Vote Smart's Synopsis:

Vote to pass a bill that requires limited liability companies to disclose ownership.

Highlights:

• Requires each person applying to form a corporation or limited liability company (LLC) under state or Indian tribe law to file a report with the Financial Crimes Enforcement Network (FinCEN) containing a list of the beneficial owners of the corporation or LLC that identifies each beneficial owner by the following information (Sec. 3):

• Full legal name;

• Date of birth;

• Current residential or business street address; and 

• A unique identifying number from a valid United States passport, personal identification card, or driver’s license.

• Requires each person applying to form a corporation or LLC to submit an annual report to FinCEN containing the following information (Sec. 3):

• The current beneficial owners of the corporation or LLC and the personal identification information described above for each beneficial owner;

• Any changes in the beneficial ownership of the corporation or LLC during the previous year; and 

• An updated list of the beneficial owners of the corporation or LLC within the time period required by the Secretary of the Treasury.

• Prohibits any person from affecting interstate or foreign commerce by doing the following (Sec. 3):

• Knowingly providing, or attempting to provide, false or fraudulent beneficial ownership information to FinCEN; 

• Willingly failing to provide complete or updated beneficial ownership information to FinCEN; and 

• Knowingly disclosing the existence of a subpoena or other request for beneficial ownership information.

• Specifies that any person who violates this act is liable to the US for a civil penalty of up to $10,000 and may be fined under title 18 of the US Code, imprisoned for up to 3 years, or both (Sec. 3).

• Defines “beneficial owner” as a person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, does the following (Sec. 3):

• Exercises substantial control over a corporation or LLC;

• Owns 25 percent or more of the equity interests of a corporation or LLC; or

• Receives substantial economic benefits from the assets of a corporation or LLC. 

• Authorizes the beneficial ownership information reported to FinCEN to be provided by FinCEN only upon receipt of the following (Sec. 3):

• A request, through appropriate protocols, by a local, tribal, state, or federal law enforcement agency;

• A request made by a federal agency on behalf of a law enforcement agency of another country under an international treaty, agreement, or convention; or 

• A request made by a financial institution, with customer consent, as part of the institution’s compliance with due diligence requirements under the Bank Secrecy Act, the USA PATRIOT Act, or other applicable law. 

• Specifies that exceptions to the terms “corporation” and “LLC” applies to the following businesses (3):

• Any business that employs more than 20 employees on a full-time basis in the US;

• Any business that files income tax returns in the US demonstrating more than $5 million in gross receipts or sales; or

• Any business that has an operating presence at a physical office within the US.

• Requires the Comptroller General of the US to conduct a study and submit a report to Congress assessing the efficacy of incorporation practices implemented under this act (Sec. 4).

• Appropriates $20 million to FinCEN for each fiscal years 2020 and 2021 to carry out the requirements made by this act (Sec. 3).

Full Bill Text

Full Bill Text