II 

115TH CONGRESS 

1ST SESSION S. 1454 

To ensure that persons who form corporations in the United States disclose 

the beneficial owners of those corporations, in order to prevent the 

formation of corporations with hidden owners, stop the misuse of United 

States corporations by wrongdoers, and assist law enforcement in detecting, preventing, and punishing terrorism, money laundering, tax evasion, 

and other criminal and civil misconduct involving United States corporations, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 28, 2017 

Mr. WHITEHOUSE (for himself, Mrs. FEINSTEIN, and Mr. GRASSLEY) introduced the following bill; which was read twice and referred to the Committee on the Judiciary 

A BILL 

To ensure that persons who form corporations in the United 

States disclose the beneficial owners of those corporations, in order to prevent the formation of corporations 

with hidden owners, stop the misuse of United States 

corporations by wrongdoers, and assist law enforcement 

in detecting, preventing, and punishing terrorism, money 

laundering, tax evasion, and other criminal and civil misconduct involving United States corporations, and for 

other purposes. 

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


lotter on DSKBCFDHB2PROD with BILLS
2 

•S 1454 IS

1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘True Incorporation 

3 Transparency for Law Enforcement Act’’ or the ‘‘TITLE 

4 Act’’. 

5 SEC. 2. FINDINGS. 

6 Congress finds the following: 

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

8 liability companies are being formed under the laws 

9 of the States each year. 

10 (2) Very few States obtain meaningful informa11 tion about the beneficial owners of the corporations 

12 and limited liability companies formed under their 

13 laws. 

14 (3) A person forming a corporation or limited 

15 liability company within the United States typically 

16 provides less information to the State of incorpora17 tion than is needed to obtain a bank account or driv18 er’s license and typically does not name a single ben19 eficial owner. 

20 (4) Terrorists and other criminals have ex21 ploited the weaknesses in State formation proce22 dures to conceal their identities when forming cor23 porations or limited liability companies in the United 

24 States, and have then used the newly created enti25 ties to support terrorist organizations, drug traf26 ficking organizations, and international organized 


lotter on DSKBCFDHB2PROD with BILLS
3 

•S 1454 IS

1 crime groups, as well as commit misconduct affect2 ing interstate and international commerce such as 

3 trafficking in illicit drugs, illegal arms trafficking, 

4 sex trafficking, money laundering, tax evasion, 

5 health care fraud, Internet-based fraud, securities 

6 fraud, financial fraud, intellectual property crimes, 

7 and acts of corruption. 

8 (5) Among those who have abused State incor9 poration procedures is Victor Bout, a Russian arms 

10 dealer who used at least 12 companies incorporated 

11 in Texas, Florida, and Delaware to carry out his ac12 tivities, and has been convicted, in part, for con13 spiring to sell weapons to a terrorist organization 

14 trying to kill citizens of the United States and Fed15 eral officers and employees. In addition, Iranian in16 terests used a shell company formed in New York to 

17 purchase a 36-story building on Fifth Avenue in 

18 Manhattan and forwarded millions of dollars in rent 

19 each year to Iran until authorities in the United 

20 States learned of the transfers and seized the build21 ing. 

22 (6) Law enforcement efforts to investigate cor23 porations and limited liability companies suspected 

24 of wrongdoing have been impeded by the lack of 

25 available beneficial ownership information, as docuVerDate Sep 11 2014 04:19 Jul 08, 2017 Jkt 069200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1454.IS S1454

lotter on DSKBCFDHB2PROD with BILLS
4 

•S 1454 IS

1 mented in reports and testimony by officials from 

2 the Department of Justice, the Department of 

3 Homeland Security, the Financial Crimes Enforce4 ment Network of the Department of the Treasury, 

5 the Internal Revenue Service, the Government Ac6 countability Office, and others. 

7 (7) In December 2016, a leading international 

8 anti-money laundering and anti-terrorist financing 

9 organization, the Financial Action Task Force on 

10 Money Laundering (in this section referred to as 

11 ‘‘FATF’’), of which the United States is a member, 

12 issued a report that criticized the United States for 

13 failing to comply with a FATF standard on the need 

14 to collect beneficial ownership information. The re15 port called the United States framework in this area 

16 ‘‘seriously deficient’’ and urged the United States to 

17 correct this deficiency. 

18 (8) In response to the FATF report and to 

19 strengthen measures to protect homeland security, 

20 Federal officials have repeatedly urged the States to 

21 improve their formation practices by obtaining bene22 ficial ownership information for the corporations and 

23 limited liability companies formed under the laws of 

24 such States. But the States continue to form mil25 lions of corporations with hidden owners. 


lotter on DSKBCFDHB2PROD with BILLS
5 

•S 1454 IS

1 (9) Many States have established automated 

2 procedures that allow a person to form a new cor3 poration or limited liability company within the 

4 State within 24 hours of filing an online application, 

5 without any prior review of the application by a 

6 State official. 

7 (10) Dozens of Internet websites highlight the 

8 anonymity of beneficial owners allowed under the 

9 formation practices of some States, point to those 

10 practices as a reason to incorporate in those States, 

11 and list those States together with offshore jurisdic12 tions as preferred locations for the formation of new 

13 corporations, essentially inviting terrorists and other 

14 wrongdoers to form entities within the United 

15 States. 

16 (11) In contrast to practices in the United 

17 States, countries around the world are working to 

18 collect beneficial ownership information. The United 

19 Kingdom now collects beneficial ownership informa20 tion for all companies formed under its laws and 

21 makes the information available to the public. All 28 

22 countries in the European Union are required to cre23 ate, maintain, and update registries of the beneficial 

24 ownership information of the corporations formed 

25 under the laws of those countries. The information 


lotter on DSKBCFDHB2PROD with BILLS
6 

•S 1454 IS

1 must be freely available to law enforcement agencies, 

2 financial institutions, and third parties that can 

3 demonstrate a legitimate interest in the information. 

4 Afghanistan, Ghana, Kenya, Nigeria, South Africa, 

5 the Ukraine, and many other countries are in the 

6 process of establishing mechanisms to collect bene7 ficial ownership information for the companies cre8 ated under their laws. 

9 (12) To reduce the vulnerability of the United 

10 States to wrongdoing by United States corporations 

11 and limited liability companies with hidden owners, 

12 protect interstate and international commerce from 

13 terrorists and other criminals misusing United 

14 States corporations and limited liability companies, 

15 strengthen law enforcement investigations of suspect 

16 corporations and limited liability companies, set min17 imum standards for and level the playing field 

18 among State formation practices, and bring the 

19 United States into compliance with international 

20 anti-money laundering and anti-terrorist financing 

21 standards, Federal legislation is needed to require 

22 the States to obtain beneficial ownership information 

23 for the corporations and limited liability companies 

24 formed under the laws of such States. 


lotter on DSKBCFDHB2PROD with BILLS
7 

•S 1454 IS

1 SEC. 3. TRANSPARENT INCORPORATION PRACTICES. 

2 (a) TRANSPARENT INCORPORATION PRACTICES.— 

3 Part E of title I of the Omnibus Crime Control and Safe 

4 Streets Act of 1968 (42 U.S.C. 3750 et seq.) is amended 

5 by adding at the end the following: 

6 ‘‘Subpart 4—Transparent Incorporation Practices 

7 ‘‘SEC. 531. TRANSPARENT INCORPORATION PRACTICES. 

8 ‘‘(a) INCORPORATION SYSTEMS.— 

9 ‘‘(1) IN GENERAL.—To protect the United 

10 States from the misuse affecting interstate or for11 eign commerce of corporations and limited liability 

12 companies with hidden owners, each State that re13 ceives funding under subpart 1 shall, not later than 

14 3 years after the date of enactment of this subpart, 

15 use an incorporation system that meets the following 

16 requirements: 

17 ‘‘(A) IDENTIFICATION OF BENEFICIAL

18 OWNERS.—Except as provided in paragraph 

19 (3), each applicant to form a corporation or 

20 limited liability company under the laws of the 

21 State is required to provide to the State during 

22 the formation process information on the bene23 ficial owners of the corporation or limited liabil24 ity company that includes— 

25 ‘‘(i) identifies each beneficial owner by 

26 name, current residential or business street 


lotter on DSKBCFDHB2PROD with BILLS
8 

•S 1454 IS

1 address, and a unique identifying number 

2 from a nonexpired passport issued by the 

3 United States or a nonexpired drivers li4 cense or identification card issued by a 

5 State; 

6 ‘‘(ii) if any beneficial owner exercises 

7 control over the corporation or limited li8 ability company through another legal enti9 ty, such as a corporation, partnership, or 

10 trust, identifies each such legal entity and 

11 each such beneficial owner who will use 

12 that entity to exercise control over the cor13 poration or limited liability company; and 

14 ‘‘(iii) if the applicant is not a bene15 ficial owner, provides the identification in16 formation described in clause (i) relating 

17 to the applicant. 

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

19 corporation or limited liability company formed 

20 under the laws of the State— 

21 ‘‘(i) the corporation or limited liability 

22 company is required by the State to submit 

23 to the State an updated list of the bene24 ficial owners of the corporation or limited 

25 liability company and the information deVerDate Sep 11 2014 04:19 Jul 08, 2017 Jkt 069200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1454.IS S1454

lotter on DSKBCFDHB2PROD with BILLS
9 

•S 1454 IS

1 scribed in subparagraph (A) for each such 

2 beneficial owner not later than 60 days 

3 after the date of any change in the bene4 ficial owners of the corporation or limited 

5 liability company; 

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

7 limited liability company formed or ac8 quired by a formation agent and retained 

9 by the formation agent as a beneficial 

10 owner for transfer to another person, the 

11 formation agent is required by the State to 

12 submit to the State an updated list of the 

13 beneficial owners and the information de14 scribed in subparagraph (A) for each such 

15 beneficial owner not later than 10 days 

16 after the date on which the formation 

17 agent transfers the corporation or limited 

18 liability company to another person; and 

19 ‘‘(iii) the corporation or limited liabil20 ity company is required by the State to 

21 submit to the State an annual filing con22 taining the list of the beneficial owners of 

23 the corporation or limited liability company 

24 and the information described in subpara25 graph (A) for each such beneficial owner. 


lotter on DSKBCFDHB2PROD with BILLS
10 

•S 1454 IS

1 ‘‘(C) RETENTION OF INFORMATION.—Ben2 eficial ownership information relating to each 

3 corporation or limited liability company formed 

4 under the laws of the State is required to be 

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

6 year period beginning on the date that the cor7 poration or limited liability company terminates 

8 under the laws of the State. 

9 ‘‘(D) INFORMATION REQUESTS.—Bene10 ficial ownership information relating to each 

11 corporation or limited liability company formed 

12 under the laws of the State shall be provided by 

13 the State not later than 30 days after receipt 

14 of— 

15 ‘‘(i) a civil, criminal, or administrative 

16 subpoena or a summons, or an equivalent 

17 of such a subpoena or summons, from a 

18 local, State, or Federal agency or a con19 gressional committee or subcommittee; 

20 ‘‘(ii) a written request made by a Fed21 eral agency on behalf of another country 

22 under an international treaty, agreement, 

23 or convention, or an order under section 

24 3512 of title 18, United States Code, or 

25 section 1782 of title 28, United States 


lotter on DSKBCFDHB2PROD with BILLS
11 

•S 1454 IS

1 Code, issued in response to a request for 

2 assistance from a foreign country; 

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

4 Financial Crimes Enforcement Network of 

5 the Department of the Treasury; or 

6 ‘‘(iv) a written request made by a fi7 nancial institution, with the consent of the 

8 customer, for purposes of compliance by 

9 the financial institution with customer due 

10 diligence requirements under subsections 

11 (a)(2) and (h)(2) of section 5318 of title 

12 31, United States Code, which the request13 ing financial institution shall maintain and 

14 safeguard in accordance with all applicable 

15 Federal and State laws related to bank 

16 records, and destroy upon satisfaction of 

17 those due diligence requirements, con18 sistent with all applicable Federal and 

19 State laws related to bank records. 

20 ‘‘(E) NO BEARER SHARE CORPORA21 TIONS.—A corporation or limited liability com22 pany formed under the laws of the State may 

23 not issue a certificate in bearer form evidencing 

24 either a whole or fractional interest in the cor25 poration or limited liability company. 


lotter on DSKBCFDHB2PROD with BILLS
12 

•S 1454 IS

1 ‘‘(2) CERTAIN BENEFICIAL OWNERS.—If an ap2 plicant to form a corporation or limited liability com3 pany or a beneficial owner, officer, director, or simi4 lar agent of a corporation or limited liability com5 pany who is required to provide identification infor6 mation under this section does not have a non7 expired passport issued by the United States or a 

8 nonexpired drivers license or identification card 

9 issued by a State, each application described in 

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

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

12 formation agent residing in the State that the for13 mation agent— 

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

15 current residential or business street address 

16 and a legible and credible copy of the pages of 

17 a nonexpired passport issued by the government 

18 of a foreign country bearing a photograph, date 

19 of birth, and unique identifying information for 

20 the person; 

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

22 identity of each such person; 

23 ‘‘(C) will provide the information described 

24 in subparagraph (A) and the proof of 

25 verification described in subparagraph (B) upon 


lotter on DSKBCFDHB2PROD with BILLS
13 

•S 1454 IS

1 request under the same circumstances as re2 quired for States under paragraph (1)(D); and 

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

4 of verification under this paragraph in the 

5 State in which the corporation or limited liabil6 ity company is being or has been formed until 

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

8 date that the corporation or limited liability 

9 company terminates under the laws of the 

10 State. 

11 ‘‘(3) EXEMPT ENTITIES.— 

12 ‘‘(A) IN GENERAL.—An incorporation sys13 tem described in paragraph (1) shall require 

14 that an application for an entity described in 

15 clause (i) or (ii) of subsection (d)(2)(B) that is 

16 proposed to be formed under the laws of a 

17 State and that will be exempt from the bene18 ficial ownership disclosure requirements under 

19 this section shall include in the application a 

20 certification by the applicant, or a prospective 

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

22 ‘‘(i) identifying the specific provision 

23 of subsection (d)(2)(B) under which the 

24 entity proposed to be formed would be ex25 empt from the beneficial ownership discloVerDate Sep 11 2014 04:19 Jul 08, 2017 Jkt 069200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S1454.IS S1454

lotter on DSKBCFDHB2PROD with BILLS
14 

•S 1454 IS

1 sure requirements under paragraphs (1) 

2 and (2); 

3 ‘‘(ii) stating that the entity proposed 

4 to be formed meets the requirements for 

5 an entity described under such provision of 

6 subsection (d)(2)(B); and 

7 ‘‘(iii) providing identification informa8 tion for the applicant or prospective offi9 cer, director, or similar agent making the 

10 certification in the same manner as pro11 vided under paragraph (1). 

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

13 the date that is 2 years after the date on which 

14 a State begins requiring beneficial ownership 

15 information in compliance with this section, an 

16 entity formed under the laws of the State be17 fore such effective date shall be considered to 

18 be a corporation or limited liability company for 

19 purposes of this subsection unless an officer, di20 rector, or similar agent of the entity submits to 

21 the State a certification— 

22 ‘‘(i) identifying the specific provision 

23 of subsection (d)(2)(B) under which the 

24 entity is exempt from the requirements 

25 under paragraphs (1) and (2); 


lotter on DSKBCFDHB2PROD with BILLS
15 

•S 1454 IS

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

2 requirements for an entity described under 

3 such provision of subsection (d)(2)(B); and 

4 ‘‘(iii) providing identification informa5 tion for the officer, director, or similar 

6 agent making the certification in the same 

7 manner as provided under paragraph (1). 

8 ‘‘(C) EXEMPT ENTITIES WITH AN OWNER9 SHIP INTEREST.—As part of the beneficial own10 ership information required under subsection 

11 (a)(1), neither an applicant seeking to form a 

12 corporation or limited liability company nor a 

13 corporation or limited liability company pro14 viding updated information is required to iden15 tify the beneficial owners of any entity that 

16 qualifies as an exempt entity under subsection 

17 (d)(2)(B). 

18 ‘‘(b) PENALTIES.— 

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

20 person to affect interstate or foreign commerce by 

21 failing to comply with this subpart by— 

22 ‘‘(A) knowingly providing, or attempting to 

23 provide, false or fraudulent beneficial ownership 

24 information, including a false or fraudulent 


lotter on DSKBCFDHB2PROD with BILLS
16 

•S 1454 IS

1 identifying photograph, to a State or formation 

2 agent; 

3 ‘‘(B) willfully failing to provide complete or 

4 updated beneficial ownership information to a 

5 State or formation agent; 

6 ‘‘(C) knowingly disclosing the existence of 

7 a subpoena or summons (or the equivalent of a 

8 subpoena or summons) or a request for bene9 ficial ownership information described in sub10 section (a)(1)(D), except— 

11 ‘‘(i) to the extent necessary to fulfill 

12 the authorized request; or 

13 ‘‘(ii) as authorized by the entity that 

14 issued the request described in subsection 

15 (a)(1)(D); or 

16 ‘‘(D) in the case of a formation agent, 

17 knowingly failing to obtain or maintain credible, 

18 legible, and updated beneficial ownership infor19 mation, including any required identifying pho20 tograph. 

21 ‘‘(2) CIVIL AND CRIMINAL PENALTIES.—In ad22 dition to any civil or criminal penalty that may be 

23 imposed by a State, any person who violates para24 graph (1)— 


lotter on DSKBCFDHB2PROD with BILLS
17 

•S 1454 IS

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

2 for a civil penalty of not more than $1,000,000; 

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 ‘‘(c) RULES.— 

8 ‘‘(1) IN GENERAL.—To carry out this subpart, 

9 the Attorney General of the United States, the Sec10 retary of Homeland Security, and the Secretary of 

11 the Treasury may issue joint guidance or a joint rule 

12 to specify how to verify beneficial ownership or other 

13 identification information provided under this sec14 tion, including under subsection (a)(2). 

15 ‘‘(2) LIMITATION.—Any guidance or rule issued 

16 under paragraph (1)— 

17 ‘‘(A) may explain and clarify the definition 

18 of the term ‘beneficial owner’; but 

19 ‘‘(B) may not amend or alter the definition 

20 of the term ‘beneficial owner’ through changes 

21 to the definition directly or through the manner 

22 of implementation. 

23 ‘‘(3) NO GUIDANCE.—A failure to issue guid24 ance or a rule under paragraph (1) shall not delay 


lotter on DSKBCFDHB2PROD with BILLS
18 

•S 1454 IS

1 the effective date of the requirements under this 

2 subpart. 

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

4 ‘‘(1) BENEFICIAL OWNER.— 

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

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

7 means each natural person who, directly or in8 directly— 

9 ‘‘(i) exercises substantial control over 

10 a corporation or limited liability company 

11 through ownership interests, voting rights, 

12 agreement, or otherwise; or 

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

14 receives substantial economic benefits from 

15 the assets of a corporation or the assets of 

16 a limited liability company. 

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

18 owner’ shall not include— 

19 ‘‘(i) a minor child; 

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

21 intermediary, custodian, or agent on behalf 

22 of another person; 

23 ‘‘(iii) a person acting solely as an em24 ployee of a corporation or limited liability 

25 company and whose control over or ecoVerDate Sep 11 2014 04:19 Jul 08, 2017 Jkt 069200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S1454.IS S1454

lotter on DSKBCFDHB2PROD with BILLS
19 

•S 1454 IS

1 nomic benefits from the corporation or lim2 ited liability company derives solely from 

3 the employment status of the person; or 

4 ‘‘(iv) a creditor of a corporation or 

5 limited liability company, unless the cred6 itor also meets the requirements of sub7 paragraph (A). 

8 ‘‘(C) ANTI-ABUSE RULE.—The exceptions 

9 under subparagraph (B) shall not apply if used 

10 for the purpose of evading, circumventing, or 

11 abusing the provisions of subparagraph (A) or 

12 subsection (a). 

13 ‘‘(2) CORPORATION; LIMITED LIABILITY COM14 PANY.— 

15 ‘‘(A) IN GENERAL.—Subject to subpara16 graph (B), the terms ‘corporation’ and ‘limited 

17 liability company’— 

18 ‘‘(i) have the meanings given such 

19 terms under the laws of the applicable 

20 State; and 

21 ‘‘(ii) include any non-United States 

22 entity eligible for registration or registered 

23 to do business as a corporation or limited 

24 liability company under the laws of the ap25 plicable State. 


lotter on DSKBCFDHB2PROD with BILLS
20 

•S 1454 IS

1 ‘‘(B) EXEMPT ENTITIES.—Subject to sub2 section (a)(3), the terms ‘corporation’ and ‘lim3 ited liability company’ do not include an entity 

4 that— 

5 ‘‘(i) is— 

6 ‘‘(I) a business concern that is an 

7 issuer of a class of securities reg8 istered under section 12 of the Securi9 ties Exchange Act of 1934 (15 U.S.C. 

10 781) or that is required to file reports 

11 under section 15(d) of that Act (15 

12 U.S.C. 78o(d)); 

13 ‘‘(II) a business concern con14 stituted or sponsored by a State, a po15 litical subdivision of a State, under an 

16 interstate compact between two or 

17 more States, by a department or 

18 agency of the United States, under 

19 the laws of the United States, or by 

20 an international organization of which 

21 the United States is a member; 

22 ‘‘(III) a depository institution (as 

23 defined in section 3 of the Federal 

24 Deposit Insurance Act (12 U.S.C. 

25 1813)); 


lotter on DSKBCFDHB2PROD with BILLS
21 

•S 1454 IS

1 ‘‘(IV) a credit union (as defined 

2 in section 101 of the Federal Credit 

3 Union Act (12 U.S.C. 1752)); 

4 ‘‘(V) a bank holding company (as 

5 defined in section 2 of the Bank Hold6 ing Company Act of 1956 (12 U.S.C. 

7 1841)); 

8 ‘‘(VI) a broker or dealer (as de9 fined in section 3 of the Securities 

10 Exchange Act of 1934 (15 U.S.C. 

11 78c)) that is registered under section 

12 15 of the Securities Exchange Act of 

13 1934 (15 U.S.C. 78o); 

14 ‘‘(VII) an exchange or clearing 

15 agency (as defined in section 3 of the 

16 Securities Exchange Act of 1934 (15 

17 U.S.C. 78c)) that is registered under 

18 section 6 or 17A of the Securities Ex19 change Act of 1934 (15 U.S.C. 78f 

20 and 78q–1); 

21 ‘‘(VIII) an investment company 

22 (as defined in section 3 of the Invest23 ment Company Act of 1940 (15 

24 U.S.C. 80a–3)) or an investment advi25 sor (as defined in section 202(11) of 


lotter on DSKBCFDHB2PROD with BILLS
22 

•S 1454 IS

1 the Investment Advisors Act of 1940 

2 (15 U.S.C. 80b–2(11))), if the com3 pany or adviser is registered with the 

4 Securities and Exchange Commission, 

5 or has filed an application for reg6 istration which has not been denied, 

7 under the Investment Company Act of 

8 1940 (15 U.S.C. 80a–1 et seq.) or the 

9 Investment Advisor Act of 1940 (15 

10 U.S.C. 80b–1 et seq.); 

11 ‘‘(IX) an insurance company (as 

12 defined in section 2 of the Investment 

13 Company Act of 1940 (15 U.S.C. 

14 80a–2)) which is formed under the 

15 laws of and regulated by a State; 

16 ‘‘(X) a registered entity (as de17 fined in section 1a of the Commodity 

18 Exchange Act (7 U.S.C. 1a)), or a fu19 tures commission merchant, intro20 ducing broker, commodity pool oper21 ator, or commodity trading advisor 

22 (as defined in section 1a of the Com23 modity Exchange Act (7 U.S.C. 1a)) 

24 that is registered with the Commodity 

25 Futures Trading Commission; 


lotter on DSKBCFDHB2PROD with BILLS
23 

•S 1454 IS

1 ‘‘(XI) a public accounting firm 

2 registered in accordance with section 

3 102 of the Sarbanes-Oxley Act (15 

4 U.S.C. 7212); 

5 ‘‘(XII) a public utility that pro6 vides telecommunications service, elec7 trical power, natural gas, or water 

8 and sewer services within the United 

9 States; 

10 ‘‘(XIII) a religious institution or 

11 nonprofit entity that is described in 

12 section 501(c)(3) or 527 of the Inter13 nal Revenue Code of 1986; 

14 ‘‘(XIV) any business concern 

15 that— 

16 ‘‘(aa) employs more than 20 

17 employees on a full-time basis in 

18 the United States; 

19 ‘‘(bb) files income tax re20 turns in the United States dem21 onstrating more than $5,000,000 

22 in gross receipts or sales; 

23 ‘‘(cc) has an operating pres24 ence at a physical location within 

25 the United States; and 


lotter on DSKBCFDHB2PROD with BILLS
24 

•S 1454 IS

1 ‘‘(dd) has more than 100 

2 shareholders; or 

3 ‘‘(XV) any corporation or limited 

4 liability company which is owned, in 

5 whole or in substantial part, by an en6 tity described in subclause (I), (II), 

7 (III), (IV), (V), (VI), (VII), (VIII), 

8 (IX), (X), (XI), (XII), (XIII), or 

9 (XIV); or 

10 ‘‘(ii) is within any class of business 

11 concerns which the Attorney General of the 

12 United States, the Secretary of Homeland 

13 Security, and the Secretary of the Treas14 ury jointly determine in writing, upon the 

15 request of a State, and through an order, 

16 guidance, or rule should be exempt from 

17 the requirements of subsection (a), because 

18 requiring beneficial ownership information 

19 from the business concern would not serve 

20 the public interest and would not assist 

21 law enforcement efforts to detect, prevent, 

22 or punish criminal or civil misconduct. 

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

24 agent’ means a person who, for compensation, acts 

25 on behalf of another person to form, or assist in the 


lotter on DSKBCFDHB2PROD with BILLS
25 

•S 1454 IS

1 formation, of a corporation or limited liability com2 pany under the laws of a State.’’. 

3 (b) FUNDING AUTHORIZATION.— 

4 (1) IN GENERAL.—To carry out section 531 of 

5 title I of the Omnibus Crime Control and Safe 

6 Streets Act of 1968, as added by this Act, and to 

7 protect the United States against the misuse affect8 ing interstate or foreign commerce of corporations or 

9 limited liability companies with hidden owners, dur10 ing the 3-year period beginning on the date of enact11 ment of this Act, funds shall be made available to 

12 each State (as that term is defined under section 

13 901(a)(2) of the Omnibus Crime Control and Safe 

14 Streets Act of 1968 (42 U.S.C. 3791(a)(2))), to pay 

15 reasonable costs to comply with the requirements of 

16 such section 531 from one or more of the following 

17 sources: 

18 (A) Upon written request by a State, and 

19 without further appropriation, the Attorney 

20 General of the United States shall make avail21 able or transfer to the State funds from excess 

22 unobligated balances (as defined in section 

23 524(c)(8)(D) of title 28, United States Code) in 

24 the Department of Justice Assets Forfeiture 


lotter on DSKBCFDHB2PROD with BILLS
26 

•S 1454 IS

1 Fund established under section 524(c) of title 

2 28, United States Code. 

3 (B) Upon written request by a State, after 

4 consultation with the Attorney General of the 

5 United States, and without further appropria6 tion, the Secretary of the Treasury shall make 

7 available or transfer to the State funds from 

8 unobligated balances described in section 

9 9705(g)(4)(B) of title 31, United States Code, 

10 in the Department of the Treasury Forfeiture 

11 Fund. 

12 (2) ELIGIBLE COSTS.—The Attorney General 

13 and Secretary of the Treasury, in their sole discre14 tion, shall determine what costs are reasonable for 

15 purposes of paragraph (1), taking into account the 

16 maximum amount of funds available for distribution 

17 to States under paragraph (3). 

18 (3) MAXIMUM AMOUNTS.— 

19 (A) DEPARTMENT OF JUSTICE.—The At20 torney General of the United States may not 

21 make available to States a total of more than 

22 $10,000,000 under paragraph (1)(A). 

23 (B) DEPARTMENT OF THE TREASURY.— 

24 The Secretary of the Treasury may not make 


lotter on DSKBCFDHB2PROD with BILLS
27 

•S 1454 IS

1 available to States a total of more than 

2 $30,000,000 under paragraph (1)(B). 

3 (4) FUNDING AVAILABILITY.—The amounts 

4 available to be provided to, and any amounts pro5 vided to, a State under paragraph (1) shall be ex6 empt from, and shall not be reduced under, any 

7 order under section 251A of the Balanced Budget 

8 and Emergency Deficit Control Act of 1985 (2 

9 U.S.C. 901a). 

10 (c) STATE COMPLIANCE REPORT.—Nothing in this 

11 Act or an amendment made by this Act authorizes the 

12 Attorney General of the United States to withhold from 

13 a State any funding otherwise available to the State under 

14 subpart 1 of part E of title I of the Omnibus Crime Con15 trol and Safe Streets Act of 1968 (42 U.S.C. 3750 et seq.) 

16 because of a failure by that State to comply with subpart 

17 4 of part E of title I of the Omnibus Crime Control and 

18 Safe Streets Act of 1968, as added by this Act. Not later 

19 than 42 months after the date of enactment of this Act, 

20 the Comptroller General of the United States shall submit 

21 to the Committee on the Judiciary of the Senate and the 

22 Committee on the Judiciary of the House of Representa23 tives a report identifying which States are in compliance 

24 with subpart 4 of part E of title I of the Omnibus Crime 

25 Control and Safe Streets Act of 1968 and, for any State 


lotter on DSKBCFDHB2PROD with BILLS
28 

•S 1454 IS

1 not in compliance, what measures must be taken by that 

2 State to achieve compliance with such subpart 4. 

3 (d) EFFECT ON STATE LAW.— 

4 (1) IN GENERAL.—This Act and the amend5 ments made by this Act do not supersede, alter, or 

6 affect any statute, regulation, order, or interpreta7 tion in effect in any State, except where a State has 

8 elected to receive funding from the Department of 

9 Justice under subpart 1 of part E of title I of the 

10 Omnibus Crime Control and Safe Streets Act of 

11 1968 (42 U.S.C. 3750 et seq.), and then only to the 

12 extent that such State statute, regulation, order, or 

13 interpretation is inconsistent with this Act or an 

14 amendment made by this Act. 

15 (2) NOT INCONSISTENT.—A State statute, reg16 ulation, order, or interpretation is not inconsistent 

17 with this Act or an amendment made by this Act if 

18 such statute, regulation, order, or interpretation— 

19 (A) requires additional information, more 

20 frequently updated information, or additional 

21 measures to verify information related to a cor22 poration, limited liability company, or beneficial 

23 owner, than is specified under this Act or an 

24 amendment made by this Act; or 


lotter on DSKBCFDHB2PROD with BILLS
29 

•S 1454 IS

1 (B) imposes additional limits on public ac2 cess to the beneficial ownership information ob3 tained by the State than is specified under this 

4 Act or an amendment made by this Act. 

5 (3) STATE RECORDS.—Nothing in this Act or 

6 the amendments made by this Act limits the author7 ity of a State, by statute or otherwise, to disclose or 

8 to not disclose to the public all or any portion of the 

9 beneficial ownership information provided to the 

10 State under subpart 4 of part E of title I of the Om11 nibus Crime Control and Safe Streets Act of 1968, 

12 as added by this Act. 

13 (4) 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 subpart 4 

18 of part E of title I of the Omnibus Crime Control 

19 and Safe Streets Act of 1968, as added by this Act. 

20 (e) FEDERAL CONTRACTORS.—Not later than the 

21 first day of the first full fiscal year beginning at least 1 

22 year after the date of enactment of this Act, the Adminis23 trator for Federal Procurement Policy shall revise the 

24 Federal Acquisition Regulation maintained under section 

25 1303(a)(1) of title 41, United States Code, to require any 


lotter on DSKBCFDHB2PROD with BILLS
30 

•S 1454 IS

1 bidder who is subject to the requirement to disclose bene2 ficial ownership information under subpart 4 of part E 

3 of title I of the Omnibus Crime Control and Safe Streets 

4 Act of 1968, as added by this Act, to provide the informa5 tion required to be disclosed under such subpart 4 to the 

6 Federal Government, or why it is exempt under section 

7 531(d)(2)(B) of title I of the Omnibus Crime Control and 

8 Safe Streets Act of 1968, as added by this Act, as part 

9 of any bid or proposal for a contract. 

10 SEC. 4. ANTI-MONEY LAUNDERING AND ANTI-TERRORIST 

11 FINANCING OBLIGATIONS OF FORMATION 

12 AGENTS. 

13 (a) ANTI-MONEY LAUNDERING AND ANTI-TER14 RORIST FINANCING OBLIGATIONS OF FORMATION

15 AGENTS.—Section 5312(a)(2) of title 31, United States 

16 Code, is amended— 

17 (1) in subparagraph (Y), by striking ‘‘or’’ at 

18 the end; 

19 (2) by redesignating subparagraph (Z) as sub20 paragraph (AA); and 

21 (3) by inserting after subparagraph (Y) the fol22 lowing: 

23 ‘‘(Z) any person engaged in the business of 

24 forming corporations or limited liability compa25 nies; or’’. 


lotter on DSKBCFDHB2PROD with BILLS
31 

•S 1454 IS

1 (b) DEADLINE FOR IMPLEMENTING RULE FOR FOR2 MATION AGENTS.— 

3 (1) PROPOSED RULE.—Not later than 120 days 

4 after the date of enactment of this Act, the Sec5 retary of the Treasury, in consultation with the Sec6 retary of Homeland Security and the Attorney Gen7 eral of the United States, shall publish a proposed 

8 rule in the Federal Register requiring persons de9 scribed in section 5312(a)(2)(Z) of title 31, United 

10 States Code, as amended by this section, to establish 

11 anti-money laundering programs under subsection 

12 (h) of section 5318 of that title. 

13 (2) FINAL RULE.—Not later than 270 days 

14 after the date of enactment of this Act, the Sec15 retary of the Treasury shall publish the rule de16 scribed in this subsection in final form in the Fed17 eral Register. 

18 (3) EXCLUSIONS.—Any rule promulgated under 

19 this subsection shall exclude from the category of 

20 persons engaged in the business of forming a cor21 poration or limited liability company— 

22 (A) any government agency; and 

23 (B) any attorney or law firm that uses a 

24 paid formation agent operating within the 


lotter on DSKBCFDHB2PROD with BILLS
32 

•S 1454 IS

1 United States to form the corporation or lim2 ited liability company. 

3 SEC. 5. 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 Committee on the Judiciary of the Sen8 ate and the Committee on the Judiciary of the House of 

9 Representatives a report— 

10 (1) identifying each State that has procedures 

11 that enable persons to form or register under the 

12 laws of the State partnerships, trusts, charitable or13 ganizations, or other legal entities, and the nature of 

14 those procedures; 

15 (2) identifying each State that requires persons 

16 seeking to form or register partnerships, trusts, 

17 charitable organizations, or other legal entities under 

18 the laws of the State to provide information about 

19 the beneficial owners (as that term is defined in sec20 tion 531 of title I of the Omnibus Crime Control 

21 and Safe Streets Act of 1968, as added by this Act) 

22 or beneficiaries of such entities, and the nature of 

23 the required information; 

24 (3) evaluating whether the lack of available 

25 beneficial ownership information for partnerships, 


lotter on DSKBCFDHB2PROD with BILLS
33 

•S 1454 IS

1 trusts, charitable organizations, or other legal enti2 ties— 

3 (A) raises concerns about the involvement 

4 of such entities in terrorism, money laundering, 

5 tax evasion, securities fraud, trafficking in illicit 

6 drugs, or other criminal or civil misconduct; 

7 and 

8 (B) has impeded investigations into enti9 ties suspected of such misconduct; and 

10 (4) evaluating whether the failure of the United 

11 States to require beneficial ownership information 

12 for partnerships, trusts, charitable organizations, or 

13 other legal entities formed or registered in the 

14 United States has elicited international criticism and 

15 what steps, if any, the United States has taken or 

16 is planning to take in response. 

17 (b) EFFECTIVENESS OF INCORPORATION PRAC18 TICES.—Not later than 5 years after the date of enact19 ment of this Act, the Comptroller General of the United 

20 States shall conduct a study and submit to the Committee 

21 on the Judiciary of the Senate and the Committee on the 

22 Judiciary of the House of Representatives a report assess23 ing the effectiveness of incorporation practices imple24 mented under this Act and the amendments made by this 

25 Act in— 


lotter on DSKBCFDHB2PROD with BILLS
34 

•S 1454 IS

1 (1) providing law enforcement agencies with 

2 prompt access to reliable, useful, and complete bene3 ficial ownership information; and 

4 (2) strengthening the capability of law enforce5 ment agencies to combat incorporation abuses and 

6 other civil and criminal misconduct. 

Æ 


lotter on DSKBCFDHB2PROD with BILLS