II 

115TH CONGRESS 

1ST SESSION S. 1717 

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 SENATE OF THE UNITED STATES 

AUGUST 2, 2017 

Mr. WYDEN (for himself and Mr. RUBIO) introduced the following bill; which 

was read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

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 ‘‘Corporate Trans5 parency Act of 2017’’. 

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. In December 2016, 

24 FATF issued another evaluation of the U.S., which 

25 found that little progress has been made over the 


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1 last ten years to address this problem. It identified 

2 the ‘‘lack of timely access to adequate, accurate and 

3 current beneficial ownership information’’ as a fun4 damental gap in U.S. efforts to combat money laun5 dering and terrorist finance. 

6 (7) In response to the 2006 FATF report, the 

7 United States has repeatedly urged the States to 

8 strengthen their incorporation practices by obtaining 

9 beneficial ownership information for the corporations 

10 and limited liability companies formed under the 

11 laws of such States. 

12 (8) Many States have established automated 

13 procedures that allow a person to form a new cor14 poration or limited liability company within the 

15 State within 24 hours of filing an online application, 

16 without any prior review of the application by a 

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

18 States will form a corporation within 1 hour of a re19 quest. 

20 (9) Dozens of Internet Web sites highlight the 

21 anonymity of beneficial owners allowed under the in22 corporation practices of some States, point to those 

23 practices as a reason to incorporate in those States, 

24 and list those States together with offshore jurisdic25 tions as preferred locations for the formation of new 


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1 corporations, essentially providing an open invitation 

2 to criminals and other wrongdoers to form entities 

3 within the United States. 

4 (10) In contrast to practices in the United 

5 States, all 28 countries in the European Union are 

6 required to have formation agents identify the bene7 ficial owners of the corporations formed under the 

8 laws of the country. 

9 (11) To reduce the vulnerability of the United 

10 States to wrongdoing by United States corporations 

11 and limited liability companies with hidden owners, 

12 to protect interstate and international commerce 

13 from criminals misusing United States corporations 

14 and limited liability companies, to strengthen law en15 forcement investigations of suspect corporations and 

16 limited liability companies, to set minimum stand17 ards for and level the playing field among State in18 corporation practices, and to bring the United States 

19 into compliance with its international anti-money 

20 laundering standards, Federal legislation is needed 

21 to require the collection of beneficial ownership in22 formation for the corporations and limited liability 

23 companies formed under the laws of such States. 

24 SEC. 3. TRANSPARENT INCORPORATION PRACTICES. 

25 (a) TRANSPARENT INCORPORATION PRACTICES.— 


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

2 United States Code, is amended by inserting after 

3 section 5332 the following new section: 

4 ‘‘§ 5333. Transparent incorporation practices 

5 ‘‘(a) REPORTING REQUIREMENTS.— 

6 ‘‘(1) IN GENERAL.—Not later than the begin7 ning of fiscal year 2019, the Secretary of the Treas8 ury shall issue regulations requiring each corpora9 tion and limited liability company formed in a State 

10 that does not have a formation system described 

11 under subsection (b) to file with the Financial 

12 Crimes Enforcement Network such information as 

13 the corporation or limited liability company would be 

14 required to provide the State if such State had a for15 mation system described under subsection (b). 

16 ‘‘(2) DISCLOSURE OF BENEFICIAL OWNERSHIP

17 INFORMATION.—Beneficial ownership information 

18 reported to the Financial Crimes Enforcement Net19 work pursuant to paragraph (1) shall be provided by 

20 the Financial Crimes Enforcement Network upon re21 ceipt of— 

22 ‘‘(A) a civil or criminal subpoena or sum23 mons from a State agency, Federal agency, or 

24 congressional committee or subcommittee re25 questing such information; 


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

2 agency on behalf of another country under an 

3 international treaty, agreement, or convention, 

4 or an order under section 3512 of title 18 or 

5 section 1782 of title 28 issued in response to a 

6 request for assistance from a foreign country; 

7 or 

8 ‘‘(C) a written request made by a financial 

9 institution, with customer consent, as part of 

10 the institution’s compliance with due diligence 

11 requirements imposed under the Bank Secrecy 

12 Act (Public Law 91508; 84 Stat. 1114), the 

13 USA PATRIOT Act (Public Law 10756; 115 

14 Stat. 272), or other applicable Federal or State 

15 law. 

16 ‘‘(3) LIMITATION.—In issuing regulations pur17 suant to paragraph (1), the Secretary shall not re18 quire such information to be filed with the Internal 

19 Revenue Service. 

20 ‘‘(b) FORMATION SYSTEM.— 

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

22 formation system is described under this subsection 

23 if it meets the following requirements: 

24 ‘‘(A) IDENTIFICATION OF BENEFICIAL

25 OWNERS.—Except as provided in paragraphs 


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

2 applicant to form a corporation or limited liabil3 ity company under the laws of the State is re4 quired to provide to the State during the forma5 tion process a list of the beneficial owners of 

6 the corporation or limited liability company 

7 that— 

8 ‘‘(i) except as provided in subpara9 graph (F), identifies each beneficial owner 

10 by— 

11 ‘‘(I) name; 

12 ‘‘(II) current residential or busi13 ness street address; and 

14 ‘‘(III) a unique identifying num15 ber from a non-expired passport 

16 issued by the United States or a non17 expired driver’s license issued by a 

18 State; and 

19 ‘‘(ii) if the applicant is not the bene20 ficial owner, provides the identification in21 formation described in clause (i) relating 

22 to the applicant. 

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

24 corporation or limited liability company formed 

25 under the laws of the State— 


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1 ‘‘(i) the corporation or limited liability 

2 company is required by the State to update 

3 the list of the beneficial owners of the cor4 poration or limited liability company by 

5 providing the information described in sub6 paragraph (A) to the State not later than 

7 60 days after the date of any change in the 

8 list of beneficial owners or the information 

9 required to be provided relating to each 

10 beneficial owner; 

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

12 limited liability company formed or ac13 quired by a formation agent and retained 

14 by the formation agent as a beneficial 

15 owner for transfer to another person, the 

16 formation agent is required by the State to 

17 submit to the State an updated list of the 

18 beneficial owners and the information de19 scribed in subparagraph (A) for each such 

20 beneficial owner not later than 10 days 

21 after date on which the formation agent 

22 transfers the corporation or limited liabil23 ity company to another person; and 

24 ‘‘(iii) the corporation or limited liabil25 ity company is required by the State to 


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1 submit to the State an annual filing con2 taining the list of the beneficial owners of 

3 the corporation or limited liability company 

4 and the information described in subpara5 graph (A) for each such beneficial owner. 

6 ‘‘(C) RETENTION OF INFORMATION.—Ben7 eficial ownership information relating to each 

8 corporation or limited liability company formed 

9 under the laws of the State is required to be 

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

11 year period beginning on the date that the cor12 poration or limited liability company terminates 

13 under the laws of the State. 

14 ‘‘(D) INFORMATION REQUESTS.—Bene15 ficial ownership information relating to each 

16 corporation or limited liability company formed 

17 under the laws of the State shall be provided by 

18 the State upon receipt of— 

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

20 summons from a State agency, Federal 

21 agency, or congressional committee or sub22 committee requesting such information; 

23 ‘‘(ii) a written request made by a Fed24 eral agency on behalf of another country 


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1 under an international treaty, agreement, 

2 or convention, or section 1782 of title 28; 

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

4 Financial Crimes Enforcement Network; or 

5 ‘‘(iv) a written request made by a fi6 nancial institution, with customer consent, 

7 as part of the institution’s compliance with 

8 due diligence requirements imposed under 

9 the Bank Secrecy Act (Public Law 91508; 

10 84 Stat. 1114), the USA PATRIOT Act 

11 (Public Law 10756; 115 Stat. 272), or 

12 other applicable Federal or State law. 

13 ‘‘(E) NOTICE.—The State discloses clearly 

14 and conspicuously that the beneficial ownership 

15 information collected under the formation sys16 tem may be provided to the entities described in 

17 subparagraph (D), pursuant to the require18 ments of such subparagraph. 

19 ‘‘(F) NO BEARER SHARE CORPORATIONS

20 OR LIMITED LIABILITY COMPANIES.—A cor21 poration or limited liability company formed 

22 under the laws of the State may not issue a cer23 tificate in bearer form evidencing either a whole 

24 or fractional interest in the corporation or lim25 ited liability company. 


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1 ‘‘(2) STATES THAT LICENSE FORMATION

2 AGENTS.— 

3 ‘‘(A) IN GENERAL.—Notwithstanding para4 graph (1), a State described in subparagraph 

5 (B) may permit an applicant to form a corpora6 tion or limited liability company under the laws 

7 of the State, or a corporation or limited liability 

8 company formed under the laws of the State, to 

9 provide the required information to a licensed 

10 formation agent residing in the State, instead 

11 of to the State directly, if the application under 

12 paragraph (1)(A) or the update under para13 graph (1)(B) contains— 

14 ‘‘(i) the name, current business ad15 dress, contact information, and licensing 

16 number of the licensed formation agent 

17 that has agreed to maintain the informa18 tion required under this subsection; and 

19 ‘‘(ii) a certification by the licensed 

20 formation agent that the licensed forma21 tion agent has possession of the informa22 tion required under this subsection and 

23 will maintain the information in the State 

24 licensing the licensed formation agent in 

25 accordance with State law. 


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1 ‘‘(B) STATES DESCRIBED.—A State de2 scribed in this subparagraph is a State that 

3 maintains a formal licensing system for forma4 tion agents that requires a formation agent to 

5 register with the State, meet standards for fit6 ness and honesty, maintain a physical office 

7 and records within the State, undergo regular 

8 monitoring, and be subject to sanctions for non9 compliance with State requirements. 

10 ‘‘(C) LICENSED FORMATION AGENT DU11 TIES.—A licensed formation agent that receives 

12 beneficial ownership information under State 

13 law in accordance with this paragraph shall— 

14 ‘‘(i) maintain the information in the 

15 State in which the corporation or limited 

16 liability company is being or has been 

17 formed in the same manner as required for 

18 States under paragraph (1)(C); 

19 ‘‘(ii) provide the information under 

20 the same circumstances as required for 

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

22 ‘‘(iii) perform the duties of a forma23 tion agent under paragraph (3). 

24 ‘‘(D) TERMINATION OF RELATIONSHIP.— 


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1 ‘‘(i) IN GENERAL.—Except as pro2 vided in clause (ii), a licensed formation 

3 agent that receives beneficial ownership in4 formation relating to a corporation or lim5 ited liability company under State law in 

6 accordance with this paragraph and that 

7 resigns, dissolves, or otherwise ends a rela8 tionship with the corporation or limited li9 ability company shall promptly— 

10 ‘‘(I) notify the State in writing 

11 that the licensed formation agent has 

12 resigned or ended the relationship; 

13 and 

14 ‘‘(II) transmit all beneficial own15 ership information relating to the cor16 poration or limited liability company 

17 in the possession of the licensed for18 mation agent to the licensing State. 

19 ‘‘(ii) EXCEPTION.—If a licensed for20 mation agent receives written instructions 

21 from a corporation or limited liability com22 pany, the licensed formation agent may 

23 transmit the beneficial ownership informa24 tion relating to the corporation or limited 

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1 mation agent that is within the same State 

2 and has agreed to maintain the informa3 tion in accordance with this section. 

4 ‘‘(iii) NOTICE TO STATE.—If a li5 censed formation agent provides beneficial 

6 ownership information to another licensed 

7 formation agent under clause (ii), the li8 censed formation agent providing the infor9 mation shall promptly notify in writing the 

10 State under the laws of which the corpora11 tion or limited liability company is formed 

12 of the identity of the licensed formation 

13 agent receiving the information. 

14 ‘‘(3) CERTAIN BENEFICIAL OWNERS.—If an ap15 plicant to form a corporation or limited liability com16 pany or a beneficial owner, officer, director, or simi17 lar agent of a corporation or limited liability com18 pany who is required to provide identification infor19 mation under this subsection does not have a non20 expired passport issued by the United States or a 

21 non-expired driver’s license or identification card 

22 issued by a State, each application described in 

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

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


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1 formation agent residing in the State that the for2 mation agent— 

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

4 current residential or business street address 

5 and a legible and credible copy of the pages of 

6 a non-expired passport issued by the govern7 ment of a foreign country bearing a photo8 graph, date of birth, and unique identifying in9 formation for the person; 

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

11 identity of each such person; 

12 ‘‘(C) will provide the information described 

13 in subparagraph (A) and the proof of 

14 verification described in subparagraph (B) upon 

15 request under the same circumstances as re16 quired for States under paragraph (1)(D); and 

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

18 of verification under this paragraph in the 

19 State in which the corporation or limited liabil20 ity company is being or has been formed until 

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

22 date that the corporation or limited liability 

23 company terminates under the laws of the 

24 State. 

25 ‘‘(4) EXEMPT ENTITIES.— 


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

2 described in paragraph (1) shall require that an 

3 application for an entity described in subpara4 graph (C) or (D) of subsection (d)(2) that is 

5 proposed to be formed under the laws of a 

6 State and that will be exempt from the bene7 ficial ownership disclosure requirements under 

8 this subsection shall include in the application 

9 a certification by the applicant, or a prospective 

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

11 ‘‘(i) identifying the specific provision 

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

13 proposed to be formed would be exempt 

14 from the beneficial ownership disclosure re15 quirements under paragraphs (1), (2), and 

16 (3); 

17 ‘‘(ii) stating that the entity proposed 

18 to be formed meets the requirements for 

19 an entity described under such provision of 

20 subsection (d)(2); and 

21 ‘‘(iii) providing identification informa22 tion for the applicant or prospective offi23 cer, director, or similar agent making the 

24 certification in the same manner as pro25 vided under paragraph (1) or (3). 


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

2 the date that is 2 years after the effective date 

3 of the amendments to the formation system of 

4 a State made to comply with this section, an 

5 entity formed under the laws of the State be6 fore such effective date shall be considered to 

7 be a corporation or limited liability company for 

8 purposes of, and shall be subject to the require9 ments of, this subsection unless an officer, di10 rector, or similar agent of the entity submits to 

11 the State a certification— 

12 ‘‘(i) identifying the specific provision 

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

14 is exempt from the requirements under 

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

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

17 requirements for an entity described under 

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

19 ‘‘(iii) providing identification informa20 tion for the officer, director, or similar 

21 agent making the certification in the same 

22 manner as provided under paragraph (1) 

23 or (3). 

24 ‘‘(C) EXEMPT ENTITIES HAVING OWNER25 SHIP INTEREST.—If an entity described in subVerDate Sep 11 2014 00:03 Aug 16, 2017 Jkt 069200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S1717.IS S1717

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1 paragraph (C) or (D) of subsection (d)(2) has 

2 or will have an ownership interest in a corpora3 tion or limited liability company formed or to be 

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

5 corporation, or limited liability company in 

6 which the entity has or will have the ownership 

7 interest shall provide the information required 

8 under this subsection relating to the entity, ex9 cept that the entity shall not be required to pro10 vide information regarding any natural person 

11 who has an ownership interest in, exercises sub12 stantial control over, or receives substantial eco13 nomic benefits from the entity. 

14 ‘‘(c) PENALTIES.— 

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

16 ‘‘(A) any person to affect interstate or for17 eign commerce by— 

18 ‘‘(i) knowingly providing, or attempt19 ing to provide, false or fraudulent bene20 ficial ownership information, including a 

21 false or fraudulent identifying photograph, 

22 to a State or licensed formation agent 

23 under State law in accordance with this 

24 section; 


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1 ‘‘(ii) willfully failing to provide com2 plete or updated beneficial ownership infor3 mation to a State or licensed formation 

4 agent under State law in accordance with 

5 this section; or 

6 ‘‘(iii) knowingly disclosing the exist7 ence of a subpoena, summons, or other re8 quest for beneficial ownership information, 

9 except— 

10 ‘‘(I) to the extent necessary to 

11 fulfill the authorized request; 

12 ‘‘(II) as authorized by the entity 

13 that issued the subpoena, summons, 

14 or other request; or 

15 ‘‘(III) as prescribed by a State; 

16 or 

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

18 knowingly failing to obtain or maintain credible, 

19 legible, and updated beneficial ownership infor20 mation, including any required identifying pho21 tograph. 

22 ‘‘(2) CIVIL AND CRIMINAL PENALTIES.—In ad23 dition to any civil or criminal penalty that may be 

24 imposed by a State, any person who violates para25 graph (1)— 


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

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

3 and 

4 ‘‘(B) may be fined under title 18, impris5 oned for not more than 3 years, or both. 

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

7 ‘‘(1) BENEFICIAL OWNER.—The term ‘bene8 ficial owner’— 

9 ‘‘(A) means a natural person who, directly 

10 or indirectly— 

11 ‘‘(i) exercises substantial control over 

12 a corporation or limited liability company; 

13 or 

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

15 receives substantial economic benefits from 

16 the assets of a corporation or limited liabil17 ity company; and 

18 ‘‘(B) does not include— 

19 ‘‘(i) a minor child; 

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

21 intermediary, custodian, or agent on behalf 

22 of another person; 

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

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

3 the employment status of the person; 

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

5 a corporation or limited liability company 

6 is through a right of inheritance, unless 

7 the person also meets the requirements of 

8 subparagraph (A); or 

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

10 limited liability company, unless the cred11 itor also meets the requirements of sub12 paragraph (A). 

13 ‘‘(2) CORPORATION; LIMITED LIABILITY COM14 PANY.—The terms ‘corporation’ and ‘limited liability 

15 company’— 

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

17 under the laws of the applicable State; 

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

19 eligible for registration or registered to do busi20 ness as a corporation or limited liability com21 pany under the laws of the applicable State; 

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

23 discloses in the application by the entity to 

24 form under the laws of the State or, if the enti25 ty was formed before the date of the enactment 


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

2 State law— 

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

4 issuer of a class of securities registered 

5 under section 12 of the Securities Ex6 change Act of 1934 (15 U.S.C. 78l) or 

7 that is required to file reports under sec8 tion 15(d) of that Act (15 U.S.C. 78o(d)); 

9 ‘‘(ii) a business concern constituted or 

10 sponsored by a State, a political subdivi11 sion of a State, under an interstate com12 pact between 2 or more States, by a de13 partment or agency of the United States, 

14 or under the laws of the United States; 

15 ‘‘(iii) a depository institution (as de16 fined in section 3 of the Federal Deposit 

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

18 ‘‘(iv) a credit union (as defined in sec19 tion 101 of the Federal Credit Union Act 

20 (12 U.S.C. 1752)); 

21 ‘‘(v) a bank holding company (as de22 fined in section 2 of the Bank Holding 

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

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

25 section 3 of the Securities Exchange Act of 


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•S 1717 IS

1 1934 (15 U.S.C. 78c)) that is registered 

2 under section 15 of the Securities Ex3 change Act of 1934 (15 U.S.C. 78o); 

4 ‘‘(vii) an exchange or clearing agency 

5 (as defined in section 3 of the Securities 

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

7 that is registered under section 6 or 17A 

8 of the Securities Exchange Act of 1934 

9 (15 U.S.C. 78f and 78q–1); 

10 ‘‘(viii) an investment company (as de11 fined in section 3 of the Investment Com12 pany Act of 1940 (15 U.S.C. 80a–3)) or 

13 an investment advisor (as defined in sec14 tion 202 of the Investment Advisers Act of 

15 1940 (15 U.S.C. 80b–2)), if the company 

16 or adviser is registered with the Securities 

17 and Exchange Commission, or has filed an 

18 application for registration which has not 

19 been denied, under the Investment Com20 pany Act of 1940 (15 U.S.C. 80a–1 et 

21 seq.) or the Investment Advisers Act of 

22 1940 (15 U.S.C. 80b–1 et seq.); 

23 ‘‘(ix) an insurance company (as de24 fined in section 2 of the Investment Com25 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 Financial Crimes Enforcement Net10 work; and 

11 (3) whether the Department of the Treasury is 

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

13 what steps it must take to come into compliance 

14 with this section. 

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

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

17 year after the date of the enactment of this Act, the Ad18 ministrator for Federal Procurement Policy shall revise 

19 the Federal Acquisition Regulation maintained under sec20 tion 1303(a)(1) of title 41, United States Code, to require 

21 any contractor who is subject to the requirement to dis22 close beneficial ownership information under section 5333 

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

24 required to be disclosed under such section to the Federal 

25 Government as part of any bid or proposal for a contract 


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1 with a value threshold in excess of the simplified acquisi2 tion threshold under section 134 of title 41, United States 

3 Code. 

4 (e) ANTI-MONEY LAUNDERING OBLIGATIONS OF

5 FORMATION AGENTS.— 

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

7 31, United States Code, is amended— 

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

9 at the end; 

10 (B) by redesignating subparagraph (Z) as 

11 subparagraph (AA); and 

12 (C) by inserting after subparagraph (Y) 

13 the following: 

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

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

16 to form, or assist in formation of, a cor17 poration or limited liability company under 

18 the laws of a State; or 

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

20 public records that form a corporation or 

21 limited liability company; or’’. 

22 (2) DEADLINE FOR ANTI-MONEY LAUNDERING

23 RULE FOR FORMATION AGENTS.— 

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

25 days after the date of enactment of this Act, 


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1 the Secretary of the Treasury, in consultation 

2 with the Attorney General of the United States 

3 and the Commissioner of the Internal Revenue 

4 Service, shall publish a proposed rule in the 

5 Federal Register requiring persons described in 

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

7 Code, as amended by this subsection, to estab8 lish anti-money laundering programs under sub9 section (h) of section 5318 of that title. 

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

11 days after the date of enactment of this Act, 

12 the Secretary of the Treasury shall publish the 

13 rule described in this subsection in final form in 

14 the Federal Register. 

15 (C) EXCLUSIONS.—Any rule promulgated 

16 under this subsection shall exclude from the 

17 category of persons involved in forming a cor18 poration or limited liability company— 

19 (i) any government agency; and 

20 (ii) any attorney or law firm that uses 

21 a paid formation agent operating within 

22 the United States to form the corporation 

23 or limited liability company. 


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1 SEC. 4. STUDIES AND REPORTS. 

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

3 years after the date of enactment of this Act, the Comp4 troller General of the United States shall conduct a study 

5 and submit to Congress a report— 

6 (1) identifying each State that has procedures 

7 that enable persons to form or register under the 

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

9 entities, and the nature of those procedures; 

10 (2) identifying each State that requires persons 

11 seeking to form or register partnerships, trusts, or 

12 other legal entities under the laws of the State to 

13 provide information about the beneficial owners (as 

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

15 31, United States Code, as added by this Act) or 

16 beneficiaries of such entities, and the nature of the 

17 required information; 

18 (3) evaluating whether the lack of available 

19 beneficial ownership information for partnerships, 

20 trusts, or other legal entities— 

21 (A) raises concerns about the involvement 

22 of such entities in terrorism, money laundering, 

23 tax evasion, securities fraud, or other mis24 conduct; and 

25 (B) has impeded investigations into enti26 ties suspected of such misconduct; and 


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1 (4) evaluating whether the failure of the United 

2 States to require beneficial ownership information 

3 for partnerships and trusts formed or registered in 

4 the United States has elicited international criticism 

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

6 or is planning to take in response. 

7 (b) EFFECTIVENESS OF INCORPORATION PRAC8 TICES.—Not later than 5 years after the date of enact9 ment of this Act, the Comptroller General of the United 

10 States shall conduct a study and submit to the Congress 

11 a report assessing the effectiveness of incorporation prac12 tices implemented under this Act and the amendments 

13 made by this Act in— 

14 (1) providing law enforcement agencies with 

15 prompt access to reliable, useful, and complete bene16 ficial ownership information; and 

17 (2) strengthening the capability of law enforce18 ment agencies to combat incorporation abuses, civil 

19 and criminal misconduct, and detect, prevent, or 

20 punish terrorism, money laundering, tax evasion, or 

21 other misconduct. 

Æ 


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