These bills seek to amend the Homeland Security Act of 2002 by forcing states to amend their incorporation laws to require new corporations and LLCs to provide a list of the business’s “beneficial owners” and to require businesses to update their filings within 60 days of any change in beneficial ownership information.
The proposed legislation would create four new federal criminal offenses. Specifically, the legislation criminalizes:
- knowingly providing false beneficial ownership information;
- willfully failing to provide complete or updated beneficial ownership information;
- knowingly disclosing the existence of a subpoena, summons or other request for beneficial ownership; and
- applicable to formation agents, knowingly failing to obtain or maintain credible, legible and updated beneficial ownership information.
Penalties include civil fines up to $10,000, criminal fines and imprisonment up to three years.
NACDL opposes the enactment of S. 1483 for many reasons. First, the bill’s definition of “beneficial owner” is unclear and over-broad. Second, the bill’s criminal offenses lack meaningful mens rea or criminal intent requirements, which can lead to unjust punishment for individuals who made honest mistakes or engaged in seemingly legal conduct. Lastly, the punishment imposed by the proposed bill is too extreme for a “paperwork” violation. In other words, the punishment does not fit the crime.
S. 1483 is a re-introduction of S. 569, which was introduced, but stalled, during the 111th Session of Congress. S. 1483 is sponsored by Sen. Carl Levin (D-MI) and was introduced in August 2011. On May 24, 2012, the Senate Committee on Foreign Relations held hearings on the proposed legislation, but no further action has been taken yet. NACDL hopes S. 1483 takes the same futile path as S. 569.
Text of S. 1483
Text of H.R. 3416
NACDL Letter Opposing S. 1483, Sept. 13, 2011
NACDL Letter Opposing S. 569, Oct. 30, 2009
Additional information on S. 569