I 

112TH CONGRESS 

1ST SESSION H. R. 3416 

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 

NOVEMBER 14, 2011 

Mrs. MALONEY (for herself, Mr. FRANK of Massachusetts, and Mr. LYNCH) 

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, and the Government 

14 Accountability 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 27 countries in the European Union are 

24 required to have formation agents identify the beneVerDate Mar 15 2010 23:50 Nov 16, 2011 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3416.IH H3416

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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.—Not later than the begin2 ning of fiscal year 2014, the Secretary of the Treas3 ury shall issue regulations requiring each corpora4 tion and limited liability company formed in a State 

5 that does not have a formation system described 

6 under subsection (b) to file with the Secretary such 

7 information as the corporation or limited liability 

8 company would be required to provide the State if 

9 such State had a formation system described under 

10 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 ‘‘(b) FORMATION SYSTEM.— 

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

8 formation system is described under this subsection 

9 if it meets the following requirements: 

10 ‘‘(A) IDENTIFICATION OF BENEFICIAL

11 OWNERS.—Except as provided in paragraphs 

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

13 applicant to form a corporation or limited liabil14 ity company under the laws of the State is re15 quired to provide to the State during the forma16 tion process a list of the beneficial owners of 

17 the corporation or limited liability company 

18 that— 

19 ‘‘(i) except as provided in subpara20 graph (F), identifies each beneficial owner 

21 by— 

22 ‘‘(I) name; 

23 ‘‘(II) current street address; and 

24 ‘‘(III) a unique identifying num25 ber from a non-expired passport 


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1 issued by the United States or a non2 expired drivers license issued by a 

3 State; and 

4 ‘‘(ii) if the applicant is not the bene5 ficial owner, provides the identification in6 formation described in clause (i) relating 

7 to the applicant. 

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

9 corporation or limited liability company formed 

10 under the laws of the State— 

11 ‘‘(i) the corporation or limited liability 

12 company is required by the State to update 

13 the list of the beneficial owners of the cor14 poration or limited liability company by 

15 providing the information described in sub16 paragraph (A) to the State not later than 

17 60 days after the date of any change in the 

18 list of beneficial owners or the information 

19 required to be provided relating to each 

20 beneficial owner; 

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

22 limited liability company formed or ac23 quired by a formation agent and retained 

24 by the formation agent as a beneficial 

25 owner for transfer to another person, the 


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1 formation agent is required by the State to 

2 submit to the State an updated list of the 

3 beneficial owners and the information de4 scribed in subparagraph (A) for each such 

5 beneficial owner not later than 10 days 

6 after date on which the formation agent 

7 transfers the corporation or limited liabil8 ity company to another person; and 

9 ‘‘(iii) the corporation or limited liabil10 ity company is required by the State to 

11 submit to the State an annual filing con12 taining the list of the beneficial owners of 

13 the corporation or limited liability company 

14 and the information described in subpara15 graph (A) for each such beneficial owner. 

16 ‘‘(C) RETENTION OF INFORMATION.—Ben17 eficial ownership information relating to each 

18 corporation or limited liability company formed 

19 under the laws of the State is required to be 

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

21 year period beginning on the date that the cor22 poration or limited liability company terminates 

23 under the laws of the State. 

24 ‘‘(D) INFORMATION REQUESTS.—Bene25 ficial ownership information relating to each 


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1 corporation or limited liability company formed 

2 under the laws of the State shall be provided by 

3 the State upon receipt of— 

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

5 summons from a State agency, Federal 

6 agency, or congressional committee or sub7 committee requesting such information; 

8 ‘‘(ii) a written request made by a Fed9 eral agency on behalf of another country 

10 under an international treaty, agreement, 

11 or convention, or section 1782 of title 28, 

12 United States Code; or 

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

14 Financial Crimes Enforcement Network. 

15 ‘‘(E) NO BEARER SHARE CORPORATIONS

16 OR LIMITED LIABILITY COMPANIES.—A cor17 poration or limited liability company formed 

18 under the laws of the State may not issue a cer19 tificate in bearer form evidencing either a whole 

20 or fractional interest in the corporation or lim21 ited liability company. 

22 ‘‘(2) STATES THAT LICENSE FORMATION

23 AGENTS.— 

24 ‘‘(A) IN GENERAL.—Notwithstanding para25 graph (1), a State described in subparagraph 


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1 (B) may permit an applicant to form a corpora2 tion or limited liability company under the laws 

3 of the State, or a corporation or limited liability 

4 company formed under the laws of the State, to 

5 provide the required information to a licensed 

6 formation agent residing in the State, instead 

7 of to the State directly, if the application under 

8 paragraph (1)(A) or the update under para9 graph (1)(B) contains— 

10 ‘‘(i) the name, current business ad11 dress, contact information, and licensing 

12 number of the licensed formation agent 

13 that has agreed to maintain the informa14 tion required under this subsection; and 

15 ‘‘(ii) a certification by the licensed 

16 formation agent that the licensed forma17 tion agent has possession of the informa18 tion required under this subsection and 

19 will maintain the information in the State 

20 licensing the licensed formation agent in 

21 accordance with State law. 

22 ‘‘(B) STATES DESCRIBED.—A State de23 scribed in this subparagraph is a State that 

24 maintains a formal licensing system for forma25 tion agents that requires a formation agent to 


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1 register with the State, meet standards for fit2 ness and honesty, maintain a physical office 

3 and records within the State, undergo regular 

4 monitoring, and be subject to sanctions for non5 compliance with State requirements. 

6 ‘‘(C) LICENSED FORMATION AGENT DU7 TIES.—A licensed formation agent that receives 

8 beneficial ownership information under State 

9 law in accordance with this paragraph shall— 

10 ‘‘(i) maintain the information in the 

11 State in which the corporation or limited 

12 liability company is being or has been 

13 formed in the same manner as required for 

14 States under paragraph (1)(C); 

15 ‘‘(ii) provide the information under 

16 the same circumstances as required for 

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

18 ‘‘(iii) perform the duties of a forma19 tion agent under paragraph (3). 

20 ‘‘(D) TERMINATION OF RELATIONSHIP.— 

21 ‘‘(i) IN GENERAL.—Except as pro22 vided in clause (ii), a licensed formation 

23 agent that receives beneficial ownership in24 formation relating to a corporation or lim25 ited liability company under State law in 


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1 accordance with this paragraph and that 

2 resigns, dissolves, or otherwise ends a rela3 tionship with the corporation or limited li4 ability company shall promptly— 

5 ‘‘(I) notify the State in writing 

6 that the licensed formation agent has 

7 resigned or ended the relationship; 

8 and 

9 ‘‘(II) transmit all beneficial own10 ership information relating to the cor11 poration or limited liability company 

12 in the possession of the licensed for13 mation agent to the licensing State. 

14 ‘‘(ii) EXCEPTION.—If a licensed for15 mation agent receives written instructions 

16 from a corporation or limited liability com17 pany, the licensed formation agent may 

18 transmit the beneficial ownership informa19 tion relating to the corporation or limited 

20 liability company to another licensed for21 mation agent that is within the same State 

22 and has agreed to maintain the informa23 tion in accordance with this section. 

24 ‘‘(iii) NOTICE TO STATE.—If a li25 censed formation agent provides beneficial 


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1 ownership information to another licensed 

2 formation agent under clause (ii), the li3 censed formation agent providing the infor4 mation shall promptly notify in writing the 

5 State under the laws of which the corpora6 tion or limited liability company is formed 

7 of the identity of the licensed formation 

8 agent receiving the information. 

9 ‘‘(3) CERTAIN BENEFICIAL OWNERS.—If an ap10 plicant to form a corporation or limited liability com11 pany or a beneficial owner, officer, director, or simi12 lar agent of a corporation or limited liability com13 pany who is required to provide identification infor14 mation under this subsection does not have a non15 expired passport issued by the United States or a 

16 nonexpired drivers license or identification card 

17 issued by a State, each application described in 

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

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

20 formation agent residing in the State that the for21 mation agent— 

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

23 current residential or business street address 

24 and a legible and credible copy of the pages of 

25 a nonexpired passport issued by the government 


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1 of a foreign country bearing a photograph, date 

2 of birth, and unique identifying information for 

3 the person; 

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

5 identity of each such person; 

6 ‘‘(C) will provide the information described 

7 in subparagraph (A) and the proof of 

8 verification described in subparagraph (B) upon 

9 request under the same circumstances as re10 quired for States under paragraph (1)(D); and 

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

12 of verification under this paragraph in the 

13 State in which the corporation or limited liabil14 ity company is being or has been formed until 

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

16 date that the corporation or limited liability 

17 company terminates under the laws of the 

18 State. 

19 ‘‘(4) EXEMPT ENTITIES.— 

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

21 described in paragraph (1) shall require that an 

22 application for an entity described in subpara23 graph (C) or (D) of subsection (d)(2) that is 

24 proposed to be formed under the laws of a 

25 State and that will be exempt from the beneVerDate Mar 15 2010 05:28 Nov 16, 2011 Jkt 019200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H3416.IH H3416

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1 ficial ownership disclosure requirements under 

2 this subsection shall include in the application 

3 a certification by the applicant, or a prospective 

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

5 ‘‘(i) identifying the specific provision 

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

7 proposed to be formed would be exempt 

8 from the beneficial ownership disclosure re9 quirements under paragraphs (1), (2), and 

10 (3); 

11 ‘‘(ii) stating that the entity proposed 

12 to be formed meets the requirements for 

13 an entity described under such provision of 

14 subsection (d)(2); and 

15 ‘‘(iii) providing identification informa16 tion for the applicant or prospective offi17 cer, director, or similar agent making the 

18 certification in the same manner as pro19 vided under paragraph (1) or (3). 

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

21 the date that is 2 years after the effective date 

22 of the amendments to the formation system of 

23 a State made to comply with this section, an 

24 entity formed under the laws of the State be25 fore such effective date shall be considered to 


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1 be a corporation or limited liability company for 

2 purposes of, and shall be subject to the require3 ments of, this subsection unless an officer, di4 rector, or similar agent of the entity submits to 

5 the State a certification— 

6 ‘‘(i) identifying the specific provision 

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

8 is exempt from the requirements under 

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

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

11 requirements for an entity described under 

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

13 ‘‘(iii) providing identification informa14 tion for the officer, director, or similar 

15 agent making the certification in the same 

16 manner as provided under paragraph (1) 

17 or (3). 

18 ‘‘(C) EXEMPT ENTITIES HAVING OWNER19 SHIP INTEREST.—If an entity described in sub20 paragraph (C) or (D) of subsection (d)(2) has 

21 or will have an ownership interest in a corpora22 tion or limited liability company formed or to be 

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

24 corporation, or limited liability company in 

25 which the entity has or will have the ownership 


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1 interest shall provide the information required 

2 under this subsection relating to the entity, ex3 cept that the entity shall not be required to pro4 vide information regarding any natural person 

5 who has an ownership interest in, exercises sub6 stantial control over, or receives substantial eco7 nomic benefits from the entity. 

8 ‘‘(c) PENALTIES.— 

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

10 ‘‘(A) any person to affect interstate or for11 eign commerce by— 

12 ‘‘(i) knowingly providing, or attempt13 ing to provide, false or fraudulent bene14 ficial ownership information, including a 

15 false or fraudulent identifying photograph, 

16 to a State or licensed formation agent 

17 under State law in accordance with this 

18 section; 

19 ‘‘(ii) willfully failing to provide com20 plete or updated beneficial ownership infor21 mation to a State or licensed formation 

22 agent under State law in accordance with 

23 this section; or 

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1 quest for beneficial ownership information, 

2 except— 

3 ‘‘(I) to the extent necessary to 

4 fulfill the authorized request; or 

5 ‘‘(II) as authorized by the entity 

6 that issued the subpoena, summons, 

7 or other request; or 

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

9 knowingly failing to obtain or maintain credible, 

10 legible, and updated beneficial ownership infor11 mation, including any required identifying pho12 tograph. 

13 ‘‘(2) CIVIL AND CRIMINAL PENALTIES.—In ad14 dition to any civil or criminal penalty that may be 

15 imposed by a State, any person who violates para16 graph (1)— 

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

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

19 and 

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

21 States Code, imprisoned for not more than 3 

22 years, or both. 

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

24 ‘‘(1) BENEFICIAL OWNER.— 


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

2 subparagraph (B), with respect to a corporation 

3 or limited liability company, the term ‘beneficial 

4 owner’ means a natural person who— 

5 ‘‘(i) directly or indirectly, has at least 

6 as great an ownership interest in the cor7 poration or limited liability company as 

8 any other natural person; or 

9 ‘‘(ii) has responsibility for directing 

10 the regular operations of the corporation 

11 or limited liability company. 

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

13 owner’ does not include— 

14 ‘‘(i) a minor child; or 

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

16 intermediary, custodian, or agent on behalf 

17 of another person. 

18 ‘‘(C) APPLICABILITY OF EXCEPTIONS.— 

19 The exceptions under subparagraph (B) shall 

20 not apply if used for the purpose of evading or 

21 circumventing the provisions of subparagraph 

22 (A) or subsection (a). 

23 ‘‘(2) CORPORATION; LIMITED LIABILITY COM24 PANY.—The terms ‘corporation’ and ‘limited liability 

25 company’— 


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

2 under the laws of the applicable State; 

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

4 eligible for registration or registered to do busi5 ness as a corporation or limited liability com6 pany under the laws of the applicable State; 

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

8 discloses in the application by the entity to 

9 form under the laws of the State or, if the enti10 ty was formed before the date of the enactment 

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

12 State law— 

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

14 issuer of a class of securities registered 

15 under section 12 of the Securities Ex16 change Act of 1934 (15 U.S.C. 781) or 

17 that is required to file reports under sec18 tion 15(d) of that Act (15 U.S.C. 78o(d)); 

19 ‘‘(ii) a business concern constituted or 

20 sponsored by a State, a political subdivi21 sion of a State, under an interstate com22 pact between 2 or more States, by a de23 partment or agency of the United States, 

24 or under the laws of the United States; 


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1 ‘‘(iii) a depository institution (as de2 fined in section 3 of the Federal Deposit 

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

4 ‘‘(iv) a credit union (as defined in sec5 tion 101 of the Federal Credit Union Act 

6 (12 U.S.C. 1752)); 

7 ‘‘(v) a bank holding company (as de8 fined in section 2 of the Bank Holding 

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

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

11 section 3 of the Securities Exchange Act of 

12 1934 (15 U.S.C. 78c)) that is registered 

13 under section 15 of the Securities and Ex14 change Act of 1934 (15 U.S.C. 78o); 

15 ‘‘(vii) an exchange or clearing agency 

16 (as defined in section 3 of the Securities 

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

18 that is registered under section 6 or 17A 

19 of the Securities Exchange Act of 1934 

20 (15 U.S.C. 78f and 78q–1); 

21 ‘‘(viii) an investment company (as de22 fined in section 3 of the Investment Com23 pany Act of 1940 (15 U.S.C. 80a–3)) or 

24 an investment advisor (as defined in sec25 tion 202(11) of the Investment Advisors 


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

2 company or adviser is registered with the 

3 Securities and Exchange Commission, or 

4 has filed an application for registration 

5 which has not been denied, under the In6 vestment Company Act of 1940 (15 U.S.C. 

7 80a–1 et seq.) or the Investment Advisor 

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

9 ‘‘(ix) an insurance company (as de10 fined in section 2 of the Investment Com11 pany Act of 1940 (15 U.S.C. 80a–2)); 

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

13 section 1a of the Commodity Exchange Act 

14 (7 U.S.C. 1a)), or a futures commission 

15 merchant, introducing broker, commodity 

16 pool operator, or commodity trading advi17 sor (as defined in section 1a of the Com18 modity Exchange Act (7 U.S.C. 1a)) that 

19 is registered with the Commodity Futures 

20 Trading Commission; 

21 ‘‘(xi) a public accounting firm reg22 istered in accordance with section 102 of 

23 the Sarbanes–Oxley Act (15 U.S.C. 7212); 

24 ‘‘(xii) a public utility that provides 

25 telecommunications service, electrical 


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1 power, natural gas, or water and sewer 

2 services, within the United States; 

3 ‘‘(xiii) a charity or nonprofit entity 

4 that is described in section 501(c), 527, or 

5 4947(a)(1) of the Internal Revenue Code 

6 of 1986, has not been denied tax exempt 

7 status, and has filed the most recently due 

8 annual information return with the Inter9 nal Revenue Service, if required to file 

10 such a return; 

11 ‘‘(xiv) any business concern that— 

12 ‘‘(I) employs more than 20 em13 ployees on a full time basis in the 

14 United States; 

15 ‘‘(II) files income tax returns in 

16 the United States demonstrating more 

17 than $10,000,000 in gross receipts or 

18 sales; and 

19 ‘‘(III) has an operating presence 

20 at a physical office within the United 

21 States; or 

22 ‘‘(xv) any corporation or limited liabil23 ity company formed and owned by an enti24 ty described in clause (i), (ii), (iii), (iv), 


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

2 (xiii), or (xiv); and 

3 ‘‘(D) do not include any individual busi4 ness concern or class of business concerns 

5 which the Secretary of the Treasury, with the 

6 written concurrence of the Attorney General of 

7 the United States, has determined in writing 

8 should be exempt from the requirements of sub9 section (a), because requiring beneficial owner10 ship information from the business concern 

11 would not serve the public interest and would 

12 not assist law enforcement efforts to detect, 

13 prevent, or punish terrorism, money laundering, 

14 tax evasion, or other misconduct. 

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

16 agent’ means a person who, for compensation— 

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

18 assist in the formation of a corporation or lim19 ited liability company under the laws of a State; 

20 or 

21 ‘‘(B) purchases, sells, or transfers the pub22 lic records that form a corporation or limited li23 ability company.’’. 

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

25 the amendments made by this Act, the Secretary of 


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1 the Treasury, in consultation with the Secretary of 

2 Homeland Security and the Attorney General of the 

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

4 (A) clarify the definitions under section 

5 5333(d) of title 31, United States Code, as 

6 added by paragraph (1); and 

7 (B) specify how to verify beneficial owner8 ship information or other identification infor9 mation for purposes of such section 5333, in10 cluding whether the verification procedures 

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

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

13 whether such verification process should require 

14 the notarization of signatures. 

15 (3) CONFORMING AMENDMENTS.—Title 31, 

16 United States Code, is amended— 

17 (A) in section 5321(a)— 

18 (i) in paragraph (1), by striking ‘‘sec19 tions 5314 and 5315’’ each place it ap20 pears and inserting ‘‘sections 5314, 5315, 

21 and 5333’’; and 

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

23 ‘‘(except section 5333)’’ after ‘‘sub24 chapter’’ each place it appears; and 


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

2 5315 or 5324’’ each place it appears and insert3 ing ‘‘section 5315, 5324, or 5333’’. 

4 (4) TABLE OF CONTENTS.—The table of con5 tents of chapter 53 of title 31, United States Code, 

6 is amended by inserting after the item relating to 

7 section 5332 the following: 

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

8 (5) RESTRICTIONS ON PUBLIC ACCESS.—A 

9 State may— 

10 (A) restrict public access to all or any por11 tion of the beneficial ownership information 

12 provided to the State as described under section 

13 5332 of title 31, United States Code, as added 

14 by this Act; and 

15 (B) by statute, regulation, order, or inter16 pretation adopted or issued by the State after 

17 the date of enactment of this Act, provide for 

18 public access to all or any portion of such infor19 mation. 

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

21 the amendments made by this Act do not impose 

22 any obligation on a State to verify the name, ad23 dress, or identity of a beneficial owner whose infor24 mation is submitted to such State under section 


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1 5333 of title 31, United States Code, as added by 

2 this Act. 

3 (b) FUNDING AUTHORIZATION.— 

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

5 title 31, United States Code, during the 3-year pe6 riod beginning on the date of enactment of this Act, 

7 funds shall be made available to each State to pay 

8 reasonable costs relating to compliance with the re9 quirements of such section. 

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

11 States against the misuse of United States corpora12 tions and limited liability companies with hidden 

13 owners, funds shall be provided to each State to 

14 carry out the purposes described in paragraph (1) 

15 from one or more of the following sources: 

16 (A) Upon application by a State, and with17 out further appropriation, the Secretary of the 

18 Treasury may make available to the State un19 obligated balances described in section 

20 9703(g)(4)(B) of title 31, United States Code, 

21 in the Department of the Treasury Forfeiture 

22 Fund established under section 9703(a) of title 

23 31, United States Code. 

24 (B) Upon application by a State, after con25 sultation with the Secretary of the Treasury, 


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1 and without further appropriation, the Attorney 

2 General of the United States may make avail3 able to the State excess unobligated balances 

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

5 United States Code) in the Department of Jus6 tice Assets Forfeiture Fund established under 

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

8 (3) MAXIMUM AMOUNTS.— 

9 (A) DEPARTMENT OF THE TREASURY.— 

10 The Secretary of the Treasury may not make 

11 available to States a total of more than 

12 $20,000,000 under paragraph (2)(A). 

13 (B) DEPARTMENT OF JUSTICE.—The At14 torney General of the United States may not 

15 make available to States a total of more than 

16 $10,000,000 under paragraph (2)(B). 

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

18 the 180-day period beginning on the date of the en19 actment of this Act, the Secretary of the Treasury 

20 and the Attorney General shall, jointly, issue regula21 tions setting forth the procedures for States to apply 

22 for funds under this subsection, including deter23 mining which State measures should be funded to 

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

25 policies, procedures, or system modifications. 


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

2 or the amendments made by this section authorizes the 

3 Secretary of the Treasury to withhold from a State any 

4 funding otherwise available to the State because of a fail5 ure by that State to comply with section 5333 of title 31, 

6 United States Code. Not later than June 1, 2014, the 

7 Comptroller General of the United States shall submit to 

8 the Committee on Financial Services of the House of Rep9 resentatives and the Committee on Homeland Security 

10 and Governmental Affairs of the Senate a report— 

11 (1) identifying which States obtain beneficial 

12 ownership information as described in such section 

13 5333; 

14 (2) with respect to each State that does not ob15 tain such information, whether corporations and lim16 ited liability companies formed under the laws of 

17 such State are in compliance with such section 5333 

18 and providing the specified beneficial ownership in19 formation to the Secretary of the Treasury; and 

20 (3) whether the Department of the Treasury is 

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

22 what steps it must take to come into compliance 

23 with this section. 

24 (d) FEDERAL CONTRACTORS.—Not later than the be25 ginning of fiscal year 2014, the Administrator for Federal 


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1 Procurement Policy shall revise the Federal Acquisition 

2 Regulation maintained under section 1303(a)(1) of title 

3 41, United States Code, to require any contractor who is 

4 subject to the requirement to disclose beneficial ownership 

5 information under section 5333 of title 31, United States 

6 Code, to provide the information required to be disclosed 

7 under such section to the Federal Government as part of 

8 any bid or proposal for a contract with a value threshold 

9 in excess of the simplified acquisition threshold under sec10 tion 134 of title 41, United States Code. 

11 (e) ANTI-MONEY LAUNDERING OBLIGATIONS OF

12 FORMATION AGENTS.— 

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

14 31, United States Code, is amended— 

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

16 at the end; 

17 (B) by redesignating subparagraph (Z) as 

18 subparagraph (AA); and 

19 (C) by inserting after subparagraph (Y) 

20 the following: 

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

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

23 to form, or assist in formation of, a cor24 poration or limited liability company under 

25 the laws of a State; or 


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

2 public records that form a corporation or 

3 limited liability company; or’’. 

4 (2) DEADLINE FOR ANTI-MONEY LAUNDERING

5 RULE FOR FORMATION AGENTS.— 

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

7 days after the date of enactment of this Act, 

8 the Secretary of the Treasury, in consultation 

9 with the Attorney General of the United States 

10 and the Commissioner of the Internal Revenue 

11 Service, shall publish a proposed rule in the 

12 Federal Register requiring persons described in 

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

14 Code, as amended by this subsection, to estab15 lish anti-money laundering programs under sub16 section (h) of section 5318 of that title. 

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

18 days after the date of enactment of this Act, 

19 the Secretary of the Treasury shall publish the 

20 rule described in this subsection in final form in 

21 the Federal Register. 

22 (C) EXCLUSIONS.—Any rule promulgated 

23 under this subsection shall exclude from the 

24 category of persons involved in forming a cor25 poration or limited liability company— 


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1 (i) any government agency; and 

2 (ii) any attorney or law firm that uses 

3 a paid formation agent operating within 

4 the United States to form the corporation 

5 or limited liability company. 

6 SEC. 4. STUDIES AND REPORTS. 

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

8 years after the date of enactment of this Act, the Comp9 troller General of the United States shall conduct a study 

10 and submit to the Congress a report— 

11 (1) identifying each State that has procedures 

12 that enable persons to form or register under the 

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

14 entities, and the nature of those procedures; 

15 (2) identifying each State that requires persons 

16 seeking to form or register partnerships, trusts, or 

17 other legal entities under the laws of the State to 

18 provide information about the beneficial owners (as 

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

20 31, United States Code, as added by this Act) or 

21 beneficiaries of such entities, and the nature of the 

22 required information; 

23 (3) evaluating whether the lack of available 

24 beneficial ownership information for partnerships, 

25 trusts, or other legal entities— 


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1 (A) raises concerns about the involvement 

2 of such entities in terrorism, money laundering, 

3 tax evasion, securities fraud, or other mis4 conduct; and 

5 (B) has impeded investigations into enti6 ties suspected of such misconduct; and 

7 (4) evaluating whether the failure of the United 

8 States to require beneficial ownership information 

9 for partnerships and trusts formed or registered in 

10 the United States has elicited international criticism 

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

12 or is planning to take in response. 

13 (b) EFFECTIVENESS OF INCORPORATION PRAC14 TICES.—Not later than 5 years after the date of enact15 ment of this Act, the Comptroller General of the United 

16 States shall conduct a study and submit to the Congress 

17 a report assessing the effectiveness of incorporation prac18 tices implemented under this Act and the amendments 

19 made by this Act in— 

20 (1) providing law enforcement agencies with 

21 prompt access to reliable, useful, and complete bene22 ficial ownership information; and 

23 (2) strengthening the capability of law enforce24 ment agencies to combat incorporation abuses, civil 

25 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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