II 

112TH CONGRESS 

1ST SESSION S. 1483 

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

the beneficial owners of those corporations, in order to prevent wrongdoers from exploiting United States corporations in ways that threaten 

homeland security, to assist law enforcement in detecting, preventing, 

and punishing terrorism, money laundering, and other misconduct involving United States corporations, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 2, 2011 

Mr. LEVIN (for himself and Mr. GRASSLEY) introduced the following bill; 

which was read twice and referred to the Committee on Homeland Security and Governmental Affairs 

A BILL 

To ensure that persons who form corporations in the United 

States disclose the beneficial owners of those corporations, in order to prevent wrongdoers from exploiting 

United States corporations in ways that threaten homeland security, to assist law enforcement in detecting, 

preventing, and punishing terrorism, money laundering, 

and other 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, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Incorporation Trans3 parency and Law Enforcement Assistance Act’’. 

4 SEC. 2. FINDINGS. 

5 Congress finds the following: 

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

7 liability companies are being formed under the laws 

8 of the States each year. 

9 (2) Very few States obtain meaningful informa10 tion about the beneficial owners of the corporations 

11 and limited liability companies formed under their 

12 laws. 

13 (3) A person forming a corporation or limited 

14 liability company within the United States typically 

15 provides less information to the State of incorpora16 tion than is needed to obtain a bank account or driv17 er’s license and typically does not name a single ben18 eficial owner. 

19 (4) Terrorists and other criminals have ex20 ploited the weaknesses in State formation proce21 dures to conceal their identities when forming cor22 porations or limited liability companies in the United 

23 States, and have then used the newly created enti24 ties to support terrorist organizations, drug traf25 ficking organizations, and international organized 

26 crime groups, as well as commit misconduct affectVerDate Mar 15 2010 21:39 Aug 04, 2011 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1483.IS S1483

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1 ing interstate and international commerce such as 

2 trafficking in illicit drugs, illegal arms trafficking, 

3 money laundering, tax evasion, Internet-based fraud, 

4 securities fraud, financial fraud, intellectual property 

5 crimes, and acts of foreign corruption. 

6 (5) Among those who have abused State incor7 poration procedures, Victor Bout, a Russian arms 

8 dealer now in United States custody on terrorism-re9 lated charges, used at least 12 companies incor10 porated in Texas, Florida, and Delaware to carry 

11 out his activities, and has been indicted, in part, for 

12 conspiring to sell weapons to a terrorist organization 

13 trying to kill citizens of the United States and Fed14 eral officers and employees. 

15 (6) Law enforcement efforts to investigate cor16 porations and limited liability companies suspected 

17 of wrongdoing that threatens homeland security 

18 have been impeded by the lack of available beneficial 

19 ownership information, as documented in reports 

20 and testimony by officials from the Department of 

21 Homeland Security, the Department of Justice, the 

22 Financial Crimes Enforcement Network of the De23 partment of the Treasury, the Internal Revenue 

24 Service, the Government Accountability Office, and 

25 others. 


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1 (7) In July 2006, a leading international anti2 money laundering and anti-terrorist financing orga3 nization, the Financial Action Task Force on Money 

4 Laundering (in this section referred to as the 

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

6 issued a report that criticized the United States for 

7 failing to comply with a FATF standard on the need 

8 to collect beneficial ownership information and urged 

9 the United States to correct this deficiency by July 

10 2008. 

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

12 strengthen measures to protect homeland security, 

13 Federal officials have repeatedly urged the States to 

14 improve their formation practices by obtaining bene15 ficial ownership information for the corporations and 

16 limited liability companies formed under the laws of 

17 such States. But the States continue to form mil18 lions of corporations with hidden owners. 

19 (9) Many States have established automated 

20 procedures that allow a person to form a new cor21 poration or limited liability company within the 

22 State within 24 hours of filing an online application, 

23 without any prior review of the application by a 

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


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1 States will form a corporation within 1 hour of a re2 quest. 

3 (10) Dozens of Internet Web sites highlight the 

4 anonymity of beneficial owners allowed under the 

5 formation practices of some States, point to those 

6 practices as a reason to incorporate in those States, 

7 and list those States together with offshore jurisdic8 tions as preferred locations for the formation of new 

9 corporations, essentially providing an open invitation 

10 to terrorists and other wrongdoers to form entities 

11 within the United States. 

12 (11) In contrast to practices in the United 

13 States, all 27 countries in the European Union are 

14 already required to have formation agents identify 

15 the beneficial owners of the corporations formed by 

16 those agents under the laws of those countries. 

17 (12) To protect homeland security, reduce the 

18 vulnerability of the United States to wrongdoing by 

19 United States corporations and limited liability com20 panies with hidden owners, protect interstate and 

21 international commerce from terrorists and other 

22 criminals misusing United States corporations and 

23 limited liability companies, strengthen law enforce24 ment investigations of suspect corporations and lim25 ited liability companies, set minimum standards for 


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1 and level the playing field among State formation 

2 practices, and bring the United States into compli3 ance with international anti-money laundering and 

4 anti-terrorist financing standards, Federal legisla5 tion is needed to require the States to obtain bene6 ficial ownership information for the corporations and 

7 limited liability companies formed under the laws of 

8 such States. 

9 SEC. 3. TRANSPARENT INCORPORATION PRACTICES. 

10 (a) TRANSPARENT INCORPORATION PRACTICES.— 

11 (1) IN GENERAL.—Subtitle A of title XX of the 

12 Homeland Security Act of 2002 (6 U.S.C. 601 et 

13 seq.) is amended by adding at the end the following: 

14 ‘‘SEC. 2009. TRANSPARENT INCORPORATION PRACTICES. 

15 ‘‘(a) INCORPORATION SYSTEMS.— 

16 ‘‘(1) IN GENERAL.—To protect the security of 

17 the United States from corporations and limited li18 ability companies with hidden owners, each State 

19 that receives funding from the Department under 

20 this title to prevent terrorism shall, not later than 

21 the beginning of fiscal year 2014, use an incorpora22 tion system that meets the following requirements: 

23 ‘‘(A) IDENTIFICATION OF BENEFICIAL

24 OWNERS.—Except as provided in paragraphs 

25 (2) and (4), each applicant to form a corporaVerDate Mar 15 2010 21:39 Aug 04, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1483.IS S1483

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1 tion or limited liability company under the laws 

2 of the State is required to provide to the State 

3 during the formation process a list of the bene4 ficial owners of the corporation or limited liabil5 ity company that— 

6 ‘‘(i) identifies each beneficial owner by 

7 name, current residential or business street 

8 address, and a unique identifying number 

9 from a nonexpired passport issued by the 

10 United States or a nonexpired drivers li11 cense or identification card issued by a 

12 State; 

13 ‘‘(ii) if any beneficial owner exercises 

14 control over the corporation or limited li15 ability company through another legal enti16 ty, such as a corporation, partnership, or 

17 trust, identifies each such legal entity and 

18 each such beneficial owner who will use 

19 that entity to exercise control over the cor20 poration or limited liability company; and 

21 ‘‘(iii) if the applicant is not a bene22 ficial owner, provides the identification in23 formation described in clause (i) relating 

24 to the applicant. 


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

2 corporation or limited liability company formed 

3 under the laws of the State— 

4 ‘‘(i) the corporation or limited liability 

5 company is required by the State to submit 

6 to the State an updated list of the bene7 ficial owners of the corporation or limited 

8 liability company and the information de9 scribed in subparagraph (A) for each such 

10 beneficial owner not later than 60 days 

11 after the date of any change in the bene12 ficial owners of the corporation or limited 

13 liability company; 

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

15 limited liability company formed or ac16 quired by a formation agent and retained 

17 by the formation agent as a beneficial 

18 owner for transfer to another person, the 

19 formation agent is required by the State to 

20 submit to the State an updated list of the 

21 beneficial owners and the information de22 scribed in subparagraph (A) for each such 

23 beneficial owner not later than 10 days 

24 after date on which the formation agent 


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1 transfers the corporation or limited liabil2 ity company to another person; and 

3 ‘‘(iii) the corporation or limited liabil4 ity company is required by the State to 

5 submit to the State an annual filing con6 taining the list of the beneficial owners of 

7 the corporation or limited liability company 

8 and the information described in subpara9 graph (A) for each such beneficial owner. 

10 ‘‘(C) RETENTION OF INFORMATION.—Ben11 eficial ownership information relating to each 

12 corporation or limited liability company formed 

13 under the laws of the State is required to be 

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

15 year period beginning on the date that the cor16 poration or limited liability company terminates 

17 under the laws of the State. 

18 ‘‘(D) INFORMATION REQUESTS.—Bene19 ficial ownership information relating to each 

20 corporation or limited liability company formed 

21 under the laws of the State shall be provided by 

22 the State upon receipt of— 

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

24 subpoena or summons from a State agen25 cy, Federal agency, or congressional comVerDate Mar 15 2010 21:39 Aug 04, 2011 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1483.IS S1483

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1 mittee or subcommittee requesting such in2 formation; 

3 ‘‘(ii) a written request made by a Fed4 eral agency on behalf of another country 

5 under an international treaty, agreement, 

6 or convention, or an order under section 

7 3512 of title 18, United States Code, or 

8 section 1782 of title 28, United States 

9 Code, issued in response to a request for 

10 assistance from a foreign country; or 

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

12 Financial Crimes Enforcement Network of 

13 the Department of the Treasury. 

14 ‘‘(E) NO BEARER SHARE CORPORA15 TIONS.—A corporation or limited liability com16 pany formed under the laws of the State may 

17 not issue a certificate in bearer form evidencing 

18 either a whole or fractional interest in the cor19 poration or limited liability company. 

20 ‘‘(2) STATES THAT LICENSE FORMATION

21 AGENTS.— 

22 ‘‘(A) IN GENERAL.—To meet the require23 ments under this section, a State described in 

24 subparagraph (B) may permit an applicant to 

25 form a corporation or limited liability company 


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1 under the laws of the State, or a corporation or 

2 limited liability company formed under the laws 

3 of the State, to provide the required informa4 tion to a licensed formation agent residing in 

5 the State, instead of to the State directly, if the 

6 application under paragraph (1)(A) or the up7 date under paragraph (1)(B) contains— 

8 ‘‘(i) the name, current business ad9 dress, contact information, and licensing 

10 number of the licensed formation agent 

11 that has agreed to maintain the informa12 tion required under this section; and 

13 ‘‘(ii) a certification by the licensed 

14 formation agent that the licensed forma15 tion agent has possession of the informa16 tion required under this section and will 

17 maintain the information in the State li18 censing the licensed formation agent in ac19 cordance with State law. 

20 ‘‘(B) STATES DESCRIBED.—A State de21 scribed in this subparagraph is a State that— 

22 ‘‘(i) receives funding from the Depart23 ment under this title to prevent terrorism; 

24 and 


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1 ‘‘(ii) maintains a formal licensing sys2 tem for formation agents that requires a 

3 formation agent to register with the State, 

4 meet standards for fitness and honesty, 

5 maintain a physical office and records 

6 within the State, undergo regular moni7 toring, and be subject to sanctions for non8 compliance with State requirements. 

9 ‘‘(C) LICENSED FORMATION AGENT DU10 TIES.—A licensed formation agent that receives 

11 beneficial ownership information under State 

12 law in accordance with this paragraph shall— 

13 ‘‘(i) maintain the information in the 

14 State in which the corporation or limited 

15 liability company is being or has been 

16 formed in the same manner as required for 

17 States under paragraph (1)(C); 

18 ‘‘(ii) provide the information under 

19 the same circumstances as required for 

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

21 ‘‘(iii) perform the duties of a forma22 tion agent under paragraph (3). 

23 ‘‘(D) TERMINATION OF RELATIONSHIP.— 

24 ‘‘(i) IN GENERAL.—Except as pro25 vided in clause (ii), a licensed formation 


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1 agent that receives beneficial ownership in2 formation relating to a corporation or lim3 ited liability company under State law in 

4 accordance with this paragraph and that 

5 resigns, dissolves, or otherwise ends a rela6 tionship with the corporation or limited li7 ability company shall promptly— 

8 ‘‘(I) notify the State in writing 

9 that the licensed formation agent has 

10 resigned or ended the relationship; 

11 and 

12 ‘‘(II) transmit all beneficial own13 ership information relating to the cor14 poration or limited liability company 

15 in the possession of the licensed for16 mation agent to the licensing State. 

17 ‘‘(ii) EXCEPTION.—If a licensed for18 mation agent receives written instructions 

19 from a corporation or limited liability com20 pany, the licensed formation agent may 

21 transmit the beneficial ownership informa22 tion relating to the corporation or limited 

23 liability company to another licensed for24 mation agent that is within the same State 


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1 and has agreed to maintain the informa2 tion in accordance with this section. 

3 ‘‘(iii) NOTICE TO STATE.—If a li4 censed formation agent provides beneficial 

5 ownership information to another licensed 

6 formation agent under clause (ii), the li7 censed formation agent providing the infor8 mation shall promptly notify in writing the 

9 State under the laws of which the corpora10 tion or limited liability company is formed 

11 of the identity of the licensed formation 

12 agent receiving the information. 

13 ‘‘(3) CERTAIN BENEFICIAL OWNERS.—If an ap14 plicant to form a corporation or limited liability com15 pany or a beneficial owner, officer, director, or simi16 lar agent of a corporation or limited liability com17 pany who is required to provide identification infor18 mation under this section does not have a non19 expired passport issued by the United States or a 

20 nonexpired drivers license or identification card 

21 issued by a State, each application described in 

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

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

24 formation agent residing in the State that the for25 mation agent— 


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

2 current residential or business street address 

3 and a legible and credible copy of the pages of 

4 a nonexpired passport issued by the government 

5 of a foreign country bearing a photograph, date 

6 of birth, and unique identifying information for 

7 the person; 

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

9 identity of each such person; 

10 ‘‘(C) will provide the information described 

11 in subparagraph (A) and the proof of 

12 verification described in subparagraph (B) upon 

13 request under the same circumstances as re14 quired for States under paragraph (1)(D); and 

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

16 of verification under this paragraph in the 

17 State in which the corporation or limited liabil18 ity company is being or has been formed until 

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

20 date that the corporation or limited liability 

21 company terminates under the laws of the 

22 State. 

23 ‘‘(4) EXEMPT ENTITIES.— 

24 ‘‘(A) IN GENERAL.—An incorporation sys25 tem described in paragraph (1) shall require 


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1 that an application for an entity described in 

2 subparagraph (C) or (D) of subsection (d)(2) 

3 that is proposed to be formed under the laws of 

4 a State and that will be exempt from the bene5 ficial ownership disclosure requirements under 

6 this section shall include in the application a 

7 certification by the applicant, or a prospective 

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

9 ‘‘(i) identifying the specific provision 

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

11 proposed to be formed would be exempt 

12 from the beneficial ownership disclosure re13 quirements under paragraphs (1), (2), and 

14 (3); 

15 ‘‘(ii) stating that the entity proposed 

16 to be formed meets the requirements for 

17 an entity described under such provision of 

18 subsection (d)(2); and 

19 ‘‘(iii) providing identification informa20 tion for the applicant or prospective offi21 cer, director, or similar agent making the 

22 certification in the same manner as pro23 vided under paragraph (1) or (3). 

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

25 the date that is 1 year after the effective date 


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1 of the amendments to the incorporation system 

2 of a State made to comply with this section, an 

3 entity formed under the laws of the State be4 fore such effective date shall be considered to 

5 be a corporation or limited liability company for 

6 purposes of this subsection unless an officer, di7 rector, or similar agent of the entity submits to 

8 the State a certification— 

9 ‘‘(i) identifying the specific provision 

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

11 is exempt from the requirements under 

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

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

14 requirements for an entity described under 

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

16 ‘‘(iii) providing identification informa17 tion for the officer, director, or similar 

18 agent making the certification in the same 

19 manner as provided under paragraph (1) 

20 or (3). 

21 ‘‘(C) EXEMPT ENTITIES HAVING OWNER22 SHIP INTEREST.—If an entity described in sub23 paragraph (C) or (D) of subsection (d)(2) has 

24 or will have an ownership interest in a corpora25 tion or limited liability company formed or to be 


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

2 corporation, or limited liability company in 

3 which the entity has or will have the ownership 

4 interest shall provide the information required 

5 under this subsection relating to the entity, ex6 cept that the entity shall not be required to pro7 vide information regarding any natural person 

8 who has an ownership interest in, exercises sub9 stantial control over, or receives substantial eco10 nomic benefits from the entity. 

11 ‘‘(b) PENALTIES.— 

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

13 person to affect interstate or foreign commerce or 

14 threaten homeland security by failing to comply with 

15 State law in accordance with this section by— 

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

17 provide, false or fraudulent beneficial ownership 

18 information, including a false or fraudulent 

19 identifying photograph, to a State or formation 

20 agent; 

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

22 updated beneficial ownership information to a 

23 State or formation agent; 


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1 ‘‘(C) knowingly disclosing the existence of 

2 a subpoena, summons, or other request for ben3 eficial ownership information, except— 

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

5 the authorized request; or 

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

7 issued the subpoena, summons, or other 

8 request; or 

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

10 knowingly failing to obtain or maintain credible, 

11 legible, and updated beneficial ownership infor12 mation, including any required identifying pho13 tograph. 

14 ‘‘(2) CIVIL AND CRIMINAL PENALTIES.—In ad15 dition to any civil or criminal penalty that may be 

16 imposed by a State, any person who violates para17 graph (1)— 

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

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

20 and 

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

22 States Code, imprisoned for not more than 3 

23 years, or both. 

24 ‘‘(c) RULES.—To carry out this section, the Sec25 retary, the Attorney General of the United States, and the 


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1 Secretary of the Treasury may issue joint guidance or a 

2 joint rule to clarify application of the definitions under 

3 subsection (d) or to specify how to verify beneficial owner4 ship or other identification information provided under 

5 this section, including under subsection (a)(3). 

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

7 ‘‘(1) BENEFICIAL OWNER.— 

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

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

10 means a natural person who, directly or indi11 rectly— 

12 ‘‘(i) exercises substantial control over 

13 a corporation or limited liability company; 

14 or 

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

16 receives substantial economic benefits from 

17 the assets of a corporation or limited liabil18 ity company. 

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

20 owner’ shall not include— 

21 ‘‘(i) a minor child; 

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

23 intermediary, custodian, or agent on behalf 

24 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 ‘‘(C) APPLICABILITY OF EXCEPTIONS.— 

17 The exceptions under subparagraph (B) shall 

18 not apply if used for the purpose of evading or 

19 circumventing the provisions of subparagraph 

20 (A) or subsection (a). 

21 ‘‘(2) CORPORATION; LIMITED LIABILITY COM22 PANY.—The terms ‘corporation’ and ‘limited liability 

23 company’— 

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

25 under the laws of the applicable State; 


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

2 eligible for registration or registered to do busi3 ness as a corporation or limited liability com4 pany under the laws of the applicable State; 

5 ‘‘(C) subject to subsection (a)(4), do not 

6 include an entity that is— 

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 and 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 charity or nonprofit entity 

23 that is described in sections 501(c), 527, 

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

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1 empt status, and is required to and has 

2 filed the most recently due annual informa3 tion return with the Internal Revenue 

4 Service; 

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 location within the 

15 United States; or 

16 ‘‘(xv) any corporation or limited liabil17 ity company which is owned, in whole or in 

18 substantial part, by an entity described in 

19 clause (i), (ii), (iii), (iv), (v), (vi), (vii), 

20 (viii), (ix), (x), (xi), (xii), (xiii), or (xiv); 

21 and 

22 ‘‘(D) do not include any class of business 

23 concerns which the Secretary, the Attorney 

24 General of the United States, and the Secretary 

25 of the Treasury jointly determine in writing, 


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1 upon the request of a State, and through an 

2 order, guidance, or rule should be exempt from 

3 the requirements of subsection (a), because re4 quiring beneficial ownership information from 

5 the business concern would not serve the public 

6 interest and would not assist law enforcement 

7 efforts to detect, prevent, or punish terrorism, 

8 money laundering, tax evasion, or other mis9 conduct that threatens homeland security. 

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

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

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

13 formation, of a corporation or limited liability com14 pany under the laws of a State.’’. 

15 (2) TECHNICAL AND CONFORMING AMEND16 MENT.—The table of contents in section 1(b) of the 

17 Homeland Security Act of 2002 (6 U.S.C. 101 et 

18 seq.) is amended by inserting after the item relating 

19 to section 2008 the following: 

‘‘Sec. 2009. Transparent incorporation practices.’’. 

20 (b) FUNDING AUTHORIZATION.— 

21 (1) IN GENERAL.—To carry out section 2009 of 

22 the Homeland Security Act of 2002, as added by 

23 this Act, during the 3-year period beginning on the 

24 date of enactment of this Act, funds shall be made 

25 available to each State (as that term is defined 


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1 under section 2 of the Homeland Security Act of 

2 2002 (6 U.S.C. 101)) to pay reasonable costs relat3 ing to compliance with the requirements of such sec4 tion 2009. 

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

6 States against the misuse of United States corpora7 tions with hidden owners, funds shall be provided to 

8 each State to carry out the purposes described in 

9 paragraph (1) from one or more of the following 

10 sources: 

11 (A) Upon application by a State, after con12 sultation with the Secretary of Homeland Secu13 rity, and without further appropriation, the 

14 Secretary of the Treasury may make available 

15 to the State unobligated balances described in 

16 section 9703(g)(4)(B) of title 31, United States 

17 Code, in the Department of the Treasury For18 feiture Fund established under section 9703(a) 

19 of title 31, United States Code. 

20 (B) Upon application by a State, after con21 sultation with the Secretary of Homeland Secu22 rity, and without further appropriation, the At23 torney General of the United States may make 

24 available to the State excess unobligated bal25 ances (as defined in section 524(c)(8)(D) of 


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1 title 28, United States Code) in the Department 

2 of Justice Assets Forfeiture Fund established 

3 under section 524(c) of title 28, United States 

4 Code. 

5 (3) MAXIMUM AMOUNTS.— 

6 (A) DEPARTMENT OF THE TREASURY.— 

7 The Secretary of the Treasury may not make 

8 available to States a total of more than 

9 $20,000,000 under paragraph (2)(A). 

10 (B) DEPARTMENT OF JUSTICE.—The At11 torney General of the United States may not 

12 make available to States a total of more than 

13 $10,000,000 under paragraph (2)(B). 

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

15 section or an amendment made by this section authorizes 

16 the Secretary of Homeland Security to withhold from a 

17 State any funding otherwise available to the State under 

18 title XX of the Homeland Security Act of 2002 (6 U.S.C. 

19 601 et seq.) because of a failure by that State to comply 

20 with section 2009 of the Homeland Security Act of 2002, 

21 as added by this section. Not later than June 1, 2015, 

22 the Comptroller General of the United States shall submit 

23 to the Committee on Homeland Security and Govern24 mental Affairs of the Senate and the Committee on Home25 land Security of the House of Representatives a report 


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1 identifying which States are in compliance with section 

2 2009 of the Homeland Security Act of 2002 and, for any 

3 State not in compliance, what measures must be taken by 

4 that State to achieve compliance with section 2009 of the 

5 Homeland Security Act of 2002. 

6 (d) EFFECT ON STATE LAW.— 

7 (1) IN GENERAL.—This Act and the amend8 ments made by this Act do not supersede, alter, or 

9 affect any statute, regulation, order, or interpreta10 tion in effect in any State, except where a State has 

11 elected to receive funding from the Department of 

12 Homeland Security under title XX of the Homeland 

13 Security Act of 2002 (6 U.S.C. 601 et seq.) to pre14 vent terrorism (as defined in section 2 of the Home15 land Security Act of 2002 (6 U.S.C. 101)), and then 

16 only to the extent that such State statute, regula17 tion, order, or interpretation is inconsistent with this 

18 Act or an amendment made by this Act. 

19 (2) NOT INCONSISTENT.—A State statute, reg20 ulation, order, or interpretation is not inconsistent 

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

22 such statute, regulation, order, or interpretation— 

23 (A) requires additional information, more 

24 frequently updated information, or additional 

25 measures to verify information related to a corVerDate Mar 15 2010 21:39 Aug 04, 2011 Jkt 099200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S1483.IS S1483

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1 poration, limited liability company, or beneficial 

2 owner, than is specified under this Act or an 

3 amendment made by this Act; or 

4 (B) imposes additional limits on public ac5 cess to the beneficial ownership information ob6 tained by the State than is specified under this 

7 Act or an amendment made by this Act. 

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

9 the amendments made by this Act limits the author10 ity of a State, by statute or otherwise, to disclose or 

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

12 beneficial ownership information provided to the 

13 State under section 2009 of the Homeland Security 

14 Act of 2002, as added by this Act. 

15 (4) NO DUTY OF VERIFICATION.—This Act and 

16 the amendments made by this Act do not impose 

17 any obligation on a State to verify the name, ad18 dress, or identity of a beneficial owner whose infor19 mation is submitted to such State under section 

20 2009 of the Homeland Security Act of 2002, as 

21 added by this Act. 

22 (e) FEDERAL CONTRACTORS.—Not later than the be23 ginning of fiscal year 2014, the Administrator for Federal 

24 Procurement Policy shall revise the Federal Acquisition 

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


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1 41, United States Code, to require any contractor who is 

2 subject to the requirement to disclose beneficial ownership 

3 information under section 2009 of the Homeland Security 

4 Act of 2002, as added by this Act, to provide the informa5 tion required to be disclosed under section 2009 of the 

6 Homeland Security Act of 2002 to the Federal Govern7 ment as part of any bid or proposal for a contract with 

8 a value threshold in excess of the simplified acquisition 

9 threshold under section 134 of title 41, United States 

10 Code. 

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

12 FINANCING OBLIGATIONS OF FORMATION 

13 AGENTS. 

14 (a) ANTI-MONEY LAUNDERING AND ANTI-TER15 RORIST FINANCING OBLIGATIONS OF FORMATION

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

17 Code, is amended— 

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

19 the end; 

20 (2) by redesignating subparagraph (Z) as sub21 paragraph (AA); and 

22 (3) by inserting after subparagraph (Y) the fol23 lowing: 


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

2 forming corporations or limited liability compa3 nies; or’’. 

4 (b) DEADLINE FOR IMPLEMENTING RULE FOR FOR5 MATION AGENTS.— 

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

7 after the date of enactment of this Act, the Sec8 retary of the Treasury, in consultation with the Sec9 retary of Homeland Security, the Attorney General 

10 of the United States, and the Commissioner of the 

11 Internal Revenue Service, shall publish a proposed 

12 rule in the Federal Register requiring persons de13 scribed in section 5312(a)(2)(Z) of title 31, United 

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

15 anti-money laundering programs under subsection 

16 (h) of section 5318 of that title. 

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

18 after the date of enactment of this Act, the Sec19 retary of the Treasury shall publish the rule de20 scribed in this subsection in final form in the Fed21 eral Register. 

22 (3) EXCLUSIONS.—Any rule promulgated under 

23 this subsection shall exclude from the category of 

24 persons engaged in the business of forming a cor25 poration or limited liability company— 


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1 (A) any government agency; and 

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

3 paid formation agent operating within the 

4 United States to form the corporation or lim5 ited liability company. 

6 SEC. 5. 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 Committee on Homeland Security and 

11 Governmental Affairs of the Senate and the Committee 

12 on Homeland Security and the Committee on Financial 

13 Services of the House of Representatives a report— 

14 (1) identifying each State that has procedures 

15 that enable persons to form or register under the 

16 laws of the State partnerships, trusts, charitable or17 ganizations, or other legal entities, and the nature of 

18 those procedures; 

19 (2) identifying each State that requires persons 

20 seeking to form or register partnerships, trusts, 

21 charitable organizations, or other legal entities under 

22 the laws of the State to provide information about 

23 the beneficial owners (as that term is defined in sec24 tion 2009 of the Homeland Security Act of 2002, as 


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1 added by this Act) or beneficiaries of such entities, 

2 and the nature of the required information; 

3 (3) evaluating whether the lack of available 

4 beneficial ownership information for partnerships, 

5 trusts, charitable organizations, or other legal enti6 ties— 

7 (A) raises concerns about the involvement 

8 of such entities in terrorism, money laundering, 

9 tax evasion, securities fraud, trafficking in illicit 

10 drugs, or other misconduct or threats to home11 land security; and 

12 (B) has impeded investigations into enti13 ties suspected of such misconduct; and 

14 (4) evaluating whether the failure of the United 

15 States to require beneficial ownership information 

16 for partnerships, trusts, charitable organizations, or 

17 other legal entities formed or registered in the 

18 United States has elicited international criticism and 

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

20 is planning to take in response. 

21 (b) EFFECTIVENESS OF INCORPORATION PRAC22 TICES.—Not later than 5 years after the date of enact23 ment of this Act, the Comptroller General of the United 

24 States shall conduct a study and submit to the Committee 

25 on Homeland Security and Governmental Affairs of the 


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1 Senate and the Committee on Homeland Security of the 

2 House of Representatives a report assessing the effective3 ness of incorporation practices implemented under this 

4 Act and the amendments made by this Act in— 

5 (1) providing law enforcement agencies with 

6 prompt access to reliable, useful, and complete bene7 ficial ownership information; and 

8 (2) strengthening the capability of law enforce9 ment agencies to combat incorporation abuses, civil 

10 and criminal misconduct, and threats to homeland 

11 security. 

Æ 


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