On August 2, 2017, United States Senators Marco Rubio (R-FL) and Ron Wyden (D-OR) jointly introduced Senate Bill 1717, entitled the “Corporate Transparency Act of 2017” (the “Act”).  The Act was referred to the U.S. Senate Committee on Banking, Housing and Urban Affairs.  The Act would amend Title 31 of the United States Code, to require the collection of beneficial ownership information for corporations and limited liability companies (“LLCs”) formed or registered in the United States.  A companion bill was introduced in the House of Representatives on June 28, 2017, by Representative Carolyn B. Maloney (D-NY), and was referred to the House Committee on Financial Services.

The recitals in the Act note that few states obtain meaningful information about the beneficial owners of the corporations and LLCs formed under their laws, and that criminals have exploited these weaknesses in state formation procedures to conceal their identities when forming corporations or LLCs in the United States, and have used the newly created entities to commit crimes such as terrorism, drug trafficking, money laundering, tax evasion, securities fraud, financial fraud, and acts of foreign corruption.

The Act would direct the U.S. Department of the Treasury to issue regulations requiring entities formed or registered in the United States to declare their beneficial owners – natural persons who, directly or indirectly, exercise substantial control over the company or have a substantial interest in, or receive substantial economic benefit from, the company.  The Act would require that beneficial owners: (i) be identified by name; (ii) disclose a current residential or business street address; and (iii) provide a unique identifying number from a non-expired U.S. passport or a non-expired U.S. driver’s license (foreign persons must provide a copy of their non-expired foreign government-issued passport).

The Act would apply to both new and currently existing corporations and LLCs.  However, the Act exempts a number of businesses that already provide beneficial ownership information in their normal course of business.  Examples of businesses exempt from the Act include companies registered under Section 12 of the Securities Exchange Act of 1934, depository institutions, credit unions, bank holding companies, broker-dealers, exchange/clearing agencies, investment companies, insurance companies, public accounting firms, entities registered with the Commodity Futures Trading Commission, and  businesses that employ more than 20 full-time employees in the United States, have more than $5,000,000 in gross receipts or sales, and have a physical office in the United States.

The Act would allow for states to participate in the collection of beneficial ownership information voluntarily.  However, companies or LLCs formed in states that will not collect beneficial owner information as described above would be required to disclose information regarding their beneficial owners directly to the U.S. Department of the Treasury, Financial Crimes Enforcement Network.

Congress has made previous attempts to pass similar ultimate beneficial ownership legislation, but these have never made it past a committee of either house.  It is unclear whether this bill will have a better chance of passing.

 

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Photo of Marina Olman-Pal Marina Olman-Pal

Marina Olman-Pal advises foreign and U.S. financial institutions on a broad range of regulatory matters including licensing, acquisitions, divestitures, compliance with Bank Secrecy Act (BSA)/anti-money laundering (AML) laws and regulations, and compliance with Office of Foreign Assets Control (OFAC) sanctions programs. Marina counsels…

Marina Olman-Pal advises foreign and U.S. financial institutions on a broad range of regulatory matters including licensing, acquisitions, divestitures, compliance with Bank Secrecy Act (BSA)/anti-money laundering (AML) laws and regulations, and compliance with Office of Foreign Assets Control (OFAC) sanctions programs. Marina counsels a wide range of companies in the financial services sector including, domestic and foreign banks, gaming companies, money services businesses including money transmitters, cryptocurrency businesses, Fintech companies and digital payment companies. Throughout her career, Marina has represented clients before U.S. regulators such as the Federal Reserve, OCC, FDIC, FinCEN, OFAC, the Florida Office of Financial Regulation and other state supervisory authorities.

Marina also regularly develops anti-money laundering programs for a wide range of financial services businesses and non-financial services businesses including, U.S. and foreign companies active in industries such as real estate, hospitality, automotive and artificial intelligence, among many others.

Photo of Alan Slomowitz Alan Slomowitz

Alan Slomowitz focuses his practice on federal governmental affairs, including representing individuals, companies and governmental entities before Congress and Executive Branch Agencies. He served 10 years as Chief of Staff to Representative Robert A. Borski (D-PA), who rose to become the second-ranking Democrat…

Alan Slomowitz focuses his practice on federal governmental affairs, including representing individuals, companies and governmental entities before Congress and Executive Branch Agencies. He served 10 years as Chief of Staff to Representative Robert A. Borski (D-PA), who rose to become the second-ranking Democrat on the House Transportation and Infrastructure Committee. Alan also served on the staff of the Committee’s Investigative and Oversight Subcommittee when Rep. Borski was Chairman.

Alan’s years of experience on Capitol Hill and at Greenberg Traurig cover a broad range of legal, public policy and political issues, including financial services, transportation, infrastructure, trade, appropriations, agriculture and municipalities. Alan uses this experience to help clients develop and implement strategies to address problems related to the legislative and regulatory processes of the Federal Government.

Photo of Carl A. Fornaris Carl A. Fornaris

Carl A. Fornaris is Co-Chair of the firm’s Financial Regulatory and Compliance Practice. With 27 years of legal experience, Carl advises a broad range of financial services firms – banks and their holding companies, money services businesses, investment advisers, securities broker dealers, gaming

Carl A. Fornaris is Co-Chair of the firm’s Financial Regulatory and Compliance Practice. With 27 years of legal experience, Carl advises a broad range of financial services firms – banks and their holding companies, money services businesses, investment advisers, securities broker dealers, gaming firms, Fintechs, cryptocurrency firms and other institutions – on all aspects of their business. These include formation and licensing, capital-raising transactions, acquisitions and divestitures, USA PATRIOT Act/BSA/AML compliance and OFAC sanctions programs, cryptocurrency regulation, mobile money and FinTech, federal and state agency enforcement proceedings, Dodd-Frank Act compliance and COVID-19/CARES Act economic stimulus program advice (ranging from Small Business Administration PPP loans to Federal Reserve Main Street program loans). Throughout his career, Carl has counseled clients in their dealings with the Federal Reserve, OCC, FDIC, FinCEN, SEC, FINRA, Florida Office of Financial Regulation, New York Department of Financial Services and other state supervisory authorities.

Carl is also active representing lenders and credit parties in financing transactions, particularly credits to non-U.S. loan parties, asset-based credits, acquisition financing and stand-by letters of credit.

Carl is a past General Counsel of the Florida International Bankers Association and sits on its Board of Directors. Previously, he served as Head of Legal and Compliance for the Latin America region of Barclays Bank PLC, with responsibility for managing legal and compliance matters throughout the region. Carl is an adjunct professor in the Business Law Department of the University of Miami Business School.