall submit to the 
                Secretary of the Treasury a report on each 
                investigation conducted under subparagraph (A).
                  (C) Actions of the secretary.--Upon receiving 
                a report submitted under subparagraph (B), the 
                Secretary of the Treasury shall--
                          (i) determine whether the Director 
                        had any responsibility for the 
                        cybersecurity breach or whether 
                        policies, practices, or procedures 
                        implemented at the direction of the 
                        Director led to the cybersecurity 
                        breach; and
                          (ii) submit to Congress a written 
                        report outlining the findings of the 
                        Secretary, including a determination by 
                        the Secretary on whether to retain or 
                        dismiss the individual serving as the 
                        Director.
          (6) Definition.--In this subsection, the term 
        ``willfully'' means the voluntary, intentional 
        violation of a known legal duty.
  (i) Continuous Review of Exempt Entities.--
          (1) In general.--On and after the effective date of 
        the regulations promulgated under subsection (b)(4), if 
        the Secretary of the Treasury makes a determination, 
        which may be based on information contained in the 
        report required under section 6502(c) of the Anti-Money 
        Laundering Act of 2020 or on any other information 
        available to the Secretary, that an entity or class of 
        entities described in subsection (a)(11)(B) has been 
        involved in significant abuse relating to money 
        laundering, the financing of terrorism, proliferation 
        finance, serious tax fraud, or any other financial 
        crime, not later than 90 days after the date on which 
        the Secretary makes the determination, the Secretary 
        shall submit to the Committee on Banking, Housing, and 
        Urban Affairs of the Senate and the Committee on 
        Financial Services of the House of Representatives a 
        report that explains the reasons for the determination 
        and any administrative or legislative recommendations 
        to prevent such abuse.
          (2) Classified annex.--The report required by 
        paragraph (1)--
                  (A) shall be submitted in unclassified form; 
                and
                  (B) may include a classified annex.
  (j) Authorization of Appropriations.--There are authorized to 
be appropriated to FinCEN for each of the 3 fiscal years 
beginning on the effective date of the regulations promulgated 
under subsection (b)(4), such sums as may be necessary to carry 
out this section, including allocating funds to the States to 
pay reasonable costs relating to compliance with the 
requirements of such section.

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