I 

113TH CONGRESS 

1ST SESSION H. R. 3331 

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

corporations or limited liability companies in the United States disclose 

the beneficial owners of those corporations or limited liability companies, 

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

enforcement in detecting, preventing, and punishing terrorism, money 

laundering, and other misconduct involving United States corporations 

and limited liability companies, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 23, 2013 

Mrs. CAROLYN B. MALONEY of New York (for herself, Ms. WATERS, Ms. 

MOORE, and Mr. CAPUANO) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

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

in the United States disclose the beneficial owners of 

those corporations or limited liability companies, in order 

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

gain, to assist law enforcement in detecting, preventing, 

and punishing terrorism, money laundering, and other 

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


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

3 SECTION 1. SHORT TITLE. 

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

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

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

9 liability companies are being formed under the laws 

10 of the States each year. 

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

13 and limited liability companies formed under their 

14 laws. 

15 (3) A person forming a corporation or limited 

16 liability company within the United States typically 

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

21 (4) Criminals have exploited the weaknesses in 

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

24 companies in the United States, and have then used 

25 the newly created entities to commit crimes affecting 


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

4 foreign corruption. 

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

7 of committing crimes have been impeded by the lack 

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

10 the Department of Justice, the Department of 

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

13 the Internal Revenue Service, and the Government 

14 Accountability Office, and others. 

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

17 Task Force on Money Laundering (in this section 

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

19 States is a member, issued a report that criticizes 

20 the United States for failing to comply with a FATF 

21 standard on the need to collect beneficial ownership 

22 information and urged the United States to correct 

23 this deficiency by July 2008. 

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

25 States has repeatedly urged the States to strengthen 


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1 their incorporation practices by obtaining beneficial 

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

4 such States. 

5 (8) Many States have established automated 

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

8 State within 24 hours of filing an online application, 

9 without any prior review of the application by a 

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

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

13 (9) Dozens of Internet Web sites highlight the 

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

16 practices as a reason to incorporate in those States, 

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

19 corporations, essentially providing an open invitation 

20 to criminals and other wrongdoers to form entities 

21 within the United States. 

22 (10) In contrast to practices in the United 

23 States, all 28 countries in the European Union are 

24 required to have formation agents identify the beneVerDate Mar 15 2010 00:31 Oct 25, 2013 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3331.IH H3331

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1 ficial owners of the corporations formed under the 

2 laws of the country. 

3 (11) To reduce the vulnerability of the United 

4 States to wrongdoing by United States corporations 

5 and limited liability companies with hidden owners, 

6 to protect interstate and international commerce 

7 from criminals misusing United States corporations 

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

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

13 into compliance with its international anti-money 

14 laundering standards, Federal legislation is needed 

15 to require the States to obtain beneficial ownership 

16 information for the corporations and limited liability 

17 companies formed under the laws of such States. 

18 SEC. 3. TRANSPARENT INCORPORATION PRACTICES. 

19 (a) TRANSPARENT INCORPORATION PRACTICES.— 

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

21 United States Code, is amended by inserting after 

22 section 5332 the following new section: 

23 ‘‘§ 5333. Transparent incorporation practices 

24 ‘‘(a) REPORTING REQUIREMENTS.— 


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1 ‘‘(1) IN GENERAL.—Not later than the begin2 ning of fiscal year 2016, the Secretary of the Treas3 ury shall issue regulations requiring each corpora4 tion and limited liability company formed in a State 

5 that does not have a formation system described 

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

7 information as the corporation or limited liability 

8 company would be required to provide the State if 

9 such State had a formation system described under 

10 subsection (b). 

11 ‘‘(2) DISCLOSURE OF BENEFICIAL OWNERSHIP

12 INFORMATION.—Beneficial ownership information 

13 reported to the Secretary of the Treasury pursuant 

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

15 of the Treasury upon receipt of— 

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

18 congressional committee or subcommittee re19 questing such information; 

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

21 agency on behalf of another country under an 

22 international treaty, agreement, or convention, 

23 or an order under section 3512 of title 18, 

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


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

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

6 ‘‘(b) FORMATION SYSTEM.— 

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

8 formation system is described under this subsection 

9 if it meets the following requirements: 

10 ‘‘(A) IDENTIFICATION OF BENEFICIAL

11 OWNERS.—Except as provided in paragraphs 

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

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

17 the corporation or limited liability company 

18 that— 

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

21 by— 

22 ‘‘(I) name; 

23 ‘‘(II) current residential or busi24 ness street address; and 


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1 ‘‘(III) a unique identifying num2 ber from a non-expired passport 

3 issued by the United States or a non4 expired drivers license issued by a 

5 State; and 

6 ‘‘(ii) if the applicant is not the bene7 ficial owner, provides the identification in8 formation described in clause (i) relating 

9 to the applicant. 

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

11 corporation or limited liability company formed 

12 under the laws of the State— 

13 ‘‘(i) the corporation or limited liability 

14 company is required by the State to update 

15 the list of the beneficial owners of the cor16 poration or limited liability company by 

17 providing the information described in sub18 paragraph (A) to the State not later than 

19 60 days after the date of any change in the 

20 list of beneficial owners or the information 

21 required to be provided relating to each 

22 beneficial owner; 

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

24 limited liability company formed or ac25 quired by a formation agent and retained 


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1 by the formation agent as a beneficial 

2 owner for transfer to another person, the 

3 formation agent is required by the State to 

4 submit to the State an updated list of the 

5 beneficial owners and the information de6 scribed in subparagraph (A) for each such 

7 beneficial owner not later than 10 days 

8 after date on which the formation agent 

9 transfers the corporation or limited liabil10 ity company to another person; and 

11 ‘‘(iii) the corporation or limited liabil12 ity company is required by the State to 

13 submit to the State an annual filing con14 taining the list of the beneficial owners of 

15 the corporation or limited liability company 

16 and the information described in subpara17 graph (A) for each such beneficial owner. 

18 ‘‘(C) RETENTION OF INFORMATION.—Ben19 eficial ownership information relating to each 

20 corporation or limited liability company formed 

21 under the laws of the State is required to be 

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

23 year period beginning on the date that the cor24 poration or limited liability company terminates 

25 under the laws of the State. 


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1 ‘‘(D) INFORMATION REQUESTS.—Bene2 ficial ownership information relating to each 

3 corporation or limited liability company formed 

4 under the laws of the State shall be provided by 

5 the State upon receipt of— 

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

7 summons from a State agency, Federal 

8 agency, or congressional committee or sub9 committee requesting such information; 

10 ‘‘(ii) a written request made by a Fed11 eral agency on behalf of another country 

12 under an international treaty, agreement, 

13 or convention, or section 1782 of title 28, 

14 United States Code; or 

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

16 Financial Crimes Enforcement Network. 

17 ‘‘(E) NO BEARER SHARE CORPORATIONS

18 OR LIMITED LIABILITY COMPANIES.—A cor19 poration or limited liability company formed 

20 under the laws of the State may not issue a cer21 tificate in bearer form evidencing either a whole 

22 or fractional interest in the corporation or lim23 ited liability company. 

24 ‘‘(2) STATES THAT LICENSE FORMATION

25 AGENTS.— 


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1 ‘‘(A) IN GENERAL.—Notwithstanding para2 graph (1), a State described in subparagraph 

3 (B) may permit an applicant to form a corpora4 tion or limited liability company under the laws 

5 of the State, or a corporation or limited liability 

6 company formed under the laws of the State, to 

7 provide the required information to a licensed 

8 formation agent residing in the State, instead 

9 of to the State directly, if the application under 

10 paragraph (1)(A) or the update under para11 graph (1)(B) contains— 

12 ‘‘(i) the name, current business ad13 dress, contact information, and licensing 

14 number of the licensed formation agent 

15 that has agreed to maintain the informa16 tion required under this subsection; and 

17 ‘‘(ii) a certification by the licensed 

18 formation agent that the licensed forma19 tion agent has possession of the informa20 tion required under this subsection and 

21 will maintain the information in the State 

22 licensing the licensed formation agent in 

23 accordance with State law. 

24 ‘‘(B) STATES DESCRIBED.—A State de25 scribed in this subparagraph is a State that 


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1 maintains a formal licensing system for forma2 tion agents that requires a formation agent to 

3 register with the State, meet standards for fit4 ness and honesty, maintain a physical office 

5 and records within the State, undergo regular 

6 monitoring, and be subject to sanctions for non7 compliance with State requirements. 

8 ‘‘(C) LICENSED FORMATION AGENT DU9 TIES.—A licensed formation agent that receives 

10 beneficial ownership information under State 

11 law in accordance with this paragraph shall— 

12 ‘‘(i) maintain the information in the 

13 State in which the corporation or limited 

14 liability company is being or has been 

15 formed in the same manner as required for 

16 States under paragraph (1)(C); 

17 ‘‘(ii) provide the information under 

18 the same circumstances as required for 

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

20 ‘‘(iii) perform the duties of a forma21 tion agent under paragraph (3). 

22 ‘‘(D) TERMINATION OF RELATIONSHIP.— 

23 ‘‘(i) IN GENERAL.—Except as pro24 vided in clause (ii), a licensed formation 

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1 formation relating to a corporation or lim2 ited liability company under State law in 

3 accordance with this paragraph and that 

4 resigns, dissolves, or otherwise ends a rela5 tionship with the corporation or limited li6 ability company shall promptly— 

7 ‘‘(I) notify the State in writing 

8 that the licensed formation agent has 

9 resigned or ended the relationship; 

10 and 

11 ‘‘(II) transmit all beneficial own12 ership information relating to the cor13 poration or limited liability company 

14 in the possession of the licensed for15 mation agent to the licensing State. 

16 ‘‘(ii) EXCEPTION.—If a licensed for17 mation agent receives written instructions 

18 from a corporation or limited liability com19 pany, the licensed formation agent may 

20 transmit the beneficial ownership informa21 tion relating to the corporation or limited 

22 liability company to another licensed for23 mation agent that is within the same State 

24 and has agreed to maintain the informa25 tion in accordance with this section. 


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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 promptly notify in writing the 

7 State under the laws of which the corpora8 tion or limited liability company is formed 

9 of the identity of the licensed formation 

10 agent receiving the information. 

11 ‘‘(3) CERTAIN BENEFICIAL OWNERS.—If an ap12 plicant to form a corporation or limited liability com13 pany or a beneficial owner, officer, director, or simi14 lar agent of a corporation or limited liability com15 pany who is required to provide identification infor16 mation under this subsection does not have a non17 expired passport issued by the United States or a 

18 nonexpired drivers license or identification card 

19 issued by a State, each application described in 

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

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

22 formation agent residing in the State that the for23 mation agent— 

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

25 current residential or business street address 


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1 and a legible and credible copy of the pages of 

2 a nonexpired passport issued by the government 

3 of a foreign country bearing a photograph, date 

4 of birth, and unique identifying information for 

5 the person; 

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

7 identity of each such person; 

8 ‘‘(C) will provide the information described 

9 in subparagraph (A) and the proof of 

10 verification described in subparagraph (B) upon 

11 request under the same circumstances as re12 quired for States under paragraph (1)(D); and 

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

14 of verification under this paragraph in the 

15 State in which the corporation or limited liabil16 ity company is being or has been formed until 

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

18 date that the corporation or limited liability 

19 company terminates under the laws of the 

20 State. 

21 ‘‘(4) EXEMPT ENTITIES.— 

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

23 described in paragraph (1) shall require that an 

24 application for an entity described in subpara25 graph (C) or (D) of subsection (d)(2) that is 


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1 proposed to be formed under the laws of a 

2 State and that will be exempt from the bene3 ficial ownership disclosure requirements under 

4 this subsection shall include in the application 

5 a certification by the applicant, or a prospective 

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

7 ‘‘(i) identifying the specific provision 

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

9 proposed to be formed would be exempt 

10 from the beneficial ownership disclosure re11 quirements under paragraphs (1), (2), and 

12 (3); 

13 ‘‘(ii) stating that the entity proposed 

14 to be formed meets the requirements for 

15 an entity described under such provision of 

16 subsection (d)(2); and 

17 ‘‘(iii) providing identification informa18 tion for the applicant or prospective offi19 cer, director, or similar agent making the 

20 certification in the same manner as pro21 vided under paragraph (1) or (3). 

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

23 the date that is 2 years after the effective date 

24 of the amendments to the formation system of 

25 a State made to comply with this section, an 


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1 entity formed under the laws of the State be2 fore such effective date shall be considered to 

3 be a corporation or limited liability company for 

4 purposes of, and shall be subject to the require5 ments of, this subsection unless an officer, di6 rector, or similar agent of the entity submits to 

7 the State a certification— 

8 ‘‘(i) identifying the specific provision 

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

10 is exempt from the requirements under 

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

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

13 requirements for an entity described under 

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

15 ‘‘(iii) providing identification informa16 tion for the officer, director, or similar 

17 agent making the certification in the same 

18 manner as provided under paragraph (1) 

19 or (3). 

20 ‘‘(C) EXEMPT ENTITIES HAVING OWNER21 SHIP INTEREST.—If an entity described in sub22 paragraph (C) or (D) of subsection (d)(2) has 

23 or will have an ownership interest in a corpora24 tion or limited liability company formed or to be 

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


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1 corporation, or limited liability company in 

2 which the entity has or will have the ownership 

3 interest shall provide the information required 

4 under this subsection relating to the entity, ex5 cept that the entity shall not be required to pro6 vide information regarding any natural person 

7 who has an ownership interest in, exercises sub8 stantial control over, or receives substantial eco9 nomic benefits from the entity. 

10 ‘‘(c) PENALTIES.— 

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

12 ‘‘(A) any person to affect interstate or for13 eign commerce by— 

14 ‘‘(i) knowingly providing, or attempt15 ing to provide, false or fraudulent bene16 ficial ownership information, including a 

17 false or fraudulent identifying photograph, 

18 to a State or licensed formation agent 

19 under State law in accordance with this 

20 section; 

21 ‘‘(ii) willfully failing to provide com22 plete or updated beneficial ownership infor23 mation to a State or licensed formation 

24 agent under State law in accordance with 

25 this section; or 


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1 ‘‘(iii) knowingly disclosing the exist2 ence of a subpoena, summons, or other re3 quest for beneficial ownership information, 

4 except— 

5 ‘‘(I) to the extent necessary to 

6 fulfill the authorized request; or 

7 ‘‘(II) as authorized by the entity 

8 that issued the subpoena, summons, 

9 or other request; or 

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

11 knowingly failing to obtain or maintain credible, 

12 legible, and updated beneficial ownership infor13 mation, including any required identifying pho14 tograph. 

15 ‘‘(2) CIVIL AND CRIMINAL PENALTIES.—In ad16 dition to any civil or criminal penalty that may be 

17 imposed by a State, any person who violates para18 graph (1)— 

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

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

21 and 

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

23 States Code, imprisoned for not more than 3 

24 years, or both. 

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


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1 ‘‘(1) BENEFICIAL OWNER.— 

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

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

4 means a natural person who, directly or indi5 rectly— 

6 ‘‘(i) exercises substantial control over 

7 a corporation or limited liability company; 

8 or 

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

10 receives substantial economic benefits from 

11 the assets of a corporation or limited liabil12 ity company. 

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

14 owner’ shall not include— 

15 ‘‘(i) a minor child; 

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

17 intermediary, custodian, or agent on behalf 

18 of another person; 

19 ‘‘(iii) a person acting solely as an em20 ployee of a corporation or limited liability 

21 company and whose control over or eco22 nomic benefits from the corporation or lim23 ited liability company derives solely from 

24 the employment status of the person; 


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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 ‘‘(2) CORPORATION; LIMITED LIABILITY COM11 PANY.—The terms ‘corporation’ and ‘limited liability 

12 company’— 

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

14 under the laws of the applicable State; 

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

16 eligible for registration or registered to do busi17 ness as a corporation or limited liability com18 pany under the laws of the applicable State; 

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

20 discloses in the application by the entity to 

21 form under the laws of the State or, if the enti22 ty was formed before the date of the enactment 

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

24 State law— 


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

2 issuer of a class of securities registered 

3 under section 12 of the Securities Ex4 change Act of 1934 (15 U.S.C. 781) or 

5 that is required to file reports under sec6 tion 15(d) of that Act (15 U.S.C. 78o(d)); 

7 ‘‘(ii) a business concern constituted or 

8 sponsored by a State, a political subdivi9 sion of a State, under an interstate com10 pact between 2 or more States, by a de11 partment or agency of the United States, 

12 or under the laws of the United States; 

13 ‘‘(iii) a depository institution (as de14 fined in section 3 of the Federal Deposit 

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

16 ‘‘(iv) a credit union (as defined in sec17 tion 101 of the Federal Credit Union Act 

18 (12 U.S.C. 1752)); 

19 ‘‘(v) a bank holding company (as de20 fined in section 2 of the Bank Holding 

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

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

23 section 3 of the Securities Exchange Act of 

24 1934 (15 U.S.C. 78c)) that is registered 


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1 under section 15 of the Securities and Ex2 change Act of 1934 (15 U.S.C. 78o); 

3 ‘‘(vii) an exchange or clearing agency 

4 (as defined in section 3 of the Securities 

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

6 that is registered under section 6 or 17A 

7 of the Securities Exchange Act of 1934 

8 (15 U.S.C. 78f and 78q–1); 

9 ‘‘(viii) an investment company (as de10 fined in section 3 of the Investment Com11 pany Act of 1940 (15 U.S.C. 80a–3)) or 

12 an investment advisor (as defined in sec13 tion 202(11) of the Investment Advisors 

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

15 company or adviser is registered with the 

16 Securities and Exchange Commission, or 

17 has filed an application for registration 

18 which has not been denied, under the In19 vestment Company Act of 1940 (15 U.S.C. 

20 80a–1 et seq.) or the Investment Advisor 

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

22 ‘‘(ix) an insurance company (as de23 fined in section 2 of the Investment Com24 pany Act of 1940 (15 U.S.C. 80a–2)); 


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

2 section 1a of the Commodity Exchange Act 

3 (7 U.S.C. 1a)), or a futures commission 

4 merchant, introducing broker, commodity 

5 pool operator, or commodity trading advi6 sor (as defined in section 1a of the Com7 modity Exchange Act (7 U.S.C. 1a)) that 

8 is registered with the Commodity Futures 

9 Trading Commission; 

10 ‘‘(xi) a public accounting firm reg11 istered in accordance with section 102 of 

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

13 ‘‘(xii) a public utility that provides 

14 telecommunications service, electrical 

15 power, natural gas, or water and sewer 

16 services, within the United States; 

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

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

19 527, or 4947(a)(1) of the Internal Revenue 

20 Code of 1986, has not been denied tax ex21 empt status, and has filed the most re22 cently due annual information return with 

23 the Internal Revenue Service, if required to 

24 file such a return; 

25 ‘‘(xiv) any business concern that— 


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1 ‘‘(I) employs more than 20 em2 ployees on a full time basis in the 

3 United States; 

4 ‘‘(II) files income tax returns in 

5 the United States demonstrating more 

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

7 sales; and 

8 ‘‘(III) has an operating presence 

9 at a physical office within the United 

10 States; or 

11 ‘‘(xv) any corporation or limited liabil12 ity company formed and owned by an enti13 ty described in clause (i), (ii), (iii), (iv), 

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

15 (xiii), or (xiv); and 

16 ‘‘(D) do not include any individual busi17 ness concern or class of business concerns 

18 which the Secretary of the Treasury, with the 

19 written concurrence of the Attorney General of 

20 the United States, has determined in writing 

21 should be exempt from the requirements of sub22 section (a), because requiring beneficial owner23 ship information from the business concern 

24 would not serve the public interest and would 

25 not assist law enforcement efforts to detect, 


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1 prevent, or punish terrorism, money laundering, 

2 tax evasion, or other misconduct. 

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

4 agent’ means a person who, for compensation— 

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

6 assist in the formation of a corporation or lim7 ited liability company under the laws of a State; 

8 or 

9 ‘‘(B) purchases, sells, or transfers the pub10 lic records that form a corporation or limited li11 ability company.’’. 

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

13 the amendments made by this Act, the Secretary of 

14 the Treasury, in consultation with the Secretary of 

15 Homeland Security and the Attorney General of the 

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

17 (A) clarify the definitions under section 

18 5333(d) of title 31, United States Code, as 

19 added by paragraph (1); and 

20 (B) specify how to verify beneficial owner21 ship information or other identification infor22 mation for purposes of such section 5333, in23 cluding whether the verification procedures 

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

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


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1 whether such verification process should require 

2 the notarization of signatures. 

3 (3) CONFORMING AMENDMENTS.—Title 31, 

4 United States Code, is amended— 

5 (A) in section 5321(a)— 

6 (i) in paragraph (1), by striking ‘‘sec7 tions 5314 and 5315’’ each place it ap8 pears and inserting ‘‘sections 5314, 5315, 

9 and 5333’’; and 

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

11 ‘‘(except section 5333)’’ after ‘‘sub12 chapter’’ each place it appears; and 

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

14 5315 or 5324’’ each place it appears and insert15 ing ‘‘section 5315, 5324, or 5333’’. 

16 (4) TABLE OF CONTENTS.—The table of con17 tents of chapter 53 of title 31, United States Code, 

18 is amended by inserting after the item relating to 

19 section 5332 the following: 

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

20 (5) RESTRICTIONS ON PUBLIC ACCESS.—A 

21 State may— 

22 (A) restrict public access to all or any por23 tion of the beneficial ownership information 

24 provided to the State as described under section 


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1 5332 of title 31, United States Code, as added 

2 by this Act; and 

3 (B) by statute, regulation, order, or inter4 pretation adopted or issued by the State after 

5 the date of enactment of this Act, provide for 

6 public access to all or any portion of such infor7 mation. 

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

9 the amendments made by this Act do not impose 

10 any obligation on a State to verify the name, ad11 dress, or identity of a beneficial owner whose infor12 mation is submitted to such State under section 

13 5333 of title 31, United States Code, as added by 

14 this Act. 

15 (b) FUNDING AUTHORIZATION.— 

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

17 title 31, United States Code, during the 3-year pe18 riod beginning on the date of enactment of this Act, 

19 funds shall be made available to each State to pay 

20 reasonable costs relating to compliance with the re21 quirements of such section. 

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

23 States against the misuse of United States corpora24 tions and limited liability companies with hidden 

25 owners, funds shall be provided to each State to 


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1 carry out the purposes described in paragraph (1) 

2 from one or more of the following sources: 

3 (A) Upon application by a State, and with4 out further appropriation, the Secretary of the 

5 Treasury shall make available to the State un6 obligated balances described in section 

7 9703(g)(4)(B) of title 31, United States Code, 

8 in the Department of the Treasury Forfeiture 

9 Fund established under section 9703(a) of title 

10 31, United States Code. 

11 (B) Upon application by a State, after con12 sultation with the Secretary of the Treasury, 

13 and without further appropriation, the Attorney 

14 General of the United States shall make avail15 able to the State excess unobligated balances 

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

17 United States Code) in the Department of Jus18 tice Assets Forfeiture Fund established under 

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

20 (3) MAXIMUM AMOUNTS.— 

21 (A) DEPARTMENT OF THE TREASURY.— 

22 The Secretary of the Treasury may not make 

23 available to States a total of more than 

24 $30,000,000 under paragraph (2)(A). 


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1 (B) DEPARTMENT OF JUSTICE.—The At2 torney General of the United States may not 

3 make available to States a total of more than 

4 $10,000,000 under paragraph (2)(B). 

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

6 the 180-day period beginning on the date of the en7 actment of this Act, the Secretary of the Treasury 

8 and the Attorney General shall, jointly, issue regula9 tions setting forth the procedures for States to apply 

10 for funds under this subsection, including deter11 mining which State measures should be funded to 

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

13 policies, procedures, or system modifications. 

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

15 or the amendments made by this section authorizes the 

16 Secretary of the Treasury to withhold from a State any 

17 funding otherwise available to the State because of a fail18 ure by that State to comply with section 5333 of title 31, 

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

20 month period beginning on the date of the enactment of 

21 this Act, the Comptroller General of the United States 

22 shall submit to the Committee on Financial Services of 

23 the House of Representatives and the Committee on 

24 Homeland Security and Governmental Affairs of the Sen25 ate a report— 


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1 (1) identifying which States obtain beneficial 

2 ownership information as described in such section 

3 5333; 

4 (2) with respect to each State that does not ob5 tain such information, whether corporations and lim6 ited liability companies formed under the laws of 

7 such State are in compliance with such section 5333 

8 and providing the specified beneficial ownership in9 formation to the Secretary of the Treasury; and 

10 (3) whether the Department of the Treasury is 

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

12 what steps it must take to come into compliance 

13 with this section. 

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

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

16 year after the date of the enactment of this Act, the Ad17 ministrator for Federal Procurement Policy shall revise 

18 the Federal Acquisition Regulation maintained under sec19 tion 1303(a)(1) of title 41, United States Code, to require 

20 any contractor who is subject to the requirement to dis21 close beneficial ownership information under section 5333 

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

23 required to be disclosed under such section to the Federal 

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1 tion threshold under section 134 of title 41, United States 

2 Code. 

3 (e) ANTI-MONEY LAUNDERING OBLIGATIONS OF

4 FORMATION AGENTS.— 

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

6 31, United States Code, is amended— 

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

8 at the end; 

9 (B) by redesignating subparagraph (Z) as 

10 subparagraph (AA); and 

11 (C) by inserting after subparagraph (Y) 

12 the following: 

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

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

15 to form, or assist in formation of, a cor16 poration or limited liability company under 

17 the laws of a State; or 

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

19 public records that form a corporation or 

20 limited liability company; or’’. 

21 (2) DEADLINE FOR ANTI-MONEY LAUNDERING

22 RULE FOR FORMATION AGENTS.— 

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

24 days after the date of enactment of this Act, 

25 the Secretary of the Treasury, in consultation 


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1 with the Attorney General of the United States 

2 and the Commissioner of the Internal Revenue 

3 Service, shall publish a proposed rule in the 

4 Federal Register requiring persons described in 

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

6 Code, as amended by this subsection, to estab7 lish anti-money laundering programs under sub8 section (h) of section 5318 of that title. 

9 (B) FINAL RULE.—Not later than 270 

10 days after the date of enactment of this Act, 

11 the Secretary of the Treasury shall publish the 

12 rule described in this subsection in final form in 

13 the Federal Register. 

14 (C) EXCLUSIONS.—Any rule promulgated 

15 under this subsection shall exclude from the 

16 category of persons involved in forming a cor17 poration or limited liability company— 

18 (i) any government agency; and 

19 (ii) any attorney or law firm that uses 

20 a paid formation agent operating within 

21 the United States to form the corporation 

22 or limited liability company. 

23 SEC. 4. STUDIES AND REPORTS. 

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

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1 troller General of the United States shall conduct a study 

2 and submit to the Congress a report— 

3 (1) identifying each State that has procedures 

4 that enable persons to form or register under the 

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

6 entities, and the nature of those procedures; 

7 (2) identifying each State that requires persons 

8 seeking to form or register partnerships, trusts, or 

9 other legal entities under the laws of the State to 

10 provide information about the beneficial owners (as 

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

12 31, United States Code, as added by this Act) or 

13 beneficiaries of such entities, and the nature of the 

14 required information; 

15 (3) evaluating whether the lack of available 

16 beneficial ownership information for partnerships, 

17 trusts, or other legal entities— 

18 (A) raises concerns about the involvement 

19 of such entities in terrorism, money laundering, 

20 tax evasion, securities fraud, or other mis21 conduct; and 

22 (B) has impeded investigations into enti23 ties suspected of such misconduct; and 

24 (4) evaluating whether the failure of the United 

25 States to require beneficial ownership information 


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1 for partnerships and trusts formed or registered in 

2 the United States has elicited international criticism 

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

4 or is planning to take in response. 

5 (b) EFFECTIVENESS OF INCORPORATION PRAC6 TICES.—Not later than 5 years after the date of enact7 ment of this Act, the Comptroller General of the United 

8 States shall conduct a study and submit to the Congress 

9 a report assessing the effectiveness of incorporation prac10 tices implemented under this Act and the amendments 

11 made by this Act in— 

12 (1) providing law enforcement agencies with 

13 prompt access to reliable, useful, and complete bene14 ficial ownership information; and 

15 (2) strengthening the capability of law enforce16 ment agencies to combat incorporation abuses, civil 

17 and criminal misconduct, and detect, prevent, or 

18 punish terrorism, money laundering, tax evasion, or 

19 other misconduct. 

Æ 


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