II 

113TH CONGRESS 

1ST SESSION S. 1465 

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 

AUGUST 1, 2013 

Mr. LEVIN (for himself, Mr. GRASSLEY, Mrs. FEINSTEIN, and Mr. HARKIN) 

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, 


smartinez on DSK6TPTVN1PROD with BILLS
2 

•S 1465 IS

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 04:03 Aug 09, 2013 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1465.IS S1465

smartinez on DSK6TPTVN1PROD with BILLS
3 

•S 1465 IS

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 corruption. 

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

8 dealer who used at least 12 companies incorporated 

9 in Texas, Florida, and Delaware to carry out his ac10 tivities, and has been convicted, in part, for con11 spiring to sell weapons to a terrorist organization 

12 trying to kill citizens of the United States and Fed13 eral officers and employees. 

14 (6) Law enforcement efforts to investigate cor15 porations and limited liability companies suspected 

16 of wrongdoing have been impeded by the lack of 

17 available beneficial ownership information, as docu18 mented in reports and testimony by officials from 

19 the Department of Justice, the Department of 

20 Homeland Security, the Financial Crimes Enforce21 ment Network of the Department of the Treasury, 

22 the Internal Revenue Service, the Government Ac23 countability Office, and others. 

24 (7) In July 2006, a leading international anti25 money laundering and anti-terrorist financing orgaVerDate Mar 15 2010 04:03 Aug 09, 2013 Jkt 029200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1465.IS S1465

smartinez on DSK6TPTVN1PROD with BILLS
4 

•S 1465 IS

1 nization, the Financial Action Task Force on Money 

2 Laundering (in this section referred to as ‘‘FATF’’), 

3 of which the United States is a member, issued a re4 port that criticized the United States for failing to 

5 comply with a FATF standard on the need to collect 

6 beneficial ownership information and urged the 

7 United States to correct this deficiency by July 

8 2008. 

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

10 strengthen measures to protect homeland security, 

11 Federal officials have repeatedly urged the States to 

12 improve their formation practices by obtaining bene13 ficial ownership information for the corporations and 

14 limited liability companies formed under the laws of 

15 such States. But the States continue to form mil16 lions of corporations with hidden owners. 

17 (9) Many States have established automated 

18 procedures that allow a person to form a new cor19 poration or limited liability company within the 

20 State within 24 hours of filing an online application, 

21 without any prior review of the application by a 

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

23 States will form a corporation within 1 hour of a re24 quest. 


smartinez on DSK6TPTVN1PROD with BILLS
5 

•S 1465 IS

1 (10) Dozens of Internet websites highlight the 

2 anonymity of beneficial owners allowed under the 

3 formation practices of some States, point to those 

4 practices as a reason to incorporate in those States, 

5 and list those States together with offshore jurisdic6 tions as preferred locations for the formation of new 

7 corporations, essentially inviting terrorists and other 

8 wrongdoers to form entities within the United 

9 States. 

10 (11) In contrast to practices in the United 

11 States, all 28 countries in the European Union are 

12 already required to have formation agents identify 

13 the beneficial owners of the corporations formed by 

14 those agents under the laws of those countries. 

15 (12) To reduce the vulnerability of the United 

16 States to wrongdoing by United States corporations 

17 and limited liability companies with hidden owners, 

18 protect interstate and international commerce from 

19 terrorists and other criminals misusing United 

20 States corporations and limited liability companies, 

21 strengthen law enforcement investigations of suspect 

22 corporations and limited liability companies, set min23 imum standards for and level the playing field 

24 among State formation practices, and bring the 

25 United States into compliance with international 


smartinez on DSK6TPTVN1PROD with BILLS
6 

•S 1465 IS

1 anti-money laundering and anti-terrorist financing 

2 standards, Federal legislation is needed to require 

3 the States to obtain beneficial ownership information 

4 for the corporations and limited liability companies 

5 formed under the laws of such States. 

6 SEC. 3. TRANSPARENT INCORPORATION PRACTICES. 

7 (a) TRANSPARENT INCORPORATION PRACTICES.— 

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

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

10 by adding at the end the following: 

11 ‘‘Subpart 4—Transparent Incorporation Practices 

12 ‘‘SEC. 531. TRANSPARENT INCORPORATION PRACTICES. 

13 ‘‘(a) INCORPORATION SYSTEMS.— 

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

15 States from the misuse affecting interstate or for16 eign commerce of corporations and limited liability 

17 companies with hidden owners, each State that re18 ceives funding under subpart 1 shall, not later than 

19 3 years after the date of enactment of this subpart, 

20 use an incorporation system that meets the following 

21 requirements: 

22 ‘‘(A) IDENTIFICATION OF BENEFICIAL

23 OWNERS.—Except as provided in paragraphs 

24 (2) and (4), each applicant to form a corpora25 tion or limited liability company under the laws 


smartinez on DSK6TPTVN1PROD with BILLS
7 

•S 1465 IS

1 of the State is required to provide to the State 

2 during the formation process a list of the bene3 ficial owners of the corporation or limited liabil4 ity company that— 

5 ‘‘(i) identifies each beneficial owner by 

6 name, current residential or business street 

7 address, and a unique identifying number 

8 from a nonexpired passport issued by the 

9 United States or a nonexpired drivers li10 cense or identification card issued by a 

11 State; 

12 ‘‘(ii) if any beneficial owner exercises 

13 control over the corporation or limited li14 ability company through another legal enti15 ty, such as a corporation, partnership, or 

16 trust, identifies each such legal entity and 

17 each such beneficial owner who will use 

18 that entity to exercise control over the cor19 poration or limited liability company; and 

20 ‘‘(iii) if the applicant is not a bene21 ficial owner, provides the identification in22 formation described in clause (i) relating 

23 to the applicant. 


smartinez on DSK6TPTVN1PROD with BILLS
8 

•S 1465 IS

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 the date on which the formation 


smartinez on DSK6TPTVN1PROD with BILLS
9 

•S 1465 IS

1 agent transfers the corporation or limited 

2 liability 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 04:03 Aug 09, 2013 Jkt 029200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1465.IS S1465

smartinez on DSK6TPTVN1PROD with BILLS
10 

•S 1465 IS

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 


smartinez on DSK6TPTVN1PROD with BILLS
11 

•S 1465 IS

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 this section. 

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

22 ‘‘(i) receives funding under subpart 1; 

23 and 

24 ‘‘(ii) maintains a formal licensing sys25 tem for formation agents that requires a 


smartinez on DSK6TPTVN1PROD with BILLS
12 

•S 1465 IS

1 formation agent to register with the State, 

2 meet standards for fitness and honesty, 

3 maintain a physical office and records 

4 within the State, undergo regular moni5 toring, and be subject to sanctions for non6 compliance with State requirements. 

7 ‘‘(C) LICENSED FORMATION AGENT DU8 TIES.—A licensed formation agent that receives 

9 beneficial ownership information in accordance 

10 with this section shall— 

11 ‘‘(i) maintain the information in the 

12 State in which the corporation or limited 

13 liability company is being or has been 

14 formed in the same manner as required for 

15 States under paragraph (1)(C); 

16 ‘‘(ii) provide the information under 

17 the same circumstances as required for 

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

19 ‘‘(iii) perform the duties of a forma20 tion agent under paragraph (3). 

21 ‘‘(D) TERMINATION OF RELATIONSHIP.— 

22 ‘‘(i) IN GENERAL.—Except as pro23 vided in clause (ii), a licensed formation 

24 agent that receives beneficial ownership in25 formation relating to a corporation or limVerDate Mar 15 2010 04:03 Aug 09, 2013 Jkt 029200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1465.IS S1465

smartinez on DSK6TPTVN1PROD with BILLS
13 

•S 1465 IS

1 ited liability company under State law in 

2 accordance with this paragraph and that 

3 resigns, dissolves, or otherwise ends a rela4 tionship with the corporation or limited li5 ability company shall within 60 days— 

6 ‘‘(I) notify the State in writing 

7 that the licensed formation agent has 

8 resigned or ended the relationship; 

9 and 

10 ‘‘(II) transmit all beneficial own11 ership information relating to the cor12 poration or limited liability company 

13 in the possession of the licensed for14 mation agent to the licensing State. 

15 ‘‘(ii) EXCEPTION.—If a licensed for16 mation agent receives written instructions 

17 from a corporation or limited liability com18 pany, the licensed formation agent may 

19 transmit the beneficial ownership informa20 tion relating to the corporation or limited 

21 liability company to another licensed for22 mation agent that is within the same State 

23 and has agreed to maintain the informa24 tion in accordance with this section. 


smartinez on DSK6TPTVN1PROD with BILLS
14 

•S 1465 IS

1 ‘‘(iii) NOTICE TO STATE.—If a li2 censed formation agent provides beneficial 

3 ownership information to another licensed 

4 formation agent under clause (ii), the li5 censed formation agent providing the infor6 mation shall, within the 60-day period 

7 specified under clause (i), notify in writing 

8 the State under the laws of which the cor9 poration or limited liability company is 

10 formed of the identity of the licensed for11 mation agent receiving the information. 

12 ‘‘(3) CERTAIN BENEFICIAL OWNERS.—If an ap13 plicant to form a corporation or limited liability com14 pany or a beneficial owner, officer, director, or simi15 lar agent of a corporation or limited liability com16 pany who is required to provide identification infor17 mation under this section does not have a non18 expired passport issued by the United States or a 

19 nonexpired drivers license or identification card 

20 issued by a State, each application described in 

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

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

23 formation agent residing in the State that the for24 mation agent— 


smartinez on DSK6TPTVN1PROD with BILLS
15 

•S 1465 IS

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 


smartinez on DSK6TPTVN1PROD with BILLS
16 

•S 1465 IS

1 that an application for an entity described in 

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

3 proposed to be formed under the laws of a 

4 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)(B) under which the 

11 entity proposed to be formed would be ex12 empt from the beneficial ownership disclo13 sure requirements under paragraphs (1), 

14 (2), and (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)(B); 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 2 years after the date on which 


smartinez on DSK6TPTVN1PROD with BILLS
17 

•S 1465 IS

1 a State begins requiring beneficial ownership 

2 information in compliance 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)(B) under which the 

11 entity is exempt from the requirements 

12 under 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)(B); 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 WITH AN OWNER22 SHIP INTEREST.—As part of the beneficial own23 ership information required under subsection 

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

25 corporation or limited liability company nor a 


smartinez on DSK6TPTVN1PROD with BILLS
18 

•S 1465 IS

1 corporation or limited liability company pro2 viding updated information is required to iden3 tify the beneficial owners of any entity that 

4 qualifies as an exempt entity under subsection 

5 (d)(2)(B). 

6 ‘‘(b) PENALTIES.— 

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

8 person to affect interstate or foreign commerce by 

9 failing to comply with this subpart by— 

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

11 provide, false or fraudulent beneficial ownership 

12 information, including a false or fraudulent 

13 identifying photograph, to a State or formation 

14 agent; 

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

16 updated beneficial ownership information to a 

17 State or formation agent; 

18 ‘‘(C) knowingly disclosing the existence of 

19 a subpoena, summons, or other request for ben20 eficial ownership information, except— 

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

22 the authorized request; or 

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

24 issued the subpoena, summons, or other 

25 request; or 


smartinez on DSK6TPTVN1PROD with BILLS
19 

•S 1465 IS

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

2 knowingly failing to obtain or maintain credible, 

3 legible, and updated beneficial ownership infor4 mation, including any required identifying pho5 tograph. 

6 ‘‘(2) CIVIL AND CRIMINAL PENALTIES.—In ad7 dition to any civil or criminal penalty that may be 

8 imposed by a State, any person who violates para9 graph (1)— 

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

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

12 and 

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

14 States Code, imprisoned for not more than 3 

15 years, or both. 

16 ‘‘(c) RULES.—To carry out this subpart, the Attor17 ney General of the United States, the Secretary of Home18 land Security, and the Secretary of the Treasury may 

19 issue joint guidance or a joint rule to clarify application 

20 of the definitions under subsection (d) or to specify how 

21 to verify beneficial ownership or other identification infor22 mation provided under this section, including under sub23 section (a)(3). Failure to issue any such guidance or rule 

24 shall not delay the effective date of the requirements under 

25 this subpart. 


smartinez on DSK6TPTVN1PROD with BILLS
20 

•S 1465 IS

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

2 ‘‘(1) BENEFICIAL OWNER.— 

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

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

5 means a natural person who, directly or indi6 rectly— 

7 ‘‘(i) exercises substantial control over 

8 a corporation or limited liability company; 

9 or 

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

11 receives substantial economic benefits from 

12 the assets of a corporation or limited liabil13 ity company. 

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

15 owner’ shall not include— 

16 ‘‘(i) a minor child; 

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

18 intermediary, custodian, or agent on behalf 

19 of another person; 

20 ‘‘(iii) a person acting solely as an em21 ployee of a corporation or limited liability 

22 company and whose control over or eco23 nomic benefits from the corporation or lim24 ited liability company derives solely from 

25 the employment status of the person; 


smartinez on DSK6TPTVN1PROD with BILLS
21 

•S 1465 IS

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

2 a corporation or limited liability company 

3 is through a right of inheritance, unless 

4 the person also meets the requirements of 

5 subparagraph (A); or 

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

7 limited liability company, unless the cred8 itor also meets the requirements of sub9 paragraph (A). 

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

11 under subparagraph (B) shall not apply if used 

12 for the purpose of evading, circumventing, or 

13 abusing the provisions of subparagraph (A) or 

14 subsection (a). 

15 ‘‘(2) CORPORATION; LIMITED LIABILITY COM16 PANY.— 

17 ‘‘(A) IN GENERAL.—Subject to subpara18 graph (B), the terms ‘corporation’ and ‘limited 

19 liability company’— 

20 ‘‘(i) have the meanings given such 

21 terms under the laws of the applicable 

22 State; and 

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

24 entity eligible for registration or registered 

25 to do business as a corporation or limited 


smartinez on DSK6TPTVN1PROD with BILLS
22 

•S 1465 IS

1 liability company under the laws of the ap2 plicable State. 

3 ‘‘(B) EXEMPT ENTITIES.—Subject to sub4 section (a)(4), the terms ‘corporation’ and ‘lim5 ited liability company’ do not include an entity 

6 that— 

7 ‘‘(i) is— 

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

9 issuer of a class of securities reg10 istered under section 12 of the Securi11 ties Exchange Act of 1934 (15 U.S.C. 

12 781) or that is required to file reports 

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

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

15 ‘‘(II) a business concern con16 stituted or sponsored by a State, a po17 litical subdivision of a State, under an 

18 interstate compact between 2 or more 

19 States, by a department or agency of 

20 the United States, under the laws of 

21 the United States, or by an inter22 national organization of which the 

23 United States is a member; 

24 ‘‘(III) a depository institution (as 

25 defined in section 3 of the Federal 


smartinez on DSK6TPTVN1PROD with BILLS
23 

•S 1465 IS

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

2 1813)); 

3 ‘‘(IV) a credit union (as defined 

4 in section 101 of the Federal Credit 

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

6 ‘‘(V) a bank holding company (as 

7 defined in section 2 of the Bank Hold8 ing Company Act of 1956 (12 U.S.C. 

9 1841)); 

10 ‘‘(VI) a broker or dealer (as de11 fined in section 3 of the Securities 

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

13 78c)) that is registered under section 

14 15 of the Securities Exchange Act of 

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

16 ‘‘(VII) an exchange or clearing 

17 agency (as defined in section 3 of the 

18 Securities Exchange Act of 1934 (15 

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

20 section 6 or 17A of the Securities Ex21 change Act of 1934 (15 U.S.C. 78f 

22 and 78q–1); 

23 ‘‘(VIII) an investment company 

24 (as defined in section 3 of the Invest25 ment Company Act of 1940 (15 


smartinez on DSK6TPTVN1PROD with BILLS
24 

•S 1465 IS

1 U.S.C. 80a–3)) or an investment advi2 sor (as defined in section 202(11) of 

3 the Investment Advisors Act of 1940 

4 (15 U.S.C. 80b–2(11))), if the com5 pany or adviser is registered with the 

6 Securities and Exchange Commission, 

7 or has filed an application for reg8 istration which has not been denied, 

9 under the Investment Company Act of 

10 1940 (15 U.S.C. 80a–1 et seq.) or the 

11 Investment Advisor Act of 1940 (15 

12 U.S.C. 80b–1 et seq.); 

13 ‘‘(IX) an insurance company (as 

14 defined in section 2 of the Investment 

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

16 80a–2)); 

17 ‘‘(X) a registered entity (as de18 fined in section 1a of the Commodity 

19 Exchange Act (7 U.S.C. 1a)), or a fu20 tures commission merchant, intro21 ducing broker, commodity pool oper22 ator, or commodity trading advisor 

23 (as defined in section 1a of the Com24 modity Exchange Act (7 U.S.C. 1a)) 


smartinez on DSK6TPTVN1PROD with BILLS
25 

•S 1465 IS

1 that is registered with the Commodity 

2 Futures Trading Commission; 

3 ‘‘(XI) a public accounting firm 

4 registered in accordance with section 

5 102 of the Sarbanes-Oxley Act (15 

6 U.S.C. 7212); 

7 ‘‘(XII) a public utility that pro8 vides telecommunications service, elec9 trical power, natural gas, or water 

10 and sewer services within the United 

11 States; 

12 ‘‘(XIII) a church, a charity, or a 

13 nonprofit entity that is described in 

14 sections 501(c), 527, or 4947(a)(1) of 

15 the Internal Revenue Code of 1986, 

16 has not been denied tax exempt sta17 tus, and is required to and has filed 

18 the most recently due annual informa19 tion return with the Internal Revenue 

20 Service; 

21 ‘‘(XIV) any business concern 

22 that— 

23 ‘‘(aa) employs more than 20 

24 employees on a full-time basis in 

25 the United States; 


smartinez on DSK6TPTVN1PROD with BILLS
26 

•S 1465 IS

1 ‘‘(bb) files income tax re2 turns in the United States dem3 onstrating more than $5,000,000 

4 in gross receipts or sales; and 

5 ‘‘(cc) has an operating pres6 ence at a physical location within 

7 the United States; or 

8 ‘‘(XV) any corporation or limited 

9 liability company which is owned, in 

10 whole or in substantial part, by an en11 tity described in subclause (I), (II), 

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

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

14 (XIV); or 

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

16 concerns which the Attorney General of the 

17 United States, the Secretary of Homeland 

18 Security, and the Secretary of the Treas19 ury jointly determine in writing, upon the 

20 request of a State, and through an order, 

21 guidance, or rule should be exempt from 

22 the requirements of subsection (a), because 

23 requiring beneficial ownership information 

24 from the business concern would not serve 

25 the public interest and would not assist 


smartinez on DSK6TPTVN1PROD with BILLS
27 

•S 1465 IS

1 law enforcement efforts to detect, prevent, 

2 or punish criminal or civil misconduct. 

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

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

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

6 formation, of a corporation or limited liability com7 pany under the laws of a State.’’. 

8 (b) FUNDING AUTHORIZATION.— 

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

10 the Omnibus Crime Control and Safe Streets Act of 

11 1968, as added by this Act, and to protect the 

12 United States against the misuse affecting interstate 

13 or foreign commerce of corporations or limited liabil14 ity companies with hidden owners, during the 3-year 

15 period beginning on the date of enactment of this 

16 Act, funds shall be made available to each State (as 

17 that term is defined under section 901(a)(2) of the 

18 Omnibus Crime Control and Safe Streets Act of 

19 1968 (42 U.S.C. 3791(a)(2))), to pay reasonable 

20 costs to comply with the requirements of such sec21 tion 531 from one or more of the following sources: 

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

23 without further appropriation, the Attorney 

24 General of the United States shall make avail25 able or transfer to the State funds from excess 


smartinez on DSK6TPTVN1PROD with BILLS
28 

•S 1465 IS

1 unobligated balances (as defined in section 

2 524(c)(8)(D) of title 28, United States Code) in 

3 the Department of Justice Assets Forfeiture 

4 Fund established under section 524(c) of title 

5 28, United States Code. 

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

7 consultation with the Attorney General of the 

8 United States, and without further appropria9 tion, the Secretary of the Treasury shall make 

10 available or transfer to the State funds from 

11 unobligated balances described in section 

12 9703(g)(4)(B) of title 31, United States Code, 

13 in the Department of the Treasury Forfeiture 

14 Fund. 

15 (2) ELIGIBLE COSTS.—The Attorney General 

16 and Secretary of the Treasury, in their sole discre17 tion, shall determine what costs are reasonable for 

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

19 maximum amount of funds available for distribution 

20 to States under paragraph (3). 

21 (3) MAXIMUM AMOUNTS.— 

22 (A) DEPARTMENT OF JUSTICE.—The At23 torney General of the United States may not 

24 make available to States a total of more than 

25 $10,000,000 under paragraph (1)(A). 


smartinez on DSK6TPTVN1PROD with BILLS
29 

•S 1465 IS

1 (B) DEPARTMENT OF THE TREASURY.— 

2 The Secretary of the Treasury may not make 

3 available to States a total of more than 

4 $30,000,000 under paragraph (1)(B). 

5 (4) FUNDING AVAILABILITY.—The amounts 

6 available to be provided to, and any amounts pro7 vided to, a State under paragraph (1) shall be ex8 empt from, and shall not be reduced under, any 

9 order under section 251A of the Balanced Budget 

10 and Emergency Deficit Control Act of 1985 (2 

11 U.S.C. 901a), including the order for fiscal year 

12 2014 issued by the President on April 10, 2013. 

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

14 Act or an amendment made by this Act authorizes the 

15 Attorney General of the United States to withhold from 

16 a State any funding otherwise available to the State under 

17 subpart 1 of part E of title I of the Omnibus Crime Con18 trol and Safe Streets Act of 1968 (42 U.S.C. 3750 et seq.) 

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

20 4 of part E of title I of the Omnibus Crime Control and 

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

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

23 the Comptroller General of the United States shall submit 

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

25 Committee on the Judiciary of the House of RepresentaVerDate Mar 15 2010 04:03 Aug 09, 2013 Jkt 029200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S1465.IS S1465

smartinez on DSK6TPTVN1PROD with BILLS
30 

•S 1465 IS

1 tives a report identifying which States are in compliance 

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

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

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

5 State to achieve compliance with such subpart 4. 

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

13 Omnibus Crime Control and Safe Streets Act of 

14 1968 (42 U.S.C. 3750 et seq.), and then only to the 

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

16 interpretation is inconsistent with this Act or an 

17 amendment made by this Act. 

18 (2) NOT INCONSISTENT.—A State statute, reg19 ulation, order, or interpretation is not inconsistent 

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

21 such statute, regulation, order, or interpretation— 

22 (A) requires additional information, more 

23 frequently updated information, or additional 

24 measures to verify information related to a cor25 poration, limited liability company, or beneficial 


smartinez on DSK6TPTVN1PROD with BILLS
31 

•S 1465 IS

1 owner, than is specified under this Act or an 

2 amendment made by this Act; or 

3 (B) imposes additional limits on public ac4 cess to the beneficial ownership information ob5 tained by the State than is specified under this 

6 Act or an amendment made by this Act. 

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

8 the amendments made by this Act limits the author9 ity of a State, by statute or otherwise, to disclose or 

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

11 beneficial ownership information provided to the 

12 State under subpart 4 of part E of title I of the Om13 nibus Crime Control and Safe Streets Act of 1968, 

14 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 subpart 4 

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

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

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

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

24 year after the date of enactment of this Act, the Adminis25 trator for Federal Procurement Policy shall revise the 


smartinez on DSK6TPTVN1PROD with BILLS
32 

•S 1465 IS

1 Federal Acquisition Regulation maintained under section 

2 1303(a)(1) of title 41, United States Code, to require any 

3 contractor who is subject to the requirement to disclose 

4 beneficial ownership information under subpart 4 of part 

5 E of title I of the Omnibus Crime Control and Safe Streets 

6 Act of 1968, as added by this Act, to provide the informa7 tion required to be disclosed under such subpart 4 to the 

8 Federal Government as part of any bid or proposal for 

9 a contract with a value threshold in excess of the sim10 plified acquisition threshold under section 134 of title 41, 

11 United States Code. 

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

13 FINANCING OBLIGATIONS OF FORMATION 

14 AGENTS. 

15 (a) ANTI-MONEY LAUNDERING AND ANTI-TER16 RORIST FINANCING OBLIGATIONS OF FORMATION

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

18 Code, is amended— 

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

20 the end; 

21 (2) by redesignating subparagraph (Z) as sub22 paragraph (AA); and 

23 (3) by inserting after subparagraph (Y) the fol24 lowing: 


smartinez on DSK6TPTVN1PROD with BILLS
33 

•S 1465 IS

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 and the Attorney Gen10 eral of the United States, shall publish a proposed 

11 rule in the Federal Register requiring persons de12 scribed in section 5312(a)(2)(Z) of title 31, United 

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

14 anti-money laundering programs under subsection 

15 (h) of section 5318 of that title. 

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

17 after the date of enactment of this Act, the Sec18 retary of the Treasury shall publish the rule de19 scribed in this subsection in final form in the Fed20 eral Register. 

21 (3) EXCLUSIONS.—Any rule promulgated under 

22 this subsection shall exclude from the category of 

23 persons engaged in the business of forming a cor24 poration or limited liability company— 

25 (A) any government agency; and 


smartinez on DSK6TPTVN1PROD with BILLS
34 

•S 1465 IS

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

2 paid formation agent operating within the 

3 United States to form the corporation or lim4 ited liability company. 

5 SEC. 5. STUDIES AND REPORTS. 

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

7 years after the date of enactment of this Act, the Comp8 troller General of the United States shall conduct a study 

9 and submit to the Committee on the Judiciary of the Sen10 ate and the Committee on the Judiciary of the House of 

11 Representatives a report— 

12 (1) identifying each State that has procedures 

13 that enable persons to form or register under the 

14 laws of the State partnerships, trusts, charitable or15 ganizations, or other legal entities, and the nature of 

16 those procedures; 

17 (2) identifying each State that requires persons 

18 seeking to form or register partnerships, trusts, 

19 charitable organizations, or other legal entities under 

20 the laws of the State to provide information about 

21 the beneficial owners (as that term is defined in sec22 tion 531 of title I of the Omnibus Crime Control 

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

24 or beneficiaries of such entities, and the nature of 

25 the required information; 


smartinez on DSK6TPTVN1PROD with BILLS
35 

•S 1465 IS

1 (3) evaluating whether the lack of available 

2 beneficial ownership information for partnerships, 

3 trusts, charitable organizations, or other legal enti4 ties— 

5 (A) raises concerns about the involvement 

6 of such entities in terrorism, money laundering, 

7 tax evasion, securities fraud, trafficking in illicit 

8 drugs, or other criminal or civil misconduct; 

9 and 

10 (B) has impeded investigations into enti11 ties suspected of such misconduct; and 

12 (4) evaluating whether the failure of the United 

13 States to require beneficial ownership information 

14 for partnerships, trusts, charitable organizations, or 

15 other legal entities formed or registered in the 

16 United States has elicited international criticism and 

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

18 is planning to take in response. 

19 (b) EFFECTIVENESS OF INCORPORATION PRAC20 TICES.—Not later than 5 years after the date of enact21 ment of this Act, the Comptroller General of the United 

22 States shall conduct a study and submit to the Committee 

23 on the Judiciary of the Senate and the Committee on the 

24 Judiciary of the House of Representatives a report assess25 ing the effectiveness of incorporation practices impleVerDate Mar 15 2010 04:03 Aug 09, 2013 Jkt 029200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\S1465.IS S1465

smartinez on DSK6TPTVN1PROD with BILLS
36 

•S 1465 IS

1 mented under this Act and the amendments made by this 

2 Act in— 

3 (1) providing law enforcement agencies with 

4 prompt access to reliable, useful, and complete bene5 ficial ownership information; and 

6 (2) strengthening the capability of law enforce7 ment agencies to combat incorporation abuses and 

8 other civil and criminal misconduct. 

Æ 


smartinez on DSK6TPTVN1PROD with BILLS