Senator Levin introduces SB 569

On March 11, 2009 Senator Levin introduced a second bill, SB 569, titled the "Incorporation Transparency and Law Enforcement Assistance Act." This bill looks to obtain beneficial owner information for all corporations and LLCs formed in the United States.

Each state would be required to obtain a list of all beneficial owners of each corporation or LLC formed, maintain the information for 5 years after the entity is terminated, update the information annually and provide the information to law enforcement when presented with a subpoena or summons. The states would not be required to actually verify the ownership information provided to them.

If a U.S. corporation or LLC is formed by a non-U.S. person, the bill would require a formation agent in the state of formation to verify the identity of the non-U.S. beneficial owners by obtaining their names, addresses and passport photos. The formation agent would then issue a written certification which would be presented to the state with the formation documents.

Each state would be able to determine whether it chose to make beneficial owner information public record or keep that information private. In addition, the bill allows states to draw on funds available through the Department of Homeland Security to pay for the changes and ongoing costs associated with these new requirements.

Finally, SB 569 would require the Department of the Treasury to issue a ruling, within 90 days of passage of the bill, establishing anti-money laundering programs to be followed by formation agents. There is no identification of what might be included in the ruling and how far the requirements might go.

Read the text of SB 569 here.

I’m also including two definitions from the text of the bill for clarification of what beneficial owners and formation agents are defined to be.

BENEFICIAL OWNER- The term "beneficial owner" means an individual who has a level of control over, or entitlement to, the funds or assets of a corporation or limited liability company that, as a practical matter, enables the individual, directly or indirectly, to control, manage, or direct the corporation or limited liability company.

FORMATION AGENT- The term "formation agent" means a person who, for compensation, acts on behalf of another person to assist in the formation of a corporation or limited liability company under the laws of a state.