‘‘(iii) knowingly disclosing the exist-
ence of a subpoena, summons, or other re-
quest for beneficial ownership information, 
except— 
‘‘(I) to the extent necessary to 
fulfill the authorized request; or 
‘‘(II) as authorized by the entity 
that issued the subpoena, summons, 
or other request; or 
‘‘(B) in the case of a formation agent, 
knowingly failing to obtain or maintain credible, 
legible, and updated beneficial ownership infor-
mation, including any required identifying pho-
tograph. 
‘‘(2) CIVIL AND CRIMINAL PENALTIES.—In ad-
dition to any civil or criminal penalty that may be 
imposed by a State, any person who violates para-
graph (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. 
‘‘(d) DEFINITIONS.—For the purposes of this section: 
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‘‘(1) BENEFICIAL OWNER.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘beneficial owner’ 
means a natural person who, directly or indi-
rectly— 
‘‘(i) exercises substantial control over 
a corporation or limited liability company; 
or 
‘‘(ii) has a substantial interest in or 
receives substantial economic benefits from 
the assets of a corporation or limited liabil-
ity company. 
‘‘(B) EXCEPTIONS.—The term ‘beneficial 
owner’ shall not include— 
‘‘(i) a minor child; 
‘‘(ii) a person acting as a nominee, 
intermediary, custodian, or agent on behalf 
of another person; 
‘‘(iii) a person acting solely as an em-
ployee of a corporation or limited liability 
company and whose control over or eco-
nomic benefits from the corporation or lim-
ited liability company derives solely from 
the employment status of the person; 
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‘‘(iv) a person whose only interest in 
a corporation or limited liability company 
is through a right of inheritance, unless 
the person also meets the requirements of 
subparagraph (A); or 
‘‘(v) a creditor of a corporation or 
limited liability company, unless the cred-
itor also meets the requirements of sub-
paragraph (A). 
‘‘(2) CORPORATION; LIMITED LIABILITY COM-
PANY.—The terms ‘corporation’ and ‘limited liability 
company’— 
‘‘(A) have the meanings given such terms 
under the laws of the applicable State; 
‘‘(B) include any non-United States entity 
eligible for registration or registered to do busi-
ness as a corporation or limited liability com-
pany under the laws of the applicable State; 
‘‘(C) do not include any entity that is, and 
discloses in the application by the entity to 
form under the laws of the State or, if the enti-
ty was formed before the date of the enactment 
of this section, in a filing with the State under 
State law— 
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‘‘(i) a business concern that is an 
issuer of a class of securities registered 
under section 12 of the Securities Ex-
change Act of 1934 (15 U.S.C. 781) or 
that is required to file reports under sec-
tion 15(d) of that Act (15 U.S.C. 78o(d)); 
‘‘(ii) a business concern constituted or 
sponsored by a State, a political subdivi-
sion of a State, under an interstate com-
pact between 2 or more States, by a de-
partment or agency of the United States, 
or under the laws of the United States; 
‘‘(iii) a depository institution (as de-
fined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813)); 
‘‘(iv) a credit union (as defined in sec-
tion 101 of the Federal Credit Union Act 
(12 U.S.C. 1752)); 
‘‘(v) a bank holding company (as de-
fined in section 2 of the Bank Holding 
Company Act of 1956 (12 U.S.C. 1841)); 
‘‘(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 
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under section 15 of the Securities and Ex-
change 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 de-
fined in section 3 of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–3)) or 
an investment advisor (as defined in sec-
tion 202(11) of the Investment Advisors 
Act of 1940 (15 U.S.C. 80b–2(11)), if the 
company or adviser is registered with the 
Securities and Exchange Commission, or 
has filed an application for registration 
which has not been denied, under the In-
vestment Company Act of 1940 (15 U.S.C. 
80a–1 et seq.) or the Investment Advisor 
Act of 1940 (15 U.S.C. 80b–1 et seq.); 
‘‘(ix) an insurance company (as de-
fined in section 2 of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–2)); 
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‘‘(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 advi-
sor (as defined in section 1a of the Com-
modity Exchange Act (7 U.S.C. 1a)) that 
is registered with the Commodity Futures 
Trading Commission; 
‘‘(xi) a public accounting firm reg-
istered in accordance with section 102 of 
the Sarbanes–Oxley Act (15 U.S.C. 7212); 
‘‘(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, or nonprofit 
entity that is described in section 501(c), 
527, or 4947(a)(1) of the Internal Revenue 
Code of 1986, has not been denied tax ex-
empt status, and has filed the most re-
cently due annual information return with 
the Internal Revenue Service, if required to 
file such a return; 
‘‘(xiv) any business concern that— 
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‘‘(I) employs more than 20 em-
ployees 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 
‘‘(xv) any corporation or limited liabil-
ity company formed and owned by an enti-
ty described in clause (i), (ii), (iii), (iv), 
(v), (vi), (vii), (viii), (ix), (x), (xi), (xii), 
(xiii), or (xiv); and 
‘‘(D) do not include any individual busi-
ness concern or class of business concerns 
which the Secretary of the Treasury, with the 
written concurrence of the Attorney General of 
the United States, has determined in writing 
should be exempt from the requirements of sub-
section (a), because requiring beneficial owner-
ship information from the business concern 
would not serve the public interest and would 
not assist law enforcement efforts to detect, 
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prevent, or punish terrorism, money laundering, 
tax evasion, or other misconduct. 
‘‘(3) FORMATION AGENT.—The term ‘formation 
agent’ means a person who, for compensation— 
‘‘(A) acts on behalf of another person to 
assist in the formation of a corporation or lim-
ited liability company under the laws of a State; 
or 
‘‘(B) purchases, sells, or transfers the pub-
lic records that form a corporation or limited li-
ability company.’’. 
(2) RULEMAKING.—To carry out this Act and 
the amendments made by this Act, the Secretary of 
the Treasury, in consultation with the Secretary of 
Homeland Security and the Attorney General of the 
United States, may issue guidance or a rule to— 
(A) clarify the definitions under section 
5333(d) of title 31, United States Code, as 
added by paragraph (1); and 
(B) specify how to verify beneficial owner-
ship information or other identification infor-
mation for purposes of such section 5333, in-
cluding whether the verification procedures 
specified in section 5333(b)(3) should apply to 
all applicants under section 5333(b)(1) or 
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whether such verification process should require 
the notarization of signatures. 
(3) CONFORMING
AMENDMENTS.—Title 31, 
United States Code, is amended— 
(A) in section 5321(a)— 
(i) in paragraph (1), by striking ‘‘sec-
tions 5314 and 5315’’ each place it ap-
pears and inserting ‘‘sections 5314, 5315, 
and 5333’’; and 
(ii) in paragraph (6), by inserting 
‘‘(except 
section 
5333)’’ 
after 
‘‘sub-
chapter’’ each place it appears; and 
(B) in section 5322, by striking ‘‘section 
5315 or 5324’’ each place it appears and insert-
ing ‘‘section 5315, 5324, or 5333’’. 
(4) TABLE OF CONTENTS.—The table of con-
tents of chapter 53 of title 31, United States Code, 
is amended by inserting after the item relating to 
section 5332 the following: 
‘‘Sec. 5333. Transparent incorporation practices.’’. 
(5) RESTRICTIONS
ON
PUBLIC
ACCESS.—A 
State may— 
(A) restrict public access to all or any por-
tion of the beneficial ownership information 
provided to the State as described under section 
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5332 of title 31, United States Code, as added 
by this Act; and 
(B) by statute, regulation, order, or inter-
pretation adopted or issued by the State after 
the date of enactment of this Act, provide for 
public access to all or any portion of such infor-
mation. 
(6) NO DUTY OF VERIFICATION.—This Act and 
the amendments made by this Act do not impose 
any obligation on a State to verify the name, ad-
dress, or identity of a beneficial owner whose infor-
mation is submitted to such State under section 
5333 of title 31, United States Code, as added by 
this Act. 
(b) FUNDING AUTHORIZATION.— 
(1) IN GENERAL.—To carry out section 5333 of 
title 31, United States Code, during the 3-year pe-
riod beginning on the date of enactment of this Act, 
funds shall be made available to each State to pay 
reasonable costs relating to compliance with the re-
quirements of such section. 
(2) FUNDING SOURCES.—To protect the United 
States against the misuse of United States corpora-
tions and limited liability companies with hidden 
owners, funds shall be provided to each State to 
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carry out the purposes described in paragraph (1) 
from one or more of the following sources: 
(A) Upon application by a State, and with-
out further appropriation, the Secretary of the 
Treasury shall make available to the State un-
obligated 
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 a State, after con-
sultation with the Secretary of the Treasury, 
and without further appropriation, the Attorney 
General of the United States shall make avail-
able to the State excess unobligated balances 
(as defined in section 524(c)(8)(D) of title 28, 
United States Code) in the Department of Jus-
tice 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 States a total of more than 
$30,000,000 under paragraph (2)(A). 
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(B) DEPARTMENT OF JUSTICE.—The At-
torney General of the United States may not 
make available to States a total of more than 
$10,000,000 under paragraph (2)(B). 
(4) RULEMAKING.—Not later than the end of 
the 180-day period beginning on the date of the en-
actment of this Act, the Secretary of the Treasury 
and the Attorney General shall, jointly, issue regula-
tions setting forth the procedures for States to apply 
for funds under this subsection, including deter-
mining which State measures should be funded to 
assess, plan, develop, test, or implement relevant 
policies, procedures, or system modifications. 
(c) COMPLIANCE REPORT.—Nothing in this section 
or the amendments made by this section authorizes the 
Secretary of the Treasury to withhold from a State any 
funding otherwise available to the State because of a fail-
ure by that State to comply with section 5333 of title 31, 
United States Code. Not later than the end of the 42- 
month period beginning on the date of the enactment of 
this Act, the Comptroller General of the United States 
shall submit to the Committee on Financial Services of 
the House of Representatives and the Committee on 
Homeland Security and Governmental Affairs of the Sen-
ate a report— 
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(1) identifying which States obtain beneficial 
ownership information as described in such section 
5333; 
(2) with respect to each State that does not ob-
tain such information, whether corporations and lim-
ited liability companies formed under the laws of 
such State are in compliance with such section 5333 
and providing the specified beneficial ownership in-
formation to the Secretary of the Treasury; and 
(3) whether the Department of the Treasury is 
in compliance with such section 5333 and, if not, 
what steps it must take to come into compliance 
with this section. 
(d) FEDERAL CONTRACTORS.—Not later than the 
first day of the first full fiscal year beginning at least one 
year after the date of the enactment of this Act, the Ad-
ministrator for Federal Procurement Policy shall revise 
the Federal Acquisition Regulation maintained under sec-
tion 1303(a)(1) of title 41, United States Code, to require 
any contractor who is subject to the requirement to dis-
close 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 acquisi-
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tion threshold under section 134 of title 41, United States 
Code. 
(e) ANTI-MONEY LAUNDERING OBLIGATIONS
OF 
FORMATION AGENTS.— 
(1) IN GENERAL.—Section 5312(a)(2) of title 
31, United States Code, is amended— 
(A) in subparagraph (Y), by striking ‘‘or’’ 
at the end; 
(B) by redesignating subparagraph (Z) as 
subparagraph (AA); and 
(C) by inserting after subparagraph (Y) 
the following: 
‘‘(Z) any person who, for compensation— 
‘‘(i) acts on behalf of another person 
to form, or assist in formation of, a cor-
poration or limited liability company under 
the laws of a State; or 
‘‘(ii) purchases, sells, or transfers the 
public records that form a corporation or 
limited liability company; or’’. 
(2) DEADLINE FOR ANTI-MONEY LAUNDERING 
RULE FOR FORMATION AGENTS.— 
(A) PROPOSED RULE.—Not later than 120 
days after the date of enactment of this Act, 
the Secretary of the Treasury, in consultation 
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with the Attorney General of the United States 
and the Commissioner of the Internal Revenue 
Service, shall publish a proposed rule in the 
Federal Register requiring persons described in 
section 5312(a)(2)(Z) of title 31, United States 
Code, as amended by this subsection, to estab-
lish anti-money laundering programs under sub-
section (h) of section 5318 of that title. 
(B) FINAL
RULE.—Not later than 270 
days after the date of enactment of this Act, 
the Secretary of the Treasury shall publish the 
rule described in this subsection in final form in 
the Federal Register. 
(C) EXCLUSIONS.—Any rule promulgated 
under this subsection shall exclude from the 
category of persons involved in forming a cor-
poration or limited liability company— 
(i) any government agency; and 
(ii) any attorney or law firm that uses 
a paid formation agent operating within 
the United States to form the corporation 
or limited liability company. 
SEC. 4. STUDIES AND REPORTS. 
(a) OTHER LEGAL ENTITIES.—Not later than 2 
years after the date of enactment of this Act, the Comp-
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troller General of the United States shall conduct a study 
and submit to the Congress a report— 
(1) identifying each State that has procedures 
that enable persons to form or register under the 
laws of the State partnerships, trusts, or other legal 
entities, and the nature of those procedures; 
(2) identifying each State that requires persons 
seeking to form or register partnerships, trusts, or 
other legal entities under the laws of the State 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 mis-
conduct; and 
(B) has impeded investigations into enti-
ties suspected of such misconduct; and 
(4) evaluating whether the failure of the United 
States to require beneficial ownership information 
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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. 
(b) EFFECTIVENESS
OF
INCORPORATION
PRAC-
TICES.—Not later than 5 years after the date of enact-
ment 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 prac-
tices 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 bene-
ficial ownership information; and 
(2) strengthening the capability of law enforce-
ment agencies to combat incorporation abuses, civil 
and criminal misconduct, and detect, prevent, or 
punish terrorism, money laundering, tax evasion, or 
other misconduct. 
Æ 
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