I 

114TH CONGRESS 

2D SESSION H. R. 4450 

To amend title 31, United States Code, to ensure that persons who form 

corporations or limited liability companies in the United States disclose 

the beneficial owners of those corporations or limited liability companies, 

in order to prevent wrongdoers from exploiting United States corporations and limited liability companies for criminal gain, to assist law 

enforcement in detecting, preventing, and punishing terrorism, money 

laundering, and other misconduct involving United States corporations 

and limited liability companies, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 3, 2016 

Mrs. CAROLYN B. MALONEY of New York (for herself, Mr. KING of New 

York, Ms. MAXINE WATERS of California, Mr. LYNCH, Mr. CAPUANO, 

and Ms. MOORE) introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend title 31, United States Code, to ensure that persons who form corporations or limited liability companies 

in the United States disclose the beneficial owners of 

those corporations or limited liability companies, in order 

to prevent wrongdoers from exploiting United States corporations and limited liability companies for criminal 

gain, to assist law enforcement in detecting, preventing, 

and punishing terrorism, money laundering, and other 

misconduct involving United States corporations and limited liability companies, and for other purposes. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Incorporation Trans5 parency and Law Enforcement Assistance Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Nearly 2,000,000 corporations and limited 

9 liability companies are being formed under the laws 

10 of the States each year. 

11 (2) Very few States obtain meaningful informa12 tion about the beneficial owners of the corporations 

13 and limited liability companies formed under their 

14 laws. 

15 (3) A person forming a corporation or limited 

16 liability company within the United States typically 

17 provides less information to the State of incorpora18 tion than is needed to obtain a bank account or driv19 er’s license and typically does not name a single ben20 eficial owner. 

21 (4) Criminals have exploited the weaknesses in 

22 State formation procedures to conceal their identi23 ties when forming corporations or limited liability 

24 companies in the United States, and have then used 

25 the newly created entities to commit crimes affecting 


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1 interstate and international commerce such as ter2 rorism, drug trafficking, money laundering, tax eva3 sion, securities fraud, financial fraud, and acts of 

4 foreign corruption. 

5 (5) Law enforcement efforts to investigate cor6 porations and limited liability companies suspected 

7 of committing crimes have been impeded by the lack 

8 of available beneficial ownership information, as doc9 umented in reports and testimony by officials from 

10 the Department of Justice, the Department of 

11 Homeland Security, the Financial Crimes Enforce12 ment Network of the Department of the Treasury, 

13 the Internal Revenue Service, the Government Ac14 countability Office, and others. 

15 (6) In July 2006, a leading international anti16 money laundering organization, the Financial Action 

17 Task Force on Money Laundering (in this section 

18 referred to as the ‘‘FATF’’), of which the United 

19 States is a member, issued a report that criticizes 

20 the United States for failing to comply with a FATF 

21 standard on the need to collect beneficial ownership 

22 information and urged the United States to correct 

23 this deficiency by July 2008. 

24 (7) In response to the FATF report, the United 

25 States has repeatedly urged the States to strengthen 


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1 their incorporation practices by obtaining beneficial 

2 ownership information for the corporations and lim3 ited liability companies formed under the laws of 

4 such States. 

5 (8) Many States have established automated 

6 procedures that allow a person to form a new cor7 poration or limited liability company within the 

8 State within 24 hours of filing an online application, 

9 without any prior review of the application by a 

10 State official. In exchange for a substantial fee, 2 

11 States will form a corporation within 1 hour of a re12 quest. 

13 (9) Dozens of Internet Web sites highlight the 

14 anonymity of beneficial owners allowed under the in15 corporation practices of some States, point to those 

16 practices as a reason to incorporate in those States, 

17 and list those States together with offshore jurisdic18 tions as preferred locations for the formation of new 

19 corporations, essentially providing an open invitation 

20 to criminals and other wrongdoers to form entities 

21 within the United States. 

22 (10) In contrast to practices in the United 

23 States, all 28 countries in the European Union are 

24 required to have formation agents identify the beneVerDate Sep 11 2014 02:08 Feb 05, 2016 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4450.IH H4450

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1 ficial owners of the corporations formed under the 

2 laws of the country. 

3 (11) To reduce the vulnerability of the United 

4 States to wrongdoing by United States corporations 

5 and limited liability companies with hidden owners, 

6 to protect interstate and international commerce 

7 from criminals misusing United States corporations 

8 and limited liability companies, to strengthen law en9 forcement investigations of suspect corporations and 

10 limited liability companies, to set minimum stand11 ards for and level the playing field among State in12 corporation practices, and to bring the United States 

13 into compliance with its international anti-money 

14 laundering standards, Federal legislation is needed 

15 to require the States to obtain beneficial ownership 

16 information for the corporations and limited liability 

17 companies formed under the laws of such States. 

18 SEC. 3. TRANSPARENT INCORPORATION PRACTICES. 

19 (a) TRANSPARENT INCORPORATION PRACTICES.— 

20 (1) IN GENERAL.—Chapter 53 of title 31, 

21 United States Code, is amended by inserting after 

22 section 5332 the following new section: 

23 ‘‘§ 5333. Transparent incorporation practices 

24 ‘‘(a) REPORTING REQUIREMENTS.— 


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1 ‘‘(1) IN GENERAL.—Subject to paragraph (3), 

2 not later than the beginning of fiscal year 2017, the 

3 Secretary of the Treasury shall issue regulations re4 quiring each corporation and limited liability com5 pany formed in a State that does not have a forma6 tion system described under subsection (b) to file 

7 with the Secretary such information as the corpora8 tion or limited liability company would be required 

9 to provide the State if such State had a formation 

10 system described under subsection (b). 

11 ‘‘(2) DISCLOSURE OF BENEFICIAL OWNERSHIP

12 INFORMATION.—Beneficial ownership information 

13 reported to the Secretary of the Treasury pursuant 

14 to paragraph (1) shall be provided by the Secretary 

15 of the Treasury upon receipt of— 

16 ‘‘(A) a civil or criminal subpoena or sum17 mons from a State agency, Federal agency, or 

18 congressional committee or subcommittee re19 questing such information; 

20 ‘‘(B) a written request made by a Federal 

21 agency on behalf of another country under an 

22 international treaty, agreement, or convention, 

23 or an order under section 3512 of title 18, 

24 United States Code, or section 1782 of title 28, 


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1 United States Code, issued in response to a re2 quest for assistance from a foreign country; or 

3 ‘‘(C) a written request made by the Finan4 cial Crimes Enforcement Network of the De5 partment of the Treasury. 

6 ‘‘(3) LIMITATION.—In issuing regulations pur7 suant to paragraph (1), the Secretary shall not re8 quire such information to be filed with the Internal 

9 Revenue Service. 

10 ‘‘(b) FORMATION SYSTEM.— 

11 ‘‘(1) IN GENERAL.—With respect to a State, a 

12 formation system is described under this subsection 

13 if it meets the following requirements: 

14 ‘‘(A) IDENTIFICATION OF BENEFICIAL

15 OWNERS.—Except as provided in paragraphs 

16 (2) and (4), and subject to paragraph (3), each 

17 applicant to form a corporation or limited liabil18 ity company under the laws of the State is re19 quired to provide to the State during the forma20 tion process a list of the beneficial owners of 

21 the corporation or limited liability company 

22 that— 

23 ‘‘(i) except as provided in subpara24 graph (F), identifies each beneficial owner 

25 by— 


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1 ‘‘(I) name; 

2 ‘‘(II) current residential or busi3 ness street address; and 

4 ‘‘(III) a unique identifying num5 ber from a nonexpired passport issued 

6 by the United States or a nonexpired 

7 drivers license issued by a State; and 

8 ‘‘(ii) if the applicant is not the bene9 ficial owner, provides the identification in10 formation described in clause (i) relating 

11 to the applicant. 

12 ‘‘(B) UPDATED INFORMATION.—For each 

13 corporation or limited liability company formed 

14 under the laws of the State— 

15 ‘‘(i) the corporation or limited liability 

16 company is required by the State to update 

17 the list of the beneficial owners of the cor18 poration or limited liability company by 

19 providing the information described in sub20 paragraph (A) to the State not later than 

21 60 days after the date of any change in the 

22 list of beneficial owners or the information 

23 required to be provided relating to each 

24 beneficial owner; 


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1 ‘‘(ii) in the case of a corporation or 

2 limited liability company formed or ac3 quired by a formation agent and retained 

4 by the formation agent as a beneficial 

5 owner for transfer to another person, the 

6 formation agent is required by the State to 

7 submit to the State an updated list of the 

8 beneficial owners and the information de9 scribed in subparagraph (A) for each such 

10 beneficial owner not later than 10 days 

11 after date on which the formation agent 

12 transfers the corporation or limited liabil13 ity company to another person; and 

14 ‘‘(iii) the corporation or limited liabil15 ity company is required by the State to 

16 submit to the State an annual filing con17 taining the list of the beneficial owners of 

18 the corporation or limited liability company 

19 and the information described in subpara20 graph (A) for each such beneficial owner. 

21 ‘‘(C) RETENTION OF INFORMATION.—Ben22 eficial ownership information relating to each 

23 corporation or limited liability company formed 

24 under the laws of the State is required to be 

25 maintained by the State until the end of the 5- 


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1 year period beginning on the date that the cor2 poration or limited liability company terminates 

3 under the laws of the State. 

4 ‘‘(D) INFORMATION REQUESTS.—Bene5 ficial ownership information relating to each 

6 corporation or limited liability company formed 

7 under the laws of the State shall be provided by 

8 the State upon receipt of— 

9 ‘‘(i) a civil or criminal subpoena or 

10 summons from a State agency, Federal 

11 agency, or congressional committee or sub12 committee requesting such information; 

13 ‘‘(ii) a written request made by a Fed14 eral agency on behalf of another country 

15 under an international treaty, agreement, 

16 or convention, or section 1782 of title 28, 

17 United States Code; or 

18 ‘‘(iii) a written request made by the 

19 Financial Crimes Enforcement Network. 

20 ‘‘(E) NO BEARER SHARE CORPORATIONS

21 OR LIMITED LIABILITY COMPANIES.—A cor22 poration or limited liability company formed 

23 under the laws of the State may not issue a cer24 tificate in bearer form evidencing either a whole 


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1 or fractional interest in the corporation or lim2 ited liability company. 

3 ‘‘(2) STATES THAT LICENSE FORMATION

4 AGENTS.— 

5 ‘‘(A) IN GENERAL.—Notwithstanding para6 graph (1), a State described in subparagraph 

7 (B) may permit an applicant to form a corpora8 tion or limited liability company under the laws 

9 of the State, or a corporation or limited liability 

10 company formed under the laws of the State, to 

11 provide the required information to a licensed 

12 formation agent residing in the State, instead 

13 of to the State directly, if the application under 

14 paragraph (1)(A) or the update under para15 graph (1)(B) contains— 

16 ‘‘(i) the name, current business ad17 dress, contact information, and licensing 

18 number of the licensed formation agent 

19 that has agreed to maintain the informa20 tion required under this subsection; and 

21 ‘‘(ii) a certification by the licensed 

22 formation agent that the licensed forma23 tion agent has possession of the informa24 tion required under this subsection and 

25 will maintain the information in the State 


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1 licensing the licensed formation agent in 

2 accordance with State law. 

3 ‘‘(B) STATES DESCRIBED.—A State de4 scribed in this subparagraph is a State that 

5 maintains a formal licensing system for forma6 tion agents that requires a formation agent to 

7 register with the State, meet standards for fit8 ness and honesty, maintain a physical office 

9 and records within the State, undergo regular 

10 monitoring, and be subject to sanctions for non11 compliance with State requirements. 

12 ‘‘(C) LICENSED FORMATION AGENT DU13 TIES.—A licensed formation agent that receives 

14 beneficial ownership information under State 

15 law in accordance with this paragraph shall— 

16 ‘‘(i) maintain the information in the 

17 State in which the corporation or limited 

18 liability company is being or has been 

19 formed in the same manner as required for 

20 States under paragraph (1)(C); 

21 ‘‘(ii) provide the information under 

22 the same circumstances as required for 

23 States under paragraph (1)(D); and 

24 ‘‘(iii) perform the duties of a forma25 tion agent under paragraph (3). 


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1 ‘‘(D) TERMINATION OF RELATIONSHIP.— 

2 ‘‘(i) IN GENERAL.—Except as pro3 vided in clause (ii), a licensed formation 

4 agent that receives beneficial ownership in5 formation relating to a corporation or lim6 ited liability company under State law in 

7 accordance with this paragraph and that 

8 resigns, dissolves, or otherwise ends a rela9 tionship with the corporation or limited li10 ability company shall promptly— 

11 ‘‘(I) notify the State in writing 

12 that the licensed formation agent has 

13 resigned or ended the relationship; 

14 and 

15 ‘‘(II) transmit all beneficial own16 ership information relating to the cor17 poration or limited liability company 

18 in the possession of the licensed for19 mation agent to the licensing State. 

20 ‘‘(ii) EXCEPTION.—If a licensed for21 mation agent receives written instructions 

22 from a corporation or limited liability com23 pany, the licensed formation agent may 

24 transmit the beneficial ownership informa25 tion relating to the corporation or limited 


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1 liability company to another licensed for2 mation agent that is within the same State 

3 and has agreed to maintain the informa4 tion in accordance with this section. 

5 ‘‘(iii) NOTICE TO STATE.—If a li6 censed formation agent provides beneficial 

7 ownership information to another licensed 

8 formation agent under clause (ii), the li9 censed formation agent providing the infor10 mation shall promptly notify in writing the 

11 State under the laws of which the corpora12 tion or limited liability company is formed 

13 of the identity of the licensed formation 

14 agent receiving the information. 

15 ‘‘(3) CERTAIN BENEFICIAL OWNERS.—If an ap16 plicant to form a corporation or limited liability com17 pany or a beneficial owner, officer, director, or simi18 lar agent of a corporation or limited liability com19 pany who is required to provide identification infor20 mation under this subsection does not have a non21 expired passport issued by the United States or a 

22 nonexpired drivers license or identification card 

23 issued by a State, each application described in 

24 paragraph (1)(A) and each update described in 

25 paragraph (1)(B) shall include a certification by a 


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1 formation agent residing in the State that the for2 mation agent— 

3 ‘‘(A) has obtained for each such person a 

4 current residential or business street address 

5 and a legible and credible copy of the pages of 

6 a nonexpired passport issued by the government 

7 of a foreign country bearing a photograph, date 

8 of birth, and unique identifying information for 

9 the person; 

10 ‘‘(B) has verified the name, address, and 

11 identity of each such person; 

12 ‘‘(C) will provide the information described 

13 in subparagraph (A) and the proof of 

14 verification described in subparagraph (B) upon 

15 request under the same circumstances as re16 quired for States under paragraph (1)(D); and 

17 ‘‘(D) will retain the information and proof 

18 of verification under this paragraph in the 

19 State in which the corporation or limited liabil20 ity company is being or has been formed until 

21 the end of the 5-year period beginning on the 

22 date that the corporation or limited liability 

23 company terminates under the laws of the 

24 State. 

25 ‘‘(4) EXEMPT ENTITIES.— 


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1 ‘‘(A) IN GENERAL.—A formation system 

2 described in paragraph (1) shall require that an 

3 application for an entity described in subpara4 graph (C) or (D) of subsection (d)(2) that is 

5 proposed to be formed under the laws of a 

6 State and that will be exempt from the bene7 ficial ownership disclosure requirements under 

8 this subsection shall include in the application 

9 a certification by the applicant, or a prospective 

10 officer, director, or similar agent of the entity— 

11 ‘‘(i) identifying the specific provision 

12 of subsection (d)(2) under which the entity 

13 proposed to be formed would be exempt 

14 from the beneficial ownership disclosure re15 quirements under paragraphs (1), (2), and 

16 (3); 

17 ‘‘(ii) stating that the entity proposed 

18 to be formed meets the requirements for 

19 an entity described under such provision of 

20 subsection (d)(2); and 

21 ‘‘(iii) providing identification informa22 tion for the applicant or prospective offi23 cer, director, or similar agent making the 

24 certification in the same manner as pro25 vided under paragraph (1) or (3). 


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1 ‘‘(B) EXISTING ENTITIES.—On and after 

2 the date that is 2 years after the effective date 

3 of the amendments to the formation system of 

4 a State made to comply with this section, an 

5 entity formed under the laws of the State be6 fore such effective date shall be considered to 

7 be a corporation or limited liability company for 

8 purposes of, and shall be subject to the require9 ments of, this subsection unless an officer, di10 rector, or similar agent of the entity submits to 

11 the State a certification— 

12 ‘‘(i) identifying the specific provision 

13 of subsection (d)(2) under which the entity 

14 is exempt from the requirements under 

15 paragraphs (1), (2), and (3); 

16 ‘‘(ii) stating that the entity meets the 

17 requirements for an entity described under 

18 such provision of subsection (d)(2); and 

19 ‘‘(iii) providing identification informa20 tion for the officer, director, or similar 

21 agent making the certification in the same 

22 manner as provided under paragraph (1) 

23 or (3). 

24 ‘‘(C) EXEMPT ENTITIES HAVING OWNER25 SHIP INTEREST.—If an entity described in subVerDate Sep 11 2014 02:08 Feb 05, 2016 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H4450.IH H4450

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1 paragraph (C) or (D) of subsection (d)(2) has 

2 or will have an ownership interest in a corpora3 tion or limited liability company formed or to be 

4 formed under the laws of a State, the applicant, 

5 corporation, or limited liability company in 

6 which the entity has or will have the ownership 

7 interest shall provide the information required 

8 under this subsection relating to the entity, ex9 cept that the entity shall not be required to pro10 vide information regarding any natural person 

11 who has an ownership interest in, exercises sub12 stantial control over, or receives substantial eco13 nomic benefits from the entity. 

14 ‘‘(c) PENALTIES.— 

15 ‘‘(1) IN GENERAL.—It shall be unlawful for— 

16 ‘‘(A) any person to affect interstate or for17 eign commerce by— 

18 ‘‘(i) knowingly providing, or attempt19 ing to provide, false or fraudulent bene20 ficial ownership information, including a 

21 false or fraudulent identifying photograph, 

22 to a State or licensed formation agent 

23 under State law in accordance with this 

24 section; 


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1 ‘‘(ii) willfully failing to provide com2 plete or updated beneficial ownership infor3 mation to a State or licensed formation 

4 agent under State law in accordance with 

5 this section; or 

6 ‘‘(iii) knowingly disclosing the exist7 ence of a subpoena, summons, or other re8 quest for beneficial ownership information, 

9 except— 

10 ‘‘(I) to the extent necessary to 

11 fulfill the authorized request; or 

12 ‘‘(II) as authorized by the entity 

13 that issued the subpoena, summons, 

14 or other request; or 

15 ‘‘(B) in the case of a formation agent, 

16 knowingly failing to obtain or maintain credible, 

17 legible, and updated beneficial ownership infor18 mation, including any required identifying pho19 tograph. 

20 ‘‘(2) CIVIL AND CRIMINAL PENALTIES.—In ad21 dition to any civil or criminal penalty that may be 

22 imposed by a State, any person who violates para23 graph (1)— 


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1 ‘‘(A) shall be liable to the United States 

2 for a civil penalty of not more than $10,000; 

3 and 

4 ‘‘(B) may be fined under title 18, United 

5 States Code, imprisoned for not more than 3 

6 years, or both. 

7 ‘‘(d) DEFINITIONS.—For the purposes of this section: 

8 ‘‘(1) BENEFICIAL OWNER.— 

9 ‘‘(A) IN GENERAL.—Except as provided in 

10 subparagraph (B), the term ‘beneficial owner’ 

11 means a natural person who, directly or indi12 rectly— 

13 ‘‘(i) exercises substantial control over 

14 a corporation or limited liability company; 

15 or 

16 ‘‘(ii) has a substantial interest in or 

17 receives substantial economic benefits from 

18 the assets of a corporation or limited liabil19 ity company. 

20 ‘‘(B) EXCEPTIONS.—The term ‘beneficial 

21 owner’ shall not include— 

22 ‘‘(i) a minor child; 

23 ‘‘(ii) a person acting as a nominee, 

24 intermediary, custodian, or agent on behalf 

25 of another person; 


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1 ‘‘(iii) a person acting solely as an em2 ployee of a corporation or limited liability 

3 company and whose control over or eco4 nomic benefits from the corporation or lim5 ited liability company derives solely from 

6 the employment status of the person; 

7 ‘‘(iv) a person whose only interest in 

8 a corporation or limited liability company 

9 is through a right of inheritance, unless 

10 the person also meets the requirements of 

11 subparagraph (A); or 

12 ‘‘(v) a creditor of a corporation or 

13 limited liability company, unless the cred14 itor also meets the requirements of sub15 paragraph (A). 

16 ‘‘(2) CORPORATION; LIMITED LIABILITY COM17 PANY.—The terms ‘corporation’ and ‘limited liability 

18 company’— 

19 ‘‘(A) have the meanings given such terms 

20 under the laws of the applicable State; 

21 ‘‘(B) include any non-United States entity 

22 eligible for registration or registered to do busi23 ness as a corporation or limited liability com24 pany under the laws of the applicable State; 


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1 ‘‘(C) do not include any entity that is, and 

2 discloses in the application by the entity to 

3 form under the laws of the State or, if the enti4 ty was formed before the date of the enactment 

5 of this section, in a filing with the State under 

6 State law— 

7 ‘‘(i) a business concern that is an 

8 issuer of a class of securities registered 

9 under section 12 of the Securities Ex10 change Act of 1934 (15 U.S.C. 781) or 

11 that is required to file reports under sec12 tion 15(d) of that Act (15 U.S.C. 78o(d)); 

13 ‘‘(ii) a business concern constituted or 

14 sponsored by a State, a political subdivi15 sion of a State, under an interstate com16 pact between 2 or more States, by a de17 partment or agency of the United States, 

18 or under the laws of the United States; 

19 ‘‘(iii) a depository institution (as de20 fined in section 3 of the Federal Deposit 

21 Insurance Act (12 U.S.C. 1813)); 

22 ‘‘(iv) a credit union (as defined in sec23 tion 101 of the Federal Credit Union Act 

24 (12 U.S.C. 1752)); 


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1 ‘‘(v) a bank holding company (as de2 fined in section 2 of the Bank Holding 

3 Company Act of 1956 (12 U.S.C. 1841)); 

4 ‘‘(vi) a broker or dealer (as defined in 

5 section 3 of the Securities Exchange Act of 

6 1934 (15 U.S.C. 78c)) that is registered 

7 under section 15 of the Securities Ex8 change Act of 1934 (15 U.S.C. 78o); 

9 ‘‘(vii) an exchange or clearing agency 

10 (as defined in section 3 of the Securities 

11 Exchange Act of 1934 (15 U.S.C. 78c)) 

12 that is registered under section 6 or 17A 

13 of the Securities Exchange Act of 1934 

14 (15 U.S.C. 78f and 78q–1); 

15 ‘‘(viii) an investment company (as de16 fined in section 3 of the Investment Com17 pany Act of 1940 (15 U.S.C. 80a–3)) or 

18 an investment advisor (as defined in sec19 tion 202(11) of the Investment Advisors 

20 Act of 1940 (15 U.S.C. 80b–2(11))), if the 

21 company or adviser is registered with the 

22 Securities and Exchange Commission, or 

23 has filed an application for registration 

24 which has not been denied, under the In25 vestment Company Act of 1940 (15 U.S.C. 


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1 80a–1 et seq.) or the Investment Advisor 

2 Act of 1940 (15 U.S.C. 80b–1 et seq.); 

3 ‘‘(ix) an insurance company (as de4 fined in section 2 of the Investment Com5 pany Act of 1940 (15 U.S.C. 80a–2)); 

6 ‘‘(x) a registered entity (as defined in 

7 section 1a of the Commodity Exchange Act 

8 (7 U.S.C. 1a)), or a futures commission 

9 merchant, introducing broker, commodity 

10 pool operator, or commodity trading advi11 sor (as defined in section 1a of the Com12 modity Exchange Act (7 U.S.C. 1a)) that 

13 is registered with the Commodity Futures 

14 Trading Commission; 

15 ‘‘(xi) a public accounting firm reg16 istered in accordance with section 102 of 

17 the Sarbanes-Oxley Act (15 U.S.C. 7212); 

18 ‘‘(xii) a public utility that provides 

19 telecommunications service, electrical 

20 power, natural gas, or water and sewer 

21 services, within the United States; 

22 ‘‘(xiii) a church, charity, or nonprofit 

23 entity that is described in section 501(c), 

24 527, or 4947(a)(1) of the Internal Revenue 

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1 empt status, and has filed the most re2 cently due annual information return with 

3 the Internal Revenue Service, if required to 

4 file such a return; 

5 ‘‘(xiv) any business concern that— 

6 ‘‘(I) employs more than 20 em7 ployees on a full-time basis in the 

8 United States; 

9 ‘‘(II) files income tax returns in 

10 the United States demonstrating more 

11 than $5,000,000 in gross receipts or 

12 sales; and 

13 ‘‘(III) has an operating presence 

14 at a physical office within the United 

15 States; or 

16 ‘‘(xv) any corporation or limited liabil17 ity company formed and owned by an enti18 ty described in clause (i), (ii), (iii), (iv), 

19 (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), 

20 (xiii), or (xiv); and 

21 ‘‘(D) do not include any individual busi22 ness concern or class of business concerns 

23 which the Secretary of the Treasury, with the 

24 written concurrence of the Attorney General of 

25 the United States, has determined in writing 


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1 should be exempt from the requirements of sub2 section (a), because requiring beneficial owner3 ship information from the business concern 

4 would not serve the public interest and would 

5 not assist law enforcement efforts to detect, 

6 prevent, or punish terrorism, money laundering, 

7 tax evasion, or other misconduct. 

8 ‘‘(3) FORMATION AGENT.—The term ‘formation 

9 agent’ means a person who, for compensation— 

10 ‘‘(A) acts on behalf of another person to 

11 assist in the formation of a corporation or lim12 ited liability company under the laws of a State; 

13 or 

14 ‘‘(B) purchases, sells, or transfers the pub15 lic records that form a corporation or limited li16 ability company.’’. 

17 (2) RULEMAKING.—To carry out this Act and 

18 the amendments made by this Act, the Secretary of 

19 the Treasury, in consultation with the Secretary of 

20 Homeland Security and the Attorney General of the 

21 United States, may issue guidance or a rule to— 

22 (A) clarify the definitions under section 

23 5333(d) of title 31, United States Code, as 

24 added by paragraph (1); and 


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1 (B) specify how to verify beneficial owner2 ship information or other identification infor3 mation for purposes of such section 5333, in4 cluding whether the verification procedures 

5 specified in section 5333(b)(3) should apply to 

6 all applicants under section 5333(b)(1) or 

7 whether such verification process should require 

8 the notarization of signatures. 

9 (3) CONFORMING AMENDMENTS.—Title 31, 

10 United States Code, is amended— 

11 (A) in section 5321(a)— 

12 (i) in paragraph (1), by striking ‘‘sec13 tions 5314 and 5315’’ each place it ap14 pears and inserting ‘‘sections 5314, 5315, 

15 and 5333’’; and 

16 (ii) in paragraph (6), by inserting 

17 ‘‘(except section 5333)’’ after ‘‘sub18 chapter’’ each place it appears; and 

19 (B) in section 5322, by striking ‘‘section 

20 5315 or 5324’’ each place it appears and insert21 ing ‘‘section 5315, 5324, or 5333’’. 

22 (4) TABLE OF CONTENTS.—The table of con23 tents of chapter 53 of title 31, United States Code, 

24 is amended by inserting after the item relating to 

25 section 5332 the following: 

‘‘Sec. 5333. Transparent incorporation practices.’’. 


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1 (5) RESTRICTIONS ON PUBLIC ACCESS.—A 

2 State may— 

3 (A) restrict public access to all or any por4 tion of the beneficial ownership information 

5 provided to the State as described under section 

6 5332 of title 31, United States Code, as added 

7 by this Act; and 

8 (B) by statute, regulation, order, or inter9 pretation adopted or issued by the State after 

10 the date of enactment of this Act, provide for 

11 public access to all or any portion of such infor12 mation. 

13 (6) NO DUTY OF VERIFICATION.—This Act and 

14 the amendments made by this Act do not impose 

15 any obligation on a State to verify the name, ad16 dress, or identity of a beneficial owner whose infor17 mation is submitted to such State under section 

18 5333 of title 31, United States Code, as added by 

19 this Act. 

20 (b) FUNDING AUTHORIZATION.— 

21 (1) IN GENERAL.—To carry out section 5333 of 

22 title 31, United States Code, during the 3-year pe23 riod beginning on the date of enactment of this Act, 

24 funds shall be made available to each State to pay 


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1 reasonable costs relating to compliance with the re2 quirements of such section. 

3 (2) FUNDING SOURCES.—To protect the United 

4 States against the misuse of United States corpora5 tions and limited liability companies with hidden 

6 owners, funds shall be provided to each State to 

7 carry out the purposes described in paragraph (1) 

8 from one or more of the following sources: 

9 (A) Upon application by a State, and with10 out further appropriation, the Secretary of the 

11 Treasury shall make available to the State un12 obligated balances described in section 

13 9703(g)(4)(B) of title 31, United States Code, 

14 in the Department of the Treasury Forfeiture 

15 Fund established under section 9703(a) of title 

16 31, United States Code. 

17 (B) Upon application by a State, after con18 sultation with the Secretary of the Treasury, 

19 and without further appropriation, the Attorney 

20 General of the United States shall make avail21 able to the State excess unobligated balances 

22 (as defined in section 524(c)(8)(D) of title 28, 

23 United States Code) in the Department of Jus24 tice Assets Forfeiture Fund established under 

25 section 524(c) of title 28, United States Code. 


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1 (3) MAXIMUM AMOUNTS.— 

2 (A) DEPARTMENT OF THE TREASURY.— 

3 The Secretary of the Treasury may not make 

4 available to States a total of more than 

5 $30,000,000 under paragraph (2)(A). 

6 (B) DEPARTMENT OF JUSTICE.—The At7 torney General of the United States may not 

8 make available to States a total of more than 

9 $10,000,000 under paragraph (2)(B). 

10 (4) RULEMAKING.—Not later than the end of 

11 the 180-day period beginning on the date of the en12 actment of this Act, the Secretary of the Treasury 

13 and the Attorney General shall, jointly, issue regula14 tions setting forth the procedures for States to apply 

15 for funds under this subsection, including deter16 mining which State measures should be funded to 

17 assess, plan, develop, test, or implement relevant 

18 policies, procedures, or system modifications. 

19 (c) COMPLIANCE REPORT.—Nothing in this section 

20 or the amendments made by this section authorizes the 

21 Secretary of the Treasury to withhold from a State any 

22 funding otherwise available to the State because of a fail23 ure by that State to comply with section 5333 of title 31, 

24 United States Code. Not later than the end of the 42- 

25 month period beginning on the date of the enactment of 


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1 this Act, the Comptroller General of the United States 

2 shall submit to the Committee on Financial Services of 

3 the House of Representatives and the Committee on 

4 Homeland Security and Governmental Affairs of the Sen5 ate a report— 

6 (1) identifying which States obtain beneficial 

7 ownership information as described in such section 

8 5333; 

9 (2) with respect to each State that does not ob10 tain such information, whether corporations and lim11 ited liability companies formed under the laws of 

12 such State are in compliance with such section 5333 

13 and providing the specified beneficial ownership in14 formation to the Secretary of the Treasury; and 

15 (3) whether the Department of the Treasury is 

16 in compliance with such section 5333 and, if not, 

17 what steps it must take to come into compliance 

18 with this section. 

19 (d) FEDERAL CONTRACTORS.—Not later than the 

20 first day of the first full fiscal year beginning at least one 

21 year after the date of the enactment of this Act, the Ad22 ministrator for Federal Procurement Policy shall revise 

23 the Federal Acquisition Regulation maintained under sec24 tion 1303(a)(1) of title 41, United States Code, to require 

25 any contractor who is subject to the requirement to disVerDate Sep 11 2014 02:08 Feb 05, 2016 Jkt 059200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\H4450.IH H4450

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1 close beneficial ownership information under section 5333 

2 of title 31, United States Code, to provide the information 

3 required to be disclosed under such section to the Federal 

4 Government as part of any bid or proposal for a contract 

5 with a value threshold in excess of the simplified acquisi6 tion threshold under section 134 of title 41, United States 

7 Code. 

8 (e) ANTI-MONEY LAUNDERING OBLIGATIONS OF

9 FORMATION AGENTS.— 

10 (1) IN GENERAL.—Section 5312(a)(2) of title 

11 31, United States Code, is amended— 

12 (A) in subparagraph (Y), by striking ‘‘or’’ 

13 at the end; 

14 (B) by redesignating subparagraph (Z) as 

15 subparagraph (AA); and 

16 (C) by inserting after subparagraph (Y) 

17 the following: 

18 ‘‘(Z) any person who, for compensation— 

19 ‘‘(i) acts on behalf of another person 

20 to form, or assist in formation of, a cor21 poration or limited liability company under 

22 the laws of a State; or 

23 ‘‘(ii) purchases, sells, or transfers the 

24 public records that form a corporation or 

25 limited liability company; or’’. 


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1 (2) DEADLINE FOR ANTI-MONEY LAUNDERING

2 RULE FOR FORMATION AGENTS.— 

3 (A) PROPOSED RULE.—Not later than 120 

4 days after the date of enactment of this Act, 

5 the Secretary of the Treasury, in consultation 

6 with the Attorney General of the United States 

7 and the Commissioner of the Internal Revenue 

8 Service, shall publish a proposed rule in the 

9 Federal Register requiring persons described in 

10 section 5312(a)(2)(Z) of title 31, United States 

11 Code, as amended by this subsection, to estab12 lish anti-money laundering programs under sub13 section (h) of section 5318 of that title. 

14 (B) FINAL RULE.—Not later than 270 

15 days after the date of enactment of this Act, 

16 the Secretary of the Treasury shall publish the 

17 rule described in this subsection in final form in 

18 the Federal Register. 

19 (C) EXCLUSIONS.—Any rule promulgated 

20 under this subsection shall exclude from the 

21 category of persons involved in forming a cor22 poration or limited liability company— 

23 (i) any government agency; and 

24 (ii) any attorney or law firm that uses 

25 a paid formation agent operating within 


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1 the United States to form the corporation 

2 or limited liability company. 

3 SEC. 4. STUDIES AND REPORTS. 

4 (a) OTHER LEGAL ENTITIES.—Not later than 2 

5 years after the date of enactment of this Act, the Comp6 troller General of the United States shall conduct a study 

7 and submit to the Congress a report— 

8 (1) identifying each State that has procedures 

9 that enable persons to form or register under the 

10 laws of the State partnerships, trusts, or other legal 

11 entities, and the nature of those procedures; 

12 (2) identifying each State that requires persons 

13 seeking to form or register partnerships, trusts, or 

14 other legal entities under the laws of the State to 

15 provide information about the beneficial owners (as 

16 that term is defined in section 5333(d)(1) of title 

17 31, United States Code, as added by this Act) or 

18 beneficiaries of such entities, and the nature of the 

19 required information; 

20 (3) evaluating whether the lack of available 

21 beneficial ownership information for partnerships, 

22 trusts, or other legal entities— 

23 (A) raises concerns about the involvement 

24 of such entities in terrorism, money laundering, 


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1 tax evasion, securities fraud, or other mis2 conduct; and 

3 (B) has impeded investigations into enti4 ties suspected of such misconduct; and 

5 (4) evaluating whether the failure of the United 

6 States to require beneficial ownership information 

7 for partnerships and trusts formed or registered in 

8 the United States has elicited international criticism 

9 and what steps, if any, the United States has taken 

10 or is planning to take in response. 

11 (b) EFFECTIVENESS OF INCORPORATION PRAC12 TICES.—Not later than 5 years after the date of enact13 ment of this Act, the Comptroller General of the United 

14 States shall conduct a study and submit to the Congress 

15 a report assessing the effectiveness of incorporation prac16 tices implemented under this Act and the amendments 

17 made by this Act in— 

18 (1) providing law enforcement agencies with 

19 prompt access to reliable, useful, and complete bene20 ficial ownership information; and 

21 (2) strengthening the capability of law enforce22 ment agencies to combat incorporation abuses, civil 

23 and criminal misconduct, and detect, prevent, or 


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1 punish terrorism, money laundering, tax evasion, or 

2 other misconduct. 

Æ 


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