Title: Corporate Transparency Act of 2017
Policy area: Crime and Law Enforcement

Summary:
Corporate Transparency Act of 2017
This bill requires an entity that forms a corporation or limited liability company to disclose information about its beneficial owners. A beneficial owner is an individual who exercises substantial control over a corporation or limited liability company or has a substantial interest in or receives substantial economic benefits from the assets of a corporation or limited liability company.
Specifically, if an entity applies to form a corporation or limited liability company in a state that does not require the disclosure of beneficial ownership information, then the entity must file beneficial ownership information with the Financial Crimes Enforcement Network.
The bill imposes a civil penalty and authorizes criminal penalties—a fine, a prison term for up to three years, or both—for providing false or fraudulent beneficial ownership information or for willfully failing to provide complete or updated beneficial ownership information.
It directs the Department of the Treasury to require persons engaged in the business of forming (or of purchasing, selling, or transferring the public records that form) corporations or limited liability companies to establish anti-money laundering programs.
The Government Accountability Office must study and report on: (1) the availability of beneficial ownership information for other legal entities (e.g., partnerships), and (2) the effectiveness of incorporation practices implemented under this bill.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3089 Introduced in House (IH)]

<DOC>






115th CONGRESS
  1st Session
                                H. R. 3089

To amend title 31, United States Code, to ensure that persons who form 
   corporations or limited liability companies in the United States 
    disclose the beneficial owners of those corporations or limited 
  liability companies, in order to prevent wrongdoers from exploiting 
United States corporations and limited liability companies for criminal 
gain, to assist law enforcement in detecting, preventing, and punishing 
  terrorism, money laundering, and other misconduct involving United 
  States corporations and limited liability companies, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 28, 2017

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

_______________________________________________________________________

                                 A BILL


 
To amend title 31, United States Code, to ensure that persons who form 
   corporations or limited liability companies in the United States 
    disclose the beneficial owners of those corporations or limited 
  liability companies, in order to prevent wrongdoers from exploiting 
United States corporations and limited liability companies for criminal 
gain, to assist law enforcement in detecting, preventing, and punishing 
  terrorism, money laundering, and other misconduct involving United 
  States corporations and limited liability companies, and for other 
                               purposes.

    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 
2017''.

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 obtain meaningful 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 to the State 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 the weaknesses in 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, drug trafficking, money laundering, tax evasion, 
        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 Financial Crimes Enforcement Network of 
        the Department of the Treasury, the Internal Revenue Service, 
        and the Government Accountability Office, and others.
            (6) In July 2006, a leading international anti-money 
        laundering organization, 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 repeatedly urged the States to strengthen their 
        incorporation practices by obtaining beneficial ownership 
        information for the corporations and limited liability 
        companies formed under the laws of such States.
            (8) Many States have established automated procedures that 
        allow a person to form a new corporation or limited liability 
        company within the State within 24 hours of filing an online 
        application, without any prior review of the application by a 
        State official. In exchange for a substantial fee, 2 States 
        will form a corporation within 1 hour of a request.
            (9) Dozens of Internet Web sites highlight the anonymity of 
        beneficial owners allowed under the incorporation practices of 
        some States, point to those practices as a reason to 
        incorporate in those States, and list those States together 
        with offshore jurisdictions as preferred locations for the 
        formation of new corporations, essentially providing an open 
        invitation to criminals and other wrongdoers to form entities 
        within the United States.
            (10) In contrast to practices in the United States, all 28 
        countries in the European Union are required to have formation 
        agents identify the beneficial 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 
        enforcement investigations of suspect corporations and limited 
        liability companies, to set minimum standards for and level the 
        playing field among State incorporation practices, and to bring 
        the United States into compliance with its 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) 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:
``Sec. 5333. Transparent incorporation practices
    ``(a) Reporting Requirements.--
            ``(1) In general.--Not later than the beginning of fiscal 
        year 2019, the Secretary of the Treasury shall issue 
        regulations requiring each corporation and limited liability 
        company formed in a State that does not have a formation system 
        described under subsection (b) to file with the Financial 
        Crimes Enforcement Network such information as the corporation 
        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 Financial 
        Crimes Enforcement Network pursuant to paragraph (1) shall be 
        provided by the Financial Crimes Enforcement Network upon 
        receipt of--
                    ``(A) a civil or criminal subpoena or summons from 
                a State agency, Federal agency, or congressional 
                committee or subcommittee requesting 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, United States Code, issued in 
                response to a request for assistance from a foreign 
                country; or
                    ``(C) a written 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 or Sate 
                law.
            ``(3) Limitation.--In issuing regulations pursuant to 
        paragraph (1), the Secretary shall not require 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 liability company under the laws of the State 
                is required to provide to the State during the 
                formation process a list of the beneficial owners of 
                the corporation or limited liability company that--
                            ``(i) except as provided in subparagraph 
                        (F), identifies each beneficial owner by--
                                    ``(I) name;
                                    ``(II) current residential or 
                                business street address; and
                                    ``(III) a unique identifying number 
                                from a non-expired passport issued by 
                                the United States or a non-expired 
                                driver's license issued by a State; and
                            ``(ii) if the applicant is not the 
                        beneficial owner, provides the identification 
                        information 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 
                        corporation or limited liability company by 
                        providing the information described in 
                        subparagraph (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;
                            ``(ii) in the case of a corporation or 
                        limited liability company formed or acquired 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 described 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 liability 
                        company to another person; and
                            ``(iii) the corporation or limited 
                        liability company is required by the State to 
                        submit to the State an annual filing containing 
                        the list of the beneficial owners of the 
                        corporation or limited liability company and 
                        the information described in subparagraph (A) 
                        for each such beneficial owner.
                    ``(C) Retention of information.--Beneficial 
                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-year period beginning on the date that 
                the corporation or limited liability company terminates 
                under the laws of the State.
                    ``(D) Information requests.--Beneficial 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 subcommittee 
                        requesting such information;
                            ``(ii) a written request made by a Federal 
                        agency on behalf of another country under an 
                        international treaty, agreement, or convention, 
                        or section 1782 of title 28, United States 
                        Code;
                            ``(iii) a written request made by the 
                        Financial Crimes Enforcement Network; or
                            ``(iv) a written 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 or Sate law.
                    ``(E) Notice.--The State discloses clearly and 
                conspicuously that the beneficial ownership information 
                collected under the formation system may be provided to 
                the entities described in subparagraph (D), pursuant to 
                the requirements of such subparagraph.
                    ``(F) No bearer share corporations or limited 
                liability companies.--A corporation or limited 
                liability company formed under the laws of the State 
                may not issue a certificate in bearer form evidencing 
                either a whole or fractional interest in the 
                corporation or limited liability company.
            ``(2) States that license formation agents.--
                    ``(A) In general.--Notwithstanding paragraph (1), a 
                State described in subparagraph (B) may permit an 
                applicant to form a corporation 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 paragraph (1)(B) 
                contains--
                            ``(i) the name, current business address, 
                        contact information, and licensing number of 
                        the licensed formation agent that has agreed to 
                        maintain the information required under this 
                        subsection; and
                            ``(ii) a certification by the licensed 
                        formation agent that the licensed formation 
                        agent has possession of the information 
                        required under this subsection and will 
                        maintain the information in the State licensing 
                        the licensed formation agent in accordance with 
                        State law.
                    ``(B) States described.--A State described in this 
                subparagraph is a State that maintains a formal 
                licensing system for formation agents that requires a 
                formation agent to register with the State, meet 
                standards for fitness and honesty, maintain a physical 
                office and records within the State, undergo regular 
                monitoring, and be subject to sanctions for 
                noncompliance with State requirements.
                    ``(C) Licensed formation agent duties.--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 formation 
                        agent under paragraph (3).
                    ``(D) Termination of relationship.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a licensed formation agent that 
                        receives beneficial ownership information 
                        relating to a corporation or limited liability 
                        company under State law in accordance with this 
                        paragraph and that resigns, dissolves, or 
                        otherwise ends a relationship with the 
                        corporation or limited liability 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 
                                ownership information relating to the 
                                corporation or limited liability 
                                company in the possession of the 
                                licensed formation agent to the 
                                licensing State.
                            ``(ii) Exception.--If a licensed formation 
                        agent receives written instructions from a 
                        corporation or limited liability company, the 
                        licensed formation agent may transmit the 
                        beneficial ownership information relating to 
                        the corporation or limited liability company to 
                        another licensed formation agent that is within 
                        the same State and has agreed to maintain the 
                        information in accordance with this section.
                            ``(iii) Notice to state.--If a licensed 
                        formation agent provides beneficial ownership 
                        information to another licensed formation agent 
                        under clause (ii), the licensed formation agent 
                        providing the information shall promptly notify 
                        in writing the State under the laws of which 
                        the corporation or limited liability company is 
                        formed of the identity of the licensed 
                        formation agent receiving the information.
            ``(3) Certain beneficial owners.--If an applicant to form a 
        corporation or limited liability company or a beneficial owner, 
        officer, director, or similar agent of a corporation or limited 
        liability company who is required to provide identification 
        information under this subsection does not have a non-expired 
        passport issued by the United States or a non-expired driver's 
        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 formation agent residing in the State that the formation 
        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 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 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 required 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 liability 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.--
                    ``(A) In general.--A formation system described in 
                paragraph (1) shall require that an application for an 
                entity described in subparagraph (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 
                beneficial 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 requirements 
                        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 
                        information for the applicant or prospective 
                        officer, director, or similar agent making the 
                        certification in the same manner as provided 
                        under paragraph (1) or (3).
                    ``(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 before such effective date shall be 
                considered to be a corporation or limited liability 
                company for purposes of, and shall be subject to the 
                requirements of, this subsection unless an officer, 
                director, 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 
                        information 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 ownership interest.--
                If an entity described in subparagraph (C) or (D) of 
                subsection (d)(2) 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, 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.
    ``(c) Penalties.--
            ``(1) In general.--It shall be unlawful for--
                    ``(A) any person to affect interstate or foreign 
                commerce by--
                            ``(i) knowingly providing, or attempting to 
                        provide, false or fraudulent beneficial 
                        ownership information, including a false or 
                        fraudulent identifying photograph, to a State 
                        or licensed formation agent under State law in 
                        accordance with this section;
                            ``(ii) willfully failing to provide 
                        complete or updated beneficial ownership 
                        information to a State or licensed formation 
                        agent under State law in accordance with this 
                        section; or
                            ``(iii) knowingly disclosing the existence 
                        of a subpoena, summons, or other request for 
                        beneficial ownership information, except--
                                    ``(I) to the extent necessary to 
                                fulfill the authorized request;
                                    ``(II) as authorized by the entity 
                                that issued the subpoena, summons, or 
                                other request; or
                                    ``(III) as prescribed by a State; 
                                or
                    ``(B) in the case of a formation agent, knowingly 
                failing to obtain or maintain credible, legible, and 
                updated beneficial ownership information, including any 
                required identifying photograph.
            ``(2) Civil and criminal penalties.--In addition to any 
        civil or criminal penalty that may be imposed by a State, 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.
    ``(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 indirectly--
                            ``(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 liability 
                        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 
                        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, unless the 
                        person also meets the requirements of 
                        subparagraph (A); or
                            ``(v) a creditor of a corporation or 
                        limited liability company, unless the creditor 
                        also meets the requirements of subparagraph 
                        (A).
            ``(2) 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;
                    ``(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;
                    ``(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 entity 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 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 or 
                        sponsored by a State, a political subdivision 
                        of a State, 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));
                            ``(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 
                        advisor (as defined in section 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 Investment 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 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);
                            ``(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 exempt status, 
                        and has filed the most recently due annual 
                        information return with the Internal Revenue 
                        Service, if required to file such a return;
                            ``(xiv) 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
                            ``(xv) any corporation or limited liability 
                        company formed and owned by an entity 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 business 
                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 subsection (a), because 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 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 limited liability 
                company under the laws of a State; or
                    ``(B) purchases, sells, or transfers the public 
                records that form a corporation or limited liability 
                company.
            ``(4) 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.''.
            (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 ownership 
                information or other identification information for 
                purposes of such section 5333, including whether the 
                verification procedures specified in section 5333(b)(3) 
                should apply to all applicants under section 5333(b)(1) 
                or 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 
                        ``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:

``Sec. 5333. Transparent incorporation practices.''.
            (5) Restrictions on public access.--A State may--
                    (A) restrict public access to all or any portion of 
                the beneficial ownership information provided to the 
                State as described under section 5332 of title 31, 
                United States Code, as added by this Act; and
                    (B) by statute, regulation, order, or 
                interpretation 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 information.
            (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, address, or identity of a beneficial owner 
        whose information 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 period 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 requirements of such section.
            (2) Funding sources.--To protect the United States against 
        the misuse of United States corporations and limited liability 
        companies with hidden owners, funds shall be provided to each 
        State to carry out the purposes described in paragraph (1) from 
        one or more of the following sources:
                    (A) Upon application by a State, and without 
                further appropriation, the Secretary of the Treasury 
                shall make available to the State 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 a State, after consultation 
                with the Secretary of the Treasury, and without further 
                appropriation, the Attorney General of the United 
                States shall make available to the State 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 States 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 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 enactment of this Act, the 
        Secretary of the Treasury and the Attorney General shall, 
        jointly, issue regulations setting forth the procedures for 
        States to apply for funds under this subsection, including 
        determining 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 failure 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 Senate a report--
            (1) identifying which States obtain beneficial ownership 
        information as described in such section 5333;
            (2) with respect to each State that does not obtain such 
        information, whether corporations and limited liability 
        companies formed under the laws of such State are in compliance 
        with such section 5333 and providing the specified beneficial 
        ownership information to the Financial Crimes Enforcement 
        Network; 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 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 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.
    (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 corporation 
                        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 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 establish anti-money 
                laundering programs under subsection (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 corporation 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 Comptroller 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 misconduct; and
                    (B) has impeded investigations into entities 
                suspected of such misconduct; 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.
    (b) 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.
                                 <all>