CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Update on the Proposed “Incorporation Transparency and Law Enforcement Assistance Act”

By: John Morrissey, COGENCY GLOBAL INC. on Mon, Oct 28, 2013

Senator Carl Levin (D-MI), the Senate’s foremost advocate for legislation designed to require the disclosure of the beneficial owners of business entities, reintroduced his “Incorporation Transparency and Law Enforcement Assistance Act” (ITLEAA) on August 1, 2013.    

ITELAA (Senate Bill 1465) is fundamentally the same as earlier beneficial owners resized 600versions of the legislation. There are, however, several changes designed to move the jurisdiction for the bill from the Senate Committee on Homeland Security and Governmental Affairs to the Committee on Judiciary. For example, the bill amends the Omnibus Crime Control and Safe Streets Act of 1968 instead of the Homeland Security Act. Conventional wisdom presumes that the Committee on the Judiciary is a more favorable jurisdiction for the bill. Other changes extend the length of time for compliance. Under this new version of the bill, the states, for example, have three years to implement it. The previous version of the bill included an implementation date of the beginning of fiscal year 2014.

With Senator Levin’s announcement that he will not seek reelection in 2014, opponents of the legislation may be inclined to think that if they can just delay the legislation until the end of the 113th session of Congress, victory will be theirs. There are, however, numerous other proponents of collecting beneficial owner information that are ready to take up the cause.

Next year, the Financial Action Task Force will begin its next round of mutual evaluations. The evaluations will be based on the task force’s revised 2012 standards which included new information on the need to collect beneficial owner information.  The fact that the U.S. was deemed to be partially non-compliant in its last mutual evaluation was one of the main motivators to collect beneficial owner information.

On June 8, 2013, the Obama administration honored a commitment made at the last G-8 Summit in June by publishing a National Action Plan for Transparency of Company Ownership and Control. In the plan, the United States commits to “continue to advocate for comprehensive legislation to require identification and verification of beneficial ownership information at the time a company is formed.”

Law enforcement and non-governmental organizations, such as Global Witness, continue to maintain that beneficial owner information is difficult to obtain and that the information should be made readily available to the public.

No matter the fate of Senate Bill 1465, the push for beneficial owner information will continue. And, ironically, Senator Levin’s retirement may actually increase the possibility of a compromise that may allow a bill to pass.

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Company Formation and Filing Considerations