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US Bill Would Introduce New Beneficial Ownership Requirements on LLCs

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Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
https://www.pearse-trust.ie/blog/us-bill-would-introduce-new-beneficial-ownership-requirements

---quote start

The US Senate is considering a bill, recently approved by the House of Representatives, that would require certain new and existing small corporations and limited liability companies (LLCs) to disclose information about their beneficial owners.

Presently, a person forming a corporation or LLC within the US typically provides less information at the time of incorporation than is needed to obtain a bank account or driver’s license.

Under the bill, the Corporate Transparency Act of 2019, 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 and update this information each year.

The bill defines a beneficial owner as an individual who:

• exercises substantial control over a corporation or limited liability company;
• owns 25% 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 authorises 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 or a prison term of up to three years, or both.

The House bill, approved and sent to the Senate on October 22, 2019, is sponsored by Carolyn Maloney (D-NY) and co-sponsored by Peter King (R-NY) and Tom Malinowski (D-NJ).

The information gathered would be available to state and federal authorities as well as financial institutions who must comply with the Know-Your-Customer requirements of the Bank Secrecy Act. The information would not be available to the public.

The United States is under pressure to adopt legislation to this effect from the Financial Action Task Force on Money Laundering (FATF).

In its December 2016 evaluation of the United States, FATF noted that the country has made little progress over the last ten years, despite the agency calling on the US to adopt a beneficial ownership law back in 2006. It identified the lack of timely access to adequate, accurate, and current beneficial ownership information as a fundamental gap in US efforts to combat money laundering and terrorism financing.

Other countries have recently introduced a new requirement in this area. For instance, all 28 countries in the European Union are required to have corporate registries that include beneficial ownership information.

Under the legislation, each applicant to form a corporation or limited liability company under the laws of a State or Indian Tribe would be required to file a report with FinCEN containing a list of the beneficial owners of the corporation or limited liability company, including their:

• full legal name;
• date of birth;
• current residential or business street address; and
• a unique identifying number from a non-expired passport issued by the United States, a non-expired personal identification card, or a non-expired driver’s license issued by a State.

If the applicant is not a beneficial owner, information will be required about the applicant also.

If a beneficial owner does not have the aforementioned ID document, they will be required provide to FinCEN their full legal name, current residential or business street address, a unique identifying number from a non-expired passport issued by a foreign government, and legible and credible copies of the pages of a non-expired foreign passport bearing a photograph, date of birth, and unique identifying information.

---quote end
 

GiGoGo

I make things happen
Silver Member
Only way would be putting the LLC bellow a Seychelles holding?
 

buenosdias

New member
Only way would be putting the LLC bellow a Seychelles holding?
There’s something called UBO (Ultimate Beneficiary Owner), where you NEED TO submit details about who’s behind the corporate veils. Besides, Seychelles registry is public now (like in UK).

You’d have a better chance with an IBC in UAE.

BTW, thanks @Martin Everson for the tip.
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
Only way would be putting the LLC bellow a Seychelles holding?
Do you feel lucky (see below) :p.

The bill imposes a civil penalty and authorises 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 or a prison term of up to three years, or both.
 

GiGoGo

I make things happen
Silver Member
You think it would pass?

Interesting info

“We have a real opportunity here to fill a major gap in our country’s anti-money laundering framework. We are eager to see the House advance this critical, cross-partisan effort to stand up against criminals, kleptocrats and fraudsters that use the U.S. as a haven for their dirty money,” said Alexandria Robins, a policy officer with Global Witness.




“I am tired of money launderers using NYC apartments as bank accounts and driving up home prices for New Yorkers. My bill, the Corporate Transparency Act, will crack down on anonymous shell companies and help to stop this practice by requiring companies to disclose their true, beneficial owners – the people who actually own the LLC – when the company is formed.
 

GiGoGo

I make things happen
Silver Member

56% chance
 

Sols

Mentor Group Gold
UBO registries are coming worldwide. It's a FATF mandate and FATF gets what it wants (at least on paper).

Aside from speed of implementation, the only difference is going to be to what degree the information is public. Where the EU norm is fully public, the US bill is similar to UBO registries in some of the more well-known tax havens where the government has the UBO registry but it's not publicly available (for now).
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
Well they are now sneaking these changes from H.R 2513 into the 2021 National Defense Authorization Act (NDAA). One way or another a US beneficial register is happening....lol.


---- quotes

Sens. Mike Crapo (R-Wyo.) and Sherrod Brown (D-Ohio) have introduced an amendment to the National Defense Authorization Act (NDAA) for FY 2021 to create a database of beneficial owners of businesses with 20 or fewer employees. This amendment, which is based on the ILLICIT CASH Act, S. 2563, is similar to the Corporate Transparency Act, H.R. 2513. The Corporate Transparency Act, which FreedomWorks opposed, passed the House in October.

Those who support the Crapo-Brown amendment, the ILLICIT CASH Act, or the Corporate Transparency Act claim that a database of businesses with beneficial owners is necessary to crack down on fraudulent shell companies, terrorism, and foreign influence in the United States. However, these legislative efforts have more menacing motivations behind them, which is why Crapo and Brown are using a must-pass vehicle to try to push this legislation through.

In this new effort, the sponsors are trying to create a new federal definition for a “beneficial owner” even though others already exist. That’s because they want to massively expand who qualifies as an individual who “directly or indirectly” owns a business or has substantial control over it. (Interestingly, the bill’s 25 percent equity approach is well below the threshold required by the Department of the Treasury’s Office of Foreign Asset Control (OFAC), which uses a “50 percent rule” ownership test.)

Businesses that have 20 or fewer employees and $5 million or less in gross receipts would be required to provide the name, date of birth, address, and a unique identifier such as a driver’s license number or passport number to the Financial Crimes Enforcement Network (FinCEN). This information must be periodically updated with FinCEN. Larger businesses have successfully lobbied for exemptions from reporting and will not have to worry about the regulatory burdens and lack of privacy that smaller businesses will face.

There are civil and criminal penalties for reporting violations. The civil penalty is $500 per day that the violation continues or isn’t corrected. The criminal penalties could be up to a $10,000 fine and/or up to two years in federal prison. With some 5,000 criminal statutes and an estimated 300,000 regulations that carry criminal penalties, over-criminalization has been a growing concern.


......

--- end quote

They say the NDAA is all but a certainty to pass. The US will now have a UBO database it will share with other nations fishing for tax avoiders.

 

Davis123

Active Member
it was a matter of time before they had to do it. Let's see how it will be in 2021 :(
Well I always used to advice my friends to avoid US for any company accounts or structures. I even advised a would be millionaire immigrant not to immigrate to USA. He did on the demands of his family. Years later he left USA as his business was not generating enough in USA to qualify for permanent green card and was ordered to leave the USA while paying taxes on his worldwide income and assets
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
Well it was only a matter of time and I think it will go through. UAE looks to be the safe bet for now, HK is still good if you can get a bank account.

It's not worth trying to tango with the IRS they are arseholes. They will spend 10M to get back 100K, and regardless of the law they make shit up as they go along.
 

GiGoGo

I make things happen
Silver Member
HK is still good if you can get a bank account.
Director and shareholders are public in HK. Maybe not the UBO if you have a nominee, but banks would only allow you to have it with a big bank relationship.
 
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