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Less Privacy Ahead for Corporations

Are you aware of what certain U.S. Senators would like to see when it comes to corporate formations?

Written By: Garrett Sutton

Are you aware of what certain U.S. Senators would like to see when it comes to corporate formations?

You might be very surprised.

The Incorporation Transparency and Law Enforcement Assistance Act, or Senate Bill 2956, was recently introduced by Senators Barack Obama, Carl Levin and Norm Coleman. These senators want to know exactly who owns each and every corporation or LLC formed in every U.S. state.

Granted, certain U.S. criminal minds have used corporate privacy to shield their fraudulent actions.  However, there are methods to help uncover this information. So why the concern?  Some government officials now claim that international terrorists are using U.S. entities to hurt America. We have heard this song before as our civil liberties are chipped away.  Under this legislation, the basic privacy in conducting one's affairs will be sacrificed at the temple of complete government knowledge to combat what may not be a problem.

Stay tuned. But for now, the bill as proposed would contain the following:

  • Requires states to obtain a list of beneficial owners of each corporation or LLC formed under their laws.
  • Requires states to ensure the beneficial owner information be updated annually.
  • Requires states to provide information to law enforcement upon request.
  • Requires entities with foreign beneficial owners to provide certification from an in-state formation agent that the formation agent has verified the identity of those owners.
  • Establishes federal, civil and criminal penalties for persons knowingly providing false beneficial ownership information.
  • Provides exemptions for publicly traded corporations since the Securities Exchange Commission already oversees them.
  • Authorizes states to use an existing Department of Homeland Security to use already appropriated funds to meet the requirements of this Act.
  • Gives states until October, 2011, to require beneficial ownership information.
  • Requires the Treasury Secretary to issue a rule requiring formation agents to establish anti-money laundering programs to ensure they are not forming U.S. corporations or other entities for criminals or other suspect persons.

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