ficial owners of the corporations formed under the 
laws of the country. 
(11) 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 en-
forcement investigations of suspect corporations and 
limited liability companies, to set minimum stand-
ards for and level the playing field among State in-
corporation practices, and to bring the United States 
into compliance with its international anti-money 
laundering standards, Federal legislation is needed 
to require the States to obtain beneficial ownership 
information for the corporations and limited liability 
companies formed under the laws of such States. 
SEC. 3. TRANSPARENT INCORPORATION PRACTICES. 
(a) TRANSPARENT INCORPORATION PRACTICES.— 
(1) IN
GENERAL.—Chapter 53 of title 31, 
United States Code, is amended by inserting after 
section 5332 the following new section: 
‘‘§ 5333. Transparent incorporation practices 
‘‘(a) REPORTING REQUIREMENTS.— 
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‘‘(1) IN GENERAL.—Subject to paragraph (3), 
not later than the beginning of fiscal year 2017, the 
Secretary of the Treasury shall issue regulations re-
quiring each corporation and limited liability com-
pany formed in a State that does not have a forma-
tion system described under subsection (b) to file 
with the Secretary such information as the corpora-
tion or limited liability company would be required 
to provide the State if such State had a formation 
system described under subsection (b). 
‘‘(2) DISCLOSURE OF BENEFICIAL OWNERSHIP 
INFORMATION.—Beneficial ownership information 
reported to the Secretary of the Treasury pursuant 
to paragraph (1) shall be provided by the Secretary 
of the Treasury upon receipt of— 
‘‘(A) a civil or criminal subpoena or sum-
mons from a State agency, Federal agency, or 
congressional committee or subcommittee re-
questing such information; 
‘‘(B) a written request made by a Federal 
agency on behalf of another country under an 
international treaty, agreement, or convention, 
or an order under section 3512 of title 18, 
United States Code, or section 1782 of title 28, 
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United States Code, issued in response to a re-
quest for assistance from a foreign country; or 
‘‘(C) a written request made by the Finan-
cial Crimes Enforcement Network of the De-
partment of the Treasury. 
‘‘(3) LIMITATION.—In issuing regulations pur-
suant to paragraph (1), the Secretary shall not re-
quire such information to be filed with the Internal 
Revenue Service. 
‘‘(b) FORMATION SYSTEM.— 
‘‘(1) IN GENERAL.—With respect to a State, a 
formation system is described under this subsection 
if it meets the following requirements: 
‘‘(A) IDENTIFICATION
OF
BENEFICIAL 
OWNERS.—Except as provided in paragraphs 
(2) and (4), and subject to paragraph (3), each 
applicant to form a corporation or limited liabil-
ity company under the laws of the State is re-
quired to provide to the State during the forma-
tion process a list of the beneficial owners of 
the corporation or limited liability company 
that— 
‘‘(i) except as provided in subpara-
graph (F), identifies each beneficial owner 
by— 
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‘‘(I) name; 
‘‘(II) current residential or busi-
ness street address; and 
‘‘(III) a unique identifying num-
ber from a nonexpired passport issued 
by the United States or a nonexpired 
drivers license issued by a State; and 
‘‘(ii) if the applicant is not the bene-
ficial owner, provides the identification in-
formation described in clause (i) relating 
to the applicant. 
‘‘(B) UPDATED INFORMATION.—For each 
corporation or limited liability company formed 
under the laws of the State— 
‘‘(i) the corporation or limited liability 
company is required by the State to update 
the list of the beneficial owners of the cor-
poration or limited liability company by 
providing the information described in sub-
paragraph (A) to the State not later than 
60 days after the date of any change in the 
list of beneficial owners or the information 
required to be provided relating to each 
beneficial owner; 
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‘‘(ii) in the case of a corporation or 
limited liability company formed or ac-
quired by a formation agent and retained 
by the formation agent as a beneficial 
owner for transfer to another person, the 
formation agent is required by the State to 
submit to the State an updated list of the 
beneficial owners and the information de-
scribed in subparagraph (A) for each such 
beneficial owner not later than 10 days 
after date on which the formation agent 
transfers the corporation or limited liabil-
ity company to another person; and 
‘‘(iii) the corporation or limited liabil-
ity company is required by the State to 
submit to the State an annual filing con-
taining the list of the beneficial owners of 
the corporation or limited liability company 
and the information described in subpara-
graph (A) for each such beneficial owner. 
‘‘(C) RETENTION OF INFORMATION.—Ben-
eficial ownership information relating to each 
corporation or limited liability company formed 
under the laws of the State is required to be 
maintained by the State until the end of the 5- 
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year period beginning on the date that the cor-
poration or limited liability company terminates 
under the laws of the State. 
‘‘(D) 
INFORMATION
REQUESTS.—Bene-
ficial ownership information relating to each 
corporation or limited liability company formed 
under the laws of the State shall be provided by 
the State upon receipt of— 
‘‘(i) a civil or criminal subpoena or 
summons from a State agency, Federal 
agency, or congressional committee or sub-
committee requesting such information; 
‘‘(ii) a written request made by a Fed-
eral agency on behalf of another country 
under an international treaty, agreement, 
or convention, or section 1782 of title 28, 
United States Code; or 
‘‘(iii) a written request made by the 
Financial Crimes Enforcement Network. 
‘‘(E) NO
BEARER
SHARE
CORPORATIONS 
OR
LIMITED
LIABILITY
COMPANIES.—A cor-
poration or limited liability company formed 
under the laws of the State may not issue a cer-
tificate in bearer form evidencing either a whole 
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or fractional interest in the corporation or lim-
ited liability company. 
‘‘(2) 
STATES
THAT
LICENSE
FORMATION 
AGENTS.— 
‘‘(A) IN GENERAL.—Notwithstanding para-
graph (1), a State described in subparagraph 
(B) may permit an applicant to form a corpora-
tion or limited liability company under the laws 
of the State, or a corporation or limited liability 
company formed under the laws of the State, to 
provide the required information to a licensed 
formation agent residing in the State, instead 
of to the State directly, if the application under 
paragraph (1)(A) or the update under para-
graph (1)(B) contains— 
‘‘(i) the name, current business ad-
dress, contact information, and licensing 
number of the licensed formation agent 
that has agreed to maintain the informa-
tion required under this subsection; and 
‘‘(ii) a certification by the licensed 
formation agent that the licensed forma-
tion agent has possession of the informa-
tion required under this subsection and 
will maintain the information in the State 
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licensing the licensed formation agent in 
accordance with State law. 
‘‘(B) STATES
DESCRIBED.—A State de-
scribed in this subparagraph is a State that 
maintains a formal licensing system for forma-
tion agents that requires a formation agent to 
register with the State, meet standards for fit-
ness and honesty, maintain a physical office 
and records within the State, undergo regular 
monitoring, and be subject to sanctions for non-
compliance with State requirements. 
‘‘(C) LICENSED
FORMATION
AGENT
DU-
TIES.—A licensed formation agent that receives 
beneficial ownership information under State 
law in accordance with this paragraph shall— 
‘‘(i) maintain the information in the 
State in which the corporation or limited 
liability company is being or has been 
formed in the same manner as required for 
States under paragraph (1)(C); 
‘‘(ii) provide the information under 
the same circumstances as required for 
States under paragraph (1)(D); and 
‘‘(iii) perform the duties of a forma-
tion agent under paragraph (3). 
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‘‘(D) TERMINATION OF RELATIONSHIP.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), a licensed formation 
agent that receives beneficial ownership in-
formation relating to a corporation or lim-
ited liability company under State law in 
accordance with this paragraph and that 
resigns, dissolves, or otherwise ends a rela-
tionship with the corporation or limited li-
ability company shall promptly— 
‘‘(I) notify the State in writing 
that the licensed formation agent has 
resigned or ended the relationship; 
and 
‘‘(II) transmit all beneficial own-
ership information relating to the cor-
poration or limited liability company 
in the possession of the licensed for-
mation agent to the licensing State. 
‘‘(ii) EXCEPTION.—If a licensed for-
mation agent receives written instructions 
from a corporation or limited liability com-
pany, the licensed formation agent may 
transmit the beneficial ownership informa-
tion relating to the corporation or limited 
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liability company to another licensed for-
mation agent that is within the same State 
and has agreed to maintain the informa-
tion in accordance with this section. 
‘‘(iii) NOTICE
TO
STATE.—If a li-
censed formation agent provides beneficial 
ownership information to another licensed 
formation agent under clause (ii), the li-
censed formation agent providing the infor-
mation shall promptly notify in writing the 
State under the laws of which the corpora-
tion or limited liability company is formed 
of the identity of the licensed formation 
agent receiving the information. 
‘‘(3) CERTAIN BENEFICIAL OWNERS.—If an ap-
plicant to form a corporation or limited liability com-
pany or a beneficial owner, officer, director, or simi-
lar agent of a corporation or limited liability com-
pany who is required to provide identification infor-
mation under this subsection does not have a non-
expired passport issued by the United States or a 
nonexpired drivers license or identification card 
issued by a State, each application described in 
paragraph (1)(A) and each update described in 
paragraph (1)(B) shall include a certification by a 
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formation agent residing in the State that the for-
mation agent— 
‘‘(A) has obtained for each such person a 
current residential or business street address 
and a legible and credible copy of the pages of 
a nonexpired 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 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 under the same circumstances as re-
quired for States under paragraph (1)(D); and 
‘‘(D) will retain the information and proof 
of verification under this paragraph in the 
State in which the corporation or limited liabil-
ity company is being or has been formed 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. 
‘‘(4) EXEMPT ENTITIES.— 
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‘‘(A) IN
GENERAL.—A formation system 
described in paragraph (1) shall require that an 
application for an entity described in subpara-
graph (C) or (D) of subsection (d)(2) that is 
proposed to be formed under the laws of a 
State and that will be exempt from the bene-
ficial ownership disclosure requirements under 
this subsection shall include in the application 
a certification by the applicant, or a prospective 
officer, director, or similar agent of the entity— 
‘‘(i) identifying the specific provision 
of subsection (d)(2) under which the entity 
proposed to be formed would be exempt 
from the beneficial ownership disclosure re-
quirements under paragraphs (1), (2), and 
(3); 
‘‘(ii) stating that the entity proposed 
to be formed meets the requirements for 
an entity described under such provision of 
subsection (d)(2); and 
‘‘(iii) providing identification informa-
tion for the applicant or prospective offi-
cer, director, or similar agent making the 
certification in the same manner as pro-
vided under paragraph (1) or (3). 
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‘‘(B) EXISTING ENTITIES.—On and after 
the date that is 2 years after the effective date 
of the amendments to the formation system of 
a State made to comply with this section, an 
entity formed under the laws of the State be-
fore such effective date shall be considered to 
be a corporation or limited liability company for 
purposes of, and shall be subject to the require-
ments of, this subsection unless an officer, di-
rector, or similar agent of the entity submits to 
the State a certification— 
‘‘(i) identifying the specific provision 
of subsection (d)(2) under which the entity 
is exempt from the requirements under 
paragraphs (1), (2), and (3); 
‘‘(ii) stating that the entity meets the 
requirements for an entity described under 
such provision of subsection (d)(2); and 
‘‘(iii) providing identification informa-
tion for the officer, director, or similar 
agent making the certification in the same 
manner as provided under paragraph (1) 
or (3). 
‘‘(C) EXEMPT ENTITIES HAVING OWNER-
SHIP INTEREST.—If an entity described in sub-
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paragraph (C) or (D) of subsection (d)(2) has 
or will have an ownership interest in a corpora-
tion or limited liability company formed or to be 
formed under the laws of a State, 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, ex-
cept that the entity shall not be required to pro-
vide information regarding any natural person 
who has an ownership interest in, exercises sub-
stantial control over, or receives substantial eco-
nomic benefits from the entity. 
‘‘(c) PENALTIES.— 
‘‘(1) IN GENERAL.—It shall be unlawful for— 
‘‘(A) any person to affect interstate or for-
eign commerce by— 
‘‘(i) knowingly providing, or attempt-
ing to provide, false or fraudulent bene-
ficial ownership information, including a 
false or fraudulent identifying photograph, 
to a State or licensed formation agent 
under State law in accordance with this 
section; 
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‘‘(ii) willfully failing to provide com-
plete or updated beneficial ownership infor-
mation to a State or licensed formation 
agent under State law in accordance with 
this section; or 
‘‘(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)— 
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‘‘(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: 
‘‘(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; 
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‘‘(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; 
‘‘(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; 
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‘‘(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— 
‘‘(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)); 
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‘‘(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 
under section 15 of the Securities 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. 
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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)); 
‘‘(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-
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