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[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2513 Reported in House (RH)]

<DOC>

                                                 Union Calendar No. 180
116th CONGRESS
  1st Session
                                H. R. 2513

                          [Report No. 116-227]

   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

                              May 3, 2019

Mrs. Carolyn B. Maloney of New York (for herself, Mr. King of New York, 
 and Mr. Malinowski) introduced the following bill; which was referred 
                 to the Committee on Financial Services

                            October 8, 2019

 Additional sponsors: Mr. Beyer, Mr. Cooper, Mr. Hastings, Mr. Meeks, 
     Mr. Cleaver, Ms. Kaptur, Ms. Blunt Rochester, and Mr. Sherman

                            October 8, 2019

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on May 3, 
                                 2019]

_______________________________________________________________________

                                 A BILL

 
   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.

 

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Corporate Transparency Act of 
2019''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Nearly 2,000,000 corporations and limited liability 
        companies are being formed under the laws of the States each 
        year.
            (2) Very few States require information about the 
        beneficial owners of the corporations and limited liability 
        companies formed under their laws.
            (3) A person forming a corporation or limited liability 
        company within the United States typically provides less 
        information at the time of incorporation than is needed to 
        obtain a bank account or driver's license and typically does 
        not name a single beneficial owner.
            (4) Criminals have exploited State formation procedures to 
        conceal their identities when forming corporations or limited 
        liability companies in the United States, and have then used 
        the newly created entities to commit crimes affecting 
        interstate and international commerce such as terrorism, 
        proliferation financing, drug and human trafficking, money 
        laundering, tax evasion, counterfeiting, piracy, securities 
        fraud, financial fraud, and acts of foreign corruption.
            (5) Law enforcement efforts to investigate corporations and 
        limited liability companies suspected of committing crimes have 
        been impeded by the lack of available beneficial ownership 
        information, as documented in reports and testimony by 
        officials from the Department of Justice, the Department of 
        Homeland Security, the Department of the Treasury, and the 
        Government Accountability Office, and others.
            (6) In July 2006, the leading international antimoney 
        laundering standard-setting body, the Financial Action Task 
        Force on Money Laundering (in this section referred to as the 
        ``FATF''), of which the United States is a member, issued a 
        report that criticizes the United States for failing to comply 
        with a FATF standard on the need to collect beneficial 
        ownership information and urged the United States to correct 
        this deficiency by July 2008. In December 2016, FATF issued 
        another evaluation of the United States, which found that 
        little progress has been made over the last ten years to 
        address this problem. It identified the ``lack of timely access 
        to adequate, accurate and current beneficial ownership 
        information'' as a fundamental gap in United States efforts to 
        combat money laundering and terrorist finance.
            (7) In response to the 2006 FATF report, the United States 
        has urged the States to obtain beneficial ownership information 
        for the corporations and limited liability companies formed 
        under the laws of such States.
            (8) In contrast to practices in the United States, all 28 
        countries in the European Union are required to have corporate 
        registries that include beneficial ownership information.
            (9) To reduce the vulnerability of the United States to 
        wrongdoing by United States corporations and limited liability 
        companies with hidden owners, to protect interstate and 
        international commerce from criminals misusing United States 
        corporations and limited liability companies, to strengthen law 
        enforcement investigations of suspect corporations and limited 
        liability companies, to set a clear, universal standard for 
        State incorporation practices, and to bring the United States 
        into compliance with international anti-money laundering 
        standards, Federal legislation is needed to require the 
        collection of beneficial ownership information for the 
        corporations and limited liability companies formed under the 
        laws of such States.

SEC. 3. TRANSPARENT INCORPORATION PRACTICES.

    (a) In General.--
            (1) Amendment to the bank secrecy act.--Chapter 53 of title 
        31, United States Code, is amended by inserting after section 
        5332 the following new section:
``Sec. 5333 Transparent incorporation practices
    ``(a) Reporting Requirements.--
            ``(1) Beneficial ownership reporting.--
                    ``(A) In general.--Each applicant to form a 
                corporation or limited liability company under the laws 
                of a State or Indian Tribe shall file a report with 
                FinCEN containing a list of the beneficial owners of 
                the corporation or limited liability company that--
                            ``(i) except as provided in paragraphs (3) 
                        and (4), and subject to paragraph (2), 
                        identifies each beneficial owner by--
                                    ``(I) full legal name;
                                    ``(II) date of birth;
                                    ``(III) current residential or 
                                business street address; and
                                    ``(IV) a unique identifying number 
                                from a non-expired passport issued by 
                                the United States, a non-expired 
                                personal identification card, or a non-
                                expired driver's license issued by a 
                                State; and
                            ``(ii) if the applicant is not a beneficial 
                        owner, also provides the identification 
                        information described in clause (i) relating to 
                        such applicant.
                    ``(B) Updated information.--Each corporation or 
                limited liability company formed under the laws of a 
                State or Indian Tribe shall--
                            ``(i) submit to FinCEN an annual filing 
                        containing a list of--
                                    ``(I) the current beneficial owners 
                                of the corporation or limited liability 
                                company and the information described 
                                in subparagraph (A) for each such 
                                beneficial owner; and
                                    ``(II) any changes in the 
                                beneficial owners of the corporation or 
                                limited liability company during the 
                                previous year; and
                            ``(ii) pursuant to any rule issued by the 
                        Secretary of the Treasury under subparagraph 
                        (C), update the list of the beneficial owners 
                        of the corporation or limited liability company 
                        within the time period prescribed by such rule.
                    ``(C) Rulemaking on updating information.--Not 
                later than 9 months after the completion of the study 
                required under section 4(a)(1) of the Corporate 
                Transparency Act of 2019, the Secretary of the Treasury 
                shall consider the findings of such study and, if the 
                Secretary determines it to be necessary or appropriate, 
                issue a rule requiring corporations and limited 
                liability companies to update the list of the 
                beneficial owners of the corporation or limited 
                liability company within a specified amount of time 
                after the date of any change in the list of beneficial 
                owners or the information required to be provided 
                relating to each beneficial owner.
                    ``(D) State notification.--Each State in which a 
                corporation or limited liability company is being 
                formed shall notify each applicant of the requirements 
                listed in subparagraphs (A) and (B).
            ``(2) Certain beneficial owners.--If an applicant to form a 
        corporation or limited liability company or a beneficial owner, 
        or similar agent of a corporation or limited liability company 
        who is required to provide identification information under 
        this subsection, does not have a nonexpired passport issued by 
        the United States, a nonexpired personal identification card, 
        or a non-expired driver's license issued by a State, each such 
        person shall provide to FinCEN the full legal name, current 
        residential or business street address, a unique identifying 
        number from a non-expired passport issued by a foreign 
        government, and a legible and credible copy of the pages of a 
        non-expired passport issued by the government of a foreign 
        country bearing a photograph, date of birth, and unique 
        identifying information for each beneficial owner, and each 
        application described in paragraph (1)(A) and each update 
        described in paragraph (1)(B) shall include a written 
        certification by a person residing in the State or Indian 
        country under the jurisdiction of the Indian Tribe forming the 
        entity that the applicant, corporation, or limited liability 
        company--
                    ``(A) has obtained for each such beneficial owner, 
                a current residential or business street address and a 
                legible and credible copy of the pages of a non-expired 
                passport issued by the government of a foreign country 
                bearing a photograph, date of birth, and unique 
                identifying information for the person;
                    ``(B) has verified the full legal name, address, 
                and identity of each such person;
                    ``(C) will provide the information described in 
                subparagraph (A) and the proof of verification 
                described in subparagraph (B) upon request of FinCEN; 
                and
                    ``(D) will retain the information and proof of 
                verification under this paragraph until the end of the 
                5-year period beginning on the date that the 
                corporation or limited liability company terminates 
                under the laws of the State or Indian Tribe.
            ``(3) Exempt entities.--
                    ``(A) In general.--With respect to an applicant to 
                form a corporation or limited liability company under 
                the laws of a State or Indian Tribe, if such entity is 
                described in subparagraph (C) or (D) of subsection 
                (d)(4) and will be exempt from the beneficial ownership 
                disclosure requirements under this subsection, such 
                applicant, or a prospective officer, director, or 
                similar agent of the applicant, shall file a written 
                certification with FinCEN--
                            ``(i) identifying the specific provision of 
                        subsection (d)(4) under which the entity 
                        proposed to be formed would be exempt from the 
                        beneficial ownership disclosure requirements 
                        under paragraphs (1) and (2);
                            ``(ii) stating that the entity proposed to 
                        be formed meets the requirements for an entity 
                        described under such provision of subsection 
                        (d)(4); and
                            ``(iii) providing identification 
                        information for the applicant or prospective 
                        officer, director, or similar agent making the 
                        certification in the same manner as provided 
                        under paragraph (1) or (2).
                    ``(B) Existing corporations or limited liability 
                companies.--On and after the date that is 2 years after 
                the final regulations are issued to carry out this 
                section, a corporation or limited liability company 
                formed under the laws of the State or Indian Tribe 
                before such date shall be subject to the requirements 
                of this subsection unless an officer, director, or 
                similar agent of the entity submits to FinCEN a written 
                certification--
                            ``(i) identifying the specific provision of 
                        subsection (d)(4) under which the entity is 
                        exempt from the requirements under paragraphs 
                        (1) and (2);
                            ``(ii) stating that the entity meets the 
                        requirements for an entity described under such 
                        provision of subsection (d)(4); and
                            ``(iii) providing identification 
                        information for the officer, director, or 
                        similar agent making the certification in the 
                        same manner as provided under paragraph (1) or 
                        (2).
                    ``(C) Exempt entities having ownership interest.--
                If an entity described in subparagraph (C) or (D) of 
                subsection (d)(4) has or will have an ownership 
                interest in a corporation or limited liability company 
                formed or to be formed under the laws of a State or 
                Indian Tribe, the applicant, corporation, or limited 
                liability company in which the entity has or will have 
                the ownership interest shall provide the information 
                required under this subsection relating to the entity, 
                except that the entity shall not be required to provide 
                information regarding any natural person who has an 
                ownership interest in, exercises substantial control 
                over, or receives substantial economic benefits from 
                the entity.
            ``(4) FinCEN id numbers.--
                    ``(A) Issuance of fincen id number.--
                            ``(i) In general.--FinCEN shall issue a 
                        FinCEN ID number to any individual who requests 
                        such a number and provides FinCEN with the 
                        information described under subclauses (I) 
                        through (IV) of paragraph (1)(A)(i).
                            ``(ii) Updating of information.--An 
                        individual with a FinCEN ID number shall submit 
                        an annual filing with FinCEN updating any 
                        information described under subclauses (I) 
                        through (IV) of paragraph (1)(A)(i).
                    ``(B) Use of fincen id number in reporting 
                requirements.--Any person required to report the 
                information described under paragraph (1)(A)(i) with 
                respect to an individual may instead report the FinCEN 
                ID number of the individual.
                    ``(C) Treatment of information submitted for fincen 
                id number.--For purposes of this section, any 
                information submitted under subparagraph (A) shall be 
                deemed to be beneficial ownership information.
            ``(5) Retention and disclosure of beneficial ownership 
        information by fincen.--
                    ``(A) Retention of information.--Beneficial 
                ownership information relating to each corporation or 
                limited liability company formed under the laws of the 
                State or Indian Tribe shall be maintained by FinCEN 
                until the end of the 5-year period (or such other 
                period of time as the Secretary of the Treasury may, by 
                rule, determine) beginning on the date that the 
                corporation or limited liability company terminates.
                    ``(B) Disclosure of information.--Beneficial 
                ownership information reported to FinCEN pursuant to 
                this section shall be provided by FinCEN only upon 
                receipt of--
                            ``(i) subject to subparagraph (C), a 
                        request, through appropriate protocols, by a 
                        local, Tribal, State, or Federal law 
                        enforcement agency;
                            ``(ii) a request made by a Federal agency 
                        on behalf of a law enforcement agency of 
                        another country under an international treaty, 
                        agreement, or convention, or an order under 
                        section 3512 of title 18 or section 1782 of 
                        title 28; or
                            ``(iii) a request made by a financial 
                        institution, with customer consent, as part of 
                        the institution's compliance with due diligence 
                        requirements imposed under the Bank Secrecy 
                        Act, the USA PATRIOT Act, or other applicable 
                        Federal, State, or Tribal law.
                    ``(C) Appropriate protocols.--
                            ``(i) Privacy.--The protocols described in 
                        subparagraph (B)(i) shall--
                                    ``(I) protect the privacy of any 
                                beneficial ownership information 
                                provided by FinCEN to a local, Tribal, 
                                State, or Federal law enforcement 
                                agency;
                                    ``(II) ensure that a local, Tribal, 
                                State, or Federal law enforcement 
                                agency requesting beneficial ownership 
                                information has an existing 
                                investigatory basis for requesting such 
                                information;
                                    ``(III) ensure that access to 
                                beneficial ownership information is 
                                limited to authorized users at a local, 
                                Tribal, State, or Federal law 
                                enforcement agency who have undergone 
                                appropriate training, and that the 
                                identity of such authorized users is 
                                verified through appropriate 
                                mechanisms, such as two-factor 
                                authentication;
                                    ``(IV) include an audit trail of 
                                requests for beneficial ownership 
                                information by a local, Tribal, State, 
                                or Federal law enforcement agency, 
                                including, as necessary, information 
                                concerning queries made by authorized 
                                users at a local, Tribal, State, or 
                                Federal law enforcement agency;
                                    ``(V) require that every local, 
                                Tribal, State, or Federal law 
                                enforcement agency that receives 
                                beneficial ownership information from 
                                FinCEN conducts an annual audit to 
                                verify that the beneficial ownership 
                                information received from FinCEN has 
                                been accessed and used appropriately, 
                                and consistent with this paragraph; and
                                    ``(VI) require FinCEN to conduct an 
                                annual audit of every local, Tribal, 
                                State, or Federal law enforcement 
                                agency that has received beneficial 
                                ownership information to ensure that 
                                such agency has requested beneficial 
                                ownership information, and has used any 
                                beneficial ownership information 
                                received from FinCEN, appropriately, 
                                and consistent with this paragraph.
                            ``(ii) Limitation on use.--Beneficial 
                        ownership information provided to a local, 
                        Tribal, State, or Federal law enforcement 
                        agency under this paragraph may only be used 
                        for law enforcement, national security, or 
                        intelligence purposes.
    ``(b) No Bearer Share Corporations or Limited Liability 
Companies.--A corporation or limited liability company formed under the 
laws of a State or Indian Tribe may not issue a certificate in bearer 
form evidencing either a whole or fractional interest in the 
corporation or limited liability company.
    ``(c) Penalties.--
            ``(1) In general.--It shall be unlawful for any person to 
        affect interstate or foreign commerce by--
                    ``(A) knowingly providing, or attempting to 
                provide, false or fraudulent beneficial ownership 
                information, including a false or fraudulent 
                identifying photograph, to FinCEN in accordance with 
                this section;
                    ``(B) willfully failing to provide complete or 
                updated beneficial ownership information to FinCEN in 
                accordance with this section; or
                    ``(C) knowingly disclosing the existence of a 
                subpoena or other request for beneficial ownership 
                information reported pursuant to this section, except--
                            ``(i) to the extent necessary to fulfill 
                        the authorized request; or
                            ``(ii) as authorized by the entity that 
                        issued the subpoena, or other request.
            ``(2) Civil and criminal penalties.--Any person who 
        violates paragraph (1)--
                    ``(A) shall be liable to the United States for a 
                civil penalty of not more than $10,000; and
                    ``(B) may be fined under title 18, United States 
                Code, imprisoned for not more than 3 years, or both.
            ``(3) Limitation.--Any person who negligently violates 
        paragraph (1) shall not be subject to civil or criminal 
        penalties under paragraph (2).
            ``(4) Waiver.--The Secretary of the Treasury may waive the 
        penalty for violating paragraph (1) if the Secretary determines 
        that the violation was due to reasonable cause and was not due 
        to willful neglect.
            ``(5) Criminal penalty for the misuse or unauthorized 
        disclosure of beneficial ownership information.--The criminal 
        penalties provided for under section 5322 shall apply to a 
        violation of this section to the same extent as such criminal 
        penalties apply to a violation described in section 5322, if 
        the violation of this section consists of the misuse or 
        unauthorized disclosure of beneficial ownership information.
    ``(d) Definitions.--For the purposes of this section:
            ``(1) Applicant.--The term `applicant' means any natural 
        person who files an application to form a corporation or 
        limited liability company under the laws of a State or Indian 
        Tribe.
            ``(2) Bank secrecy act.--The term `Bank Secrecy Act' 
        means--
                    ``(A) section 21 of the Federal Deposit Insurance 
                Act;
                    ``(B) chapter 2 of title I of Public Law 91-508; 
                and
                    ``(C) this subchapter.
            ``(3) Beneficial owner.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `beneficial owner' means a 
                natural person who, directly or indirectly, through any 
                contract, arrangement, understanding, relationship, or 
                otherwise--
                            ``(i) exercises substantial control over a 
                        corporation or limited liability company;
                            ``(ii) owns 25 percent or more of the 
                        equity interests of a corporation or limited 
                        liability company; or
                            ``(iii) receives substantial economic 
                        benefits from the assets of a corporation or 
                        limited liability company.
                    ``(B) Exceptions.--The term `beneficial owner' 
                shall not include--
                            ``(i) a minor child, as defined in the 
                        State or Indian Tribe in which the entity is 
                        formed;
                            ``(ii) a person acting as a nominee, 
                        intermediary, custodian, or agent on behalf of 
                        another person;
                            ``(iii) a person acting solely as an 
                        employee of a corporation or limited liability 
                        company and whose control over or economic 
                        benefits from the corporation or limited 
                        liability company derives solely from the 
                        employment status of the person;
                            ``(iv) a person whose only interest in a 
                        corporation or limited liability company is 
                        through a right of inheritance; or
                            ``(v) a creditor of a corporation or 
                        limited liability company, unless the creditor 
                        also meets the requirements of subparagraph 
                        (A).
                    ``(C) Substantial economic benefits defined.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), a natural person receives 
                        substantial economic benefits from the assets 
                        of a corporation or limited liability company 
                        if the person has an entitlement to more than a 
                        specified percentage of the funds or assets of 
                        the corporation or limited liability company, 
                        which the Secretary of the Treasury shall, by 
                        rule, establish.
                            ``(ii) Rulemaking criteria.--In 
                        establishing the percentage under clause (i), 
                        the Secretary of the Treasury shall seek to--
                                    ``(I) provide clarity to 
                                corporations and limited liability 
                                companies with respect to the 
                                identification and disclosure of a 
                                natural person who receives substantial 
                                economic benefits from the assets of a 
                                corporation or limited liability 
                                company; and
                                    ``(II) identify those natural 
                                persons who, as a result of the 
                                substantial economic benefits they 
                                receive from the assets of a 
                                corporation or limited liability 
                                company, exercise a dominant influence 
                                over such corporation or limited 
                                liability company.
            ``(4) Corporation; limited liability company.--The terms 
        `corporation' and `limited liability company'--
                    ``(A) have the meanings given such terms under the 
                laws of the applicable State or Indian Tribe;
                    ``(B) include any non-United States entity eligible 
                for registration or registered to do business as a 
                corporation or limited liability company under the laws 
                of the applicable State or Indian Tribe;
                    ``(C) do not include any entity that is--
                            ``(i) a business concern that is an issuer 
                        of a class of securities registered under 
                        section 12 of the Securities Exchange Act of 
                        1934 (15 U.S.C. 781) or that is required to 
                        file reports under section 15(d) of that Act 
                        (15 U.S.C. 78o(d));
                            ``(ii) a business concern constituted, 
                        sponsored, or chartered by a State or Indian 
                        Tribe, a political subdivision of a State or 
                        Indian Tribe, under an interstate compact 
                        between two or more States, by a department or 
                        agency of the United States, or under the laws 
                        of the United States;
                            ``(iii) a depository institution (as 
                        defined in section 3 of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813));
                            ``(iv) a credit union (as defined in 
                        section 101 of the Federal Credit Union Act (12 
                        U.S.C. 1752));
                            ``(v) a bank holding company (as defined in 
                        section 2 of the Bank Holding Company Act of 
                        1956 (12 U.S.C. 1841)) or a savings and loan 
                        holding company (as defined in section 10(a) of 
                        the Home Owners' Loan Act (12 U.S.C. 1467a(a));
                            ``(vi) a broker or dealer (as defined in 
                        section 3 of the Securities Exchange Act of 
                        1934 (15 U.S.C. 78c)) that is registered under 
                        section 15 of the Securities Exchange Act of 
                        1934 (15 U.S.C. 78o);
                            ``(vii) an exchange or clearing agency (as 
                        defined in section 3 of the Securities Exchange 
                        Act of 1934 (15 U.S.C. 78c)) that is registered 
                        under section 6 or 17A of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78f and 78q-1);
                            ``(viii) an investment company (as defined 
                        in section 3 of the Investment Company Act of 
                        1940 (15 U.S.C. 80a-3)) or an investment 
                        adviser (as defined in section 202(11) of the 
                        Investment Advisers Act of 1940 (15 U.S.C. 80b-
                        2(11))), if the company or adviser is 
                        registered with the Securities and Exchange 
                        Commission, has filed an application for 
                        registration which has not been denied, under 
                        the Investment Company Act of 1940 (15 U.S.C. 
                        80a-1 et seq.) or the Investment Adviser Act of 
                        1940 (15 U.S.C. 80b-1 et seq.), or is an 
                        investment adviser described under section 
                        203(l) of the Investment Advisers Act of 1940 
                        (15 U.S.C. 80b-3(l));
                            ``(ix) an insurance company (as defined in 
                        section 2 of the Investment Company Act of 1940 
                        (15 U.S.C. 80a-2));
                            ``(x) a registered entity (as defined in 
                        section 1a of the Commodity Exchange Act (7 
                        U.S.C. 1a)), or a futures commission merchant, 
                        introducing broker, commodity pool operator, or 
                        commodity trading advisor (as defined in 
                        section 1a of the Commodity Exchange Act (7 
                        U.S.C. 1a)) that is registered with the 
                        Commodity Futures Trading Commission;
                            ``(xi) a public accounting firm registered 
                        in accordance with section 102 of the Sarbanes-
                        Oxley Act (15 U.S.C. 7212) or an entity 
                        controlling, controlled by, or under common 
                        control of such a firm;
                            ``(xii) a public utility that provides 
                        telecommunications service, electrical power, 
                        natural gas, or water and sewer services, 
                        within the United States;
                            ``(xiii) a church, charity, nonprofit 
                        entity, or other organization that is described 
                        in section 501(c), 527, or 4947(a)(1) of the 
                        Internal Revenue Code of 1986, that has not 
                        been denied tax exempt status, and that has 
                        filed the most recently due annual information 
                        return with the Internal Revenue Service, if 
                        required to file such a return;
                            ``(xiv) a financial market utility 
                        designated by the Financial Stability Oversight 
                        Council under section 804 of the Dodd-Frank 
                        Wall Street Reform and Consumer Protection Act;
                            ``(xv) an insurance producer (as defined in 
                        section 334 of the Gramm-Leach-Bliley Act);
                            ``(xvi) any business concern that--
                                    ``(I) employs more than 20 
                                employees on a full-time basis in the 
                                United States;
                                    ``(II) files income tax returns in 
                                the United States demonstrating more 
                                than $5,000,000 in gross receipts or 
                                sales; and
                                    ``(III) has an operating presence 
                                at a physical office within the United 
                                States; or
                            ``(xvii) any corporation or limited 
                        liability company formed and owned by an entity 
                        described in this clause or in clause (i), 
                        (ii), (iii), (iv), (v), (vi), (vii), (viii), 
                        (ix), (x), (xi), (xii), (xiii), (xiv), (xv), or 
                        (xvi); and
                    ``(D) do not include any individual business 
                concern or class of business concerns which the 
                Secretary of the Treasury and the Attorney General of 
                the United States have jointly determined, by rule of 
                otherwise, to be exempt from the requirements of 
                subsection (a), if the Secretary and the Attorney 
                General jointly determine that requiring beneficial 
                ownership information from the business concern would 
                not serve the public interest and would not assist law 
                enforcement efforts to detect, prevent, or prosecute 
                terrorism, money laundering, tax evasion, or other 
                misconduct.
            ``(5) Fincen.--The term `FinCEN' means the Financial Crimes 
        Enforcement Network of the Department of the Treasury.
            ``(6) Indian country.--The term `Indian country' has the 
        meaning given that term in section 1151 of title 18.
            ``(7) Indian tribe.--The term `Indian Tribe' has the 
        meaning given that term under section 102 of the Federally 
        Recognized Indian Tribe List Act of 1994.
            ``(8) Personal identification card.--The term `personal 
        identification card' means an identification document issued by 
        a State, Indian Tribe, or local government to an individual 
        solely for the purpose of identification of that individual.
            ``(9) State.--The term `State' means any State, 
        commonwealth, territory, or possession of the United States, 
        the District of Columbia, the Commonwealth of Puerto Rico, the 
        Commonwealth of the Northern Mariana Islands, American Samoa, 
        Guam, or the United States Virgin Islands.''.
            (2) Rulemaking.--
                    (A) In general.--Not later than 1 year after the 
                date of enactment of this Act, the Secretary of the 
                Treasury shall issue regulations to carry out this Act 
                and the amendments made by this Act, including, to the 
                extent necessary, to clarify the definitions in section 
                5333(d) of title 31, United States Code.
                    (B) Revision of final rule.--Not later than 1 year 
                after the date of enactment of this Act, the Secretary 
                of the Treasury shall revise the final rule titled 
                ``Customer Due Diligence Requirements for Financial 
                Institutions'' (May 11, 2016; 81 Fed. Reg. 29397) to--
                            (i) bring the rule into conformance with 
                        this Act and the amendments made by this Act;
                            (ii) account for financial institutions' 
                        access to comprehensive beneficial ownership 
                        information filed by corporations and limited 
                        liability companies, under threat of civil and 
                        criminal penalties, under this Act and the 
                        amendments made by this Act; and
                            (iii) reduce any burdens on financial 
                        institutions that are, in light of the 
                        enactment of this Act and the amendments made 
                        by this Act, unnecessary or duplicative.
            (3) Conforming amendments.--Title 31, United States Code, 
        is amended--
                    (A) in section 5321(a)--
                            (i) in paragraph (1), by striking 
                        ``sections 5314 and 5315'' each place it 
                        appears and inserting ``sections 5314, 5315, 
                        and 5333''; and
                            (ii) in paragraph (6), by inserting 
                        ``(except section 5333)'' after ``subchapter'' 
                        each place it appears; and
                    (B) in section 5322, by striking ``section 5315 or 
                5324'' each place it appears and inserting ``section 
                5315, 5324, or 5333''.
            (4) Table of contents.--The table of contents of chapter 53 
        of title 31, United States Code, is amended by inserting after 
        the item relating to section 5332 the following:

``5333. Transparent incorporation practices.''.
    (b) Funding Authorization.--
            (1) In general.--To carry out section 5333 of title 31, 
        United States Code, as added by subsection (a), funds shall be 
        made available to the Financial Crimes Enforcement Network (in 
        this subsection referred to as ``FinCEN'') to pay reasonable 
        costs relating to compliance with the requirements of such 
        section.
            (2) Funding sources.--Funds shall be provided to FinCEN to 
        carry out the purposes described in paragraph (1) from one or 
        more of the following sources:
                    (A) Upon application by FinCEN, and without further 
                appropriation, the Secretary of the Treasury shall make 
                available to the FinCEN unobligated balances described 
                in section 9703(g)(4)(B) of title 31, United States 
                Code, in the Department of the Treasury Forfeiture Fund 
                established under section 9703(a) of title 31, United 
                States Code.
                    (B) Upon application by FinCEN, after consultation 
                with the Secretary of the Treasury, and without further 
                appropriation, the Attorney General of the United 
                States shall make available to FinCEN excess 
                unobligated balances (as defined in section 
                524(c)(8)(D) of title 28, United States Code) in the 
                Department of Justice Assets Forfeiture Fund 
                established under section 524(c) of title 28, United 
                States Code.
            (3) Maximum amounts.--
                    (A) Department of the treasury.--The Secretary of 
                the Treasury may not make available to FinCEN a total 
                of more than $30,000,000 under paragraph (2)(A).
                    (B) Department of justice.--The Attorney General of 
                the United States may not make available to FinCEN a 
                total of more than $10,000,000 under paragraph (2)(B).
    (c) Federal Contractors.--Not later than the first day of the first 
full fiscal year beginning at least 1 year after the date of the 
enactment of this Act, the Administrator for Federal Procurement Policy 
shall revise the Federal Acquisition Regulation maintained under 
section 1303(a)(1) of title 41, United States Code, to require any 
contractor or subcontractor who is subject to the requirement to 
disclose beneficial ownership information under section 5333 of title 
31, United States Code, to provide the information required to be 
disclosed under such section to the Federal Government as part of any 
bid or proposal for a contract with a value threshold in excess of the 
simplified acquisition threshold under section 134 of title 41, United 
States Code.

SEC. 4. STUDIES AND REPORTS.

    (a) Updating of Beneficial Ownership Information.--
            (1) Study.--The Secretary of the Treasury, in consultation 
        with the Attorney General of the United States, shall conduct a 
        study to evaluate--
                    (A) the necessity of a requirement for corporations 
                and limited liability companies to update the list of 
                their beneficial owners within a specified amount of 
                time after the date of any change in the list of 
                beneficial owners or the information required to be 
                provided relating to each beneficial owner, taking into 
                account the annual filings required under section 
                5333(a)(1)(B)(i) of title 31, United States Code, and 
                the information contained in such annual filings; and
                    (B) the burden that a requirement to update the 
                list of beneficial owners within a specified period of 
                time after a change in such list of beneficial owners 
                would impose on corporations and limited liability 
                companies.
            (2) Report.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary of the Treasury shall 
        submit a report on the study required under paragraph (1) to 
        the Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, and 
        Urban Affairs of the Senate
            (3) Public comment.--The Secretary of the Treasury shall 
        seek and consider public input, comments, and data in order to 
        conduct the study required under subparagraph paragraph (1).
    (b) Other Legal Entities.--Not later than 2 years after the date of 
enactment of this Act, the Comptroller General of the United States 
shall conduct a study and submit to the Congress a report--
            (1) identifying each State or Indian Tribe that has 
        procedures that enable persons to form or register under the 
        laws of the State or Indian Tribe partnerships, trusts, or 
        other legal entities, and the nature of those procedures;
            (2) identifying each State or Indian Tribe that requires 
        persons seeking to form or register partnerships, trusts, or 
        other legal entities under the laws of the State or Indian 
        Tribe to provide information about the beneficial owners (as 
        that term is defined in section 5333(d)(1) of title 31, United 
        States Code, as added by this Act) or beneficiaries of such 
        entities, and the nature of the required information;
            (3) evaluating whether the lack of available beneficial 
        ownership information for partnerships, trusts, or other legal 
        entities--
                    (A) raises concerns about the involvement of such 
                entities in terrorism, money laundering, tax evasion, 
                securities fraud, or other misconduct;
                    (B) has impeded investigations into entities 
                suspected of such misconduct; and
                    (C) increases the costs to financial institutions 
                of complying with due diligence requirements imposed 
                under the Bank Secrecy Act, the USA PATRIOT Act, or 
                other applicable Federal, State, or Tribal law; and
            (4) evaluating whether the failure of the United States to 
        require beneficial ownership information for partnerships and 
        trusts formed or registered in the United States has elicited 
        international criticism and what steps, if any, the United 
        States has taken or is planning to take in response.
    (c) Effectiveness of Incorporation Practices.--Not later than 5 
years after the date of enactment of this Act, the Comptroller General 
of the United States shall conduct a study and submit to the Congress a 
report assessing the effectiveness of incorporation practices 
implemented under this Act and the amendments made by this Act in--
            (1) providing law enforcement agencies with prompt access 
        to reliable, useful, and complete beneficial ownership 
        information; and
            (2) strengthening the capability of law enforcement 
        agencies to combat incorporation abuses, civil and criminal 
        misconduct, and detect, prevent, or punish terrorism, money 
        laundering, tax evasion, or other misconduct.

SEC. 5. DEFINITIONS.

    In this Act, the terms ``Bank Secrecy Act'', ``beneficial owner'', 
``corporation'', and ``limited liability company'' have the meaning 
given those terms, respectively, under section 5333(d) of title 31, 
United States Code.
                                                 Union Calendar No. 180

116th CONGRESS

  1st Session

                               H. R. 2513

                          [Report No. 116-227]

_______________________________________________________________________

                                 A BILL

   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.

_______________________________________________________________________

                            October 8, 2019

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
```