HR 2513 would require every covered Affected Entity to register its Beneficial Owners with the Financial Crimes Enforcement Network (FinCEN) and, within two years after enactment, the 2 million existing corporations and LLCs would be required to register their Beneficial Owners. A covered Affected Entity would be a corporation or LLC formed under local state law, and any non-U.S. entity eligible for registration in a state, but would not include the following: an issuer of registered securities, a business charted by states as an interstate company between two states, a depository institution under the Federal Deposit Insurance Act, a credit union, a bank holding company, a broker-dealer, an exchange or clearing agency, an investment company registered with the U.S. Securities and Exchange Commission (SEC), an insurance company, a registered entity under the Commodity Exchange Act, a public accounting firm, a public utility, a church, charity, nonprofit entity as described in the Internal Revenue Code, a financial market utility, an insurance producer, a pooled investment vehicle, or any business concern that employs more than 20 full-time employees in the U.S., files income tax returns, has an operating presence or physical office in the U.S., or a businesses that the Secretary of the Treasury or U.S. Attorney General have jointly determined is not required to register.
HR 2513 also provides that the Office of the Comptroller of the Currency would have two years to complete a study of what other business entities should be covered, including partnerships, trusts or beneficiaries of such entities.
The law would require that each applicant that forms an Affected Entity would be required to provide the following information for the applicant and their Beneficial Owners: full legal name, date of birth, current residential or business address, and a unique identifying number from a non-expired personal identification card or a non-expired driver's license issued by a state. Every Affected Entity would be required to annually provide current information of its Beneficial Owners. If the Beneficial Owner does not have the required license or identification card, they could file with FinCEN to obtain a FinCEN identification number. FinCEN would be required to maintain the information it receives regarding the Beneficial Owners for five years after the Affected Entity terminates.
A Beneficial Owner is defined as "a natural person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise exercises substantial control over the Affected Entity, or owns 25% or more of the equity interests of the Affected Entity, or receives substantial economic benefits from the assets of the Affected Entity." Excluded from the definition of a Beneficial Owner is a minor child, a nominee, an employee of an Affected Entity whose control derives from his or her employment, or someone whose interest derives from an inheritance or a creditor.
The Beneficial Owner information could be shared with state and federal law enforcement agencies but "may only be used for law enforcement, national security or intelligence purposes." Corporations and LLCs would not be permitted to issue bearer certificates. The penalties for noncompliance would be a civil penalty of not more than $10,000 and/or imprisonment for up to three years. Noncompliance would include knowingly providing or attempting to provide false or fraudulent beneficial ownership information, willfully failing to provide complete or updated beneficial ownership information, or knowingly disclosing the existence of a subpoena or other request for beneficial ownership information.
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