Earlier this year, Representatives Carolyn B. Maloney and Peter King, both New York Congressmen, reintroduced legislation in the House of Representatives that would require disclosure of a corporation’s beneficial owner; companion legislation being introduced in the Senate by Senator Sheldon Whitehouse.  Titled the Incorporation Transparency and Law Enforcement Assistance Act of 2016 (the “Act”), the bill focuses on shell corporations, both foreign and domestic, which use the anonymity offered through incorporation in many states across the United States to perpetuate fraud, launder money, and conceal assets overseas.  The purpose of the Act is to require information gathering related to beneficial ownership of corporations to enforce greater oversight of those corporations.

The Act specifically directs the Treasury Department to issue regulations which would require corporations and limited liability companies that are formed in a state which does not already require basic disclosures as to beneficial ownership to file such information with the Treasury Department as backup.  The Act also provides minimum disclosure requirements for states in the following way:

  • Identification of beneficial owners of the corporations by name, current address and non-expired passport or driver’s license;
  • Identification of any affiliated legal entities that will exercise control over the corporation; and
  • Requirement to update list of beneficial owners of a corporation no later than 60 days after a change in ownership.

The Act also includes civil penalties for those who:

  • Submit false or fraudulent beneficial ownership information;
  • Do not provide complete or updated information; or
  • Knowingly disclose subpoena, summons, or other requests for beneficial ownership information without authorization.