US Considers Beneficial Owner Legislation
The House of Representatives has approved bipartisan legislation that would require certain new and existing small corporations and limited liability companies to disclose information about their beneficial owners.
The bill, known as the Corporate Transparency Act of 2019, was sponsored by Carolyn B. Maloney (D-NY) and co-sponsored by Peter King (R-NY) and Tom Malinowski (D-NJ).
Under the proposed legislation, certain entities applying to form a corporation or limited liability company would have to file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN). Additionally, certain existing corporations and limited liability companies would have to file this information with FinCEN two years after the implementation of final regulations required under the bill.
The bill defines a beneficial owner as an individual who:
- exercises substantial control over a corporation or limited liability company;
- owns 25 percent or more of the interest in a corporation or limited liability company; or
- receives substantial economic benefits from the assets of a corporation or limited liability company.
The bill imposes a civil penalty and authorizes criminal penalties for providing false or fraudulent beneficial ownership information or for willfully failing to provide complete or updated beneficial ownership information. These include a fine, a prison term of up to three years, or both.
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