Skip Navigation
United States

Transparency of Legal Entities (US0082)

Overview

At-a-Glance

Action Plan: Not Attached

Action Plan Cycle: 2015

Status: Inactive

Institutions

Lead Institution: The Department of the Treasury and the White House

Support Institution(s): NA

Policy Areas

Beneficial Ownership, Private Sector

IRM Review

IRM Report: United States End-of-Term IRM Report 2015-2017, United States Mid-Term Report 2015-2017

Starred: No

Early Results: Did Not Change Did Not Change

Design i

Verifiable: No

Relevant to OGP Values: Not Relevant

Potential Impact:

Implementation i

Completion:

Description

The Administration is committed to increasing transparency of legal entities to combat high-level corruption, money laundering, and other financial crimes. The Department of the Treasury and the White House will continue engaging Congress to build bipartisan support to require that meaningful beneficial ownership information be disclosed at the time a company is formed. The Department of the Treasury will also work towards finalizing a rule to clarify customer due diligence requirements for U.S. financial institutions.

IRM Midterm Status Summary

For details of these commitments, see the report: https://www.opengovpartnership.org/sites/default/files/United-States_Mid...

IRM End of Term Status Summary

Commitment 30. Beneficial Ownership

Increase Transparency of Legal Entities Formed in the United States

The Administration is committed to increasing transparency of legal entities to combat high-level corruption, money laundering, and other financial crimes. The Department of the Treasury and the White House will continue engaging Congress to build bipartisan support to require that meaningful beneficial ownership information be disclosed at the time a company is formed. The Department of the Treasury will also work towards finalizing a rule to clarify customer due diligence requirements for U.S. financial institutions.

Responsible Institutions: The White House, Department of Treasury

Supporting Institution: Congress

Start Date: Not Specified End Date: Not Specified

Commitment Aim

This commitment aimed to build bipartisan political support for mandatory disclosure of beneficial ownership information, and to finalize a rule clarifying customer due diligence requirements for US financial institutions.

Status

Midterm: Substantial

At the midterm, the government had made substantial progress on this commitment. The Treasury Department finalized a ”customer due diligence” rule[1] requiring financial institutions to identify the beneficial owners of companies that hold accounts with them in May 2016, to be implemented by 18 May 2018. The rule defines beneficial owners as “the individuals who own or control their legal entity customers.”[2] Despite progress in this area, congressional legislation requiring the disclosure of beneficial ownership information for all US-owned companies remained pending.

End of term: Complete

On 28 June 2017, Representative Carolyn B. Maloney (D-New York), along with two additional Democratic and Republication Representatives, co-sponsored the introduction of Bill H.R.3089—the “Corporate Transparency Act of 2017”—requiring the disclosure of beneficial ownership information at the time of company formation. Specifically, the bill aims “to ensure that persons who form corporations or limited liability companies in the United States disclose the beneficial owners of those corporations or limited liability companies, in order to prevent wrongdoers from exploiting United States corporations and limited liability companies for criminal gain, to assist law enforcement in detecting, preventing, and punishing terrorism, money laundering, and other misconduct involving United States corporations and limited liability companies, and for other purposes.” The section of the bill covering “Transparent Incorporation Practices” specifically requires companies (both new and existing) to disclose the names and addresses of beneficial owners.[3] Subject to certain exceptions, the bill defines beneficial owners as “a natural person who, directly or indirectly--(i) exercises substantial control over a corporation or limited liability company; or (ii) has a substantial interest in or receives substantial economic benefits from the assets of a corporation or limited liability company.”[4]

On 2 August 2017, Senators Ron Wyden (D-Oregon) and Marco Rubio (R-Florida) co-sponsored the introduction of a bill with an identical name (S.1717) into the US Senate that was referred to the Committee on Banking, Housing, and Urban Affairs.[5]

At the end of term, neither bill had been passed into law, and the latter was not introduced until after the close of the end-of-term evaluation period. However, for the purposes of evaluating this commitment, the IRM researcher assesses that the introduction of both bills effectively demonstrates bipartisan support for legislation requiring the disclosure of beneficial ownership. Progress on this commitment as written is therefore complete,[6] though it is worth reiterating that no bill requiring the disclosure of beneficial ownership had been passed into law at the time of writing.

Did It Open Government?

Access to Information: Did Not Change

Civic Participation: Did Not Change

Public Accountability: Did Not Change

This commitment did not open government due to its unclear relevance for the OGP values of open government. While greater reporting of beneficial ownership information could improve government oversight of financial entities, this information must be actively disclosed for there to be changes in the level of government openness.

Carried Forward?

At the time of writing, the US government had not published its fourth national action plan, so it is unclear if the commitment will be carried forward. This commitment should not be carried forward as written due to its unclear relevance to OGP values. Instead, the government could commit to creating a public register of beneficial ownership information gleaned from financial and other institutions. The disclosure of beneficial ownership information as a means to combat illicit finance remains an important issue in light of the roughly two million corporations and limited liability companies formed in the United States each year, as described in the text of both bills. The government should also continue efforts to examine how beneficial ownership disclosures may help to prevent such financial flows going forward.


[1] Somanader, Tanya. “President Obama’s Efforts on Financial Transparency and Anti-Corruption: What You Need to Know.” The While House Blog. 6 May 2016. http://bit.ly/2vNNiJ3. Consulted 25 June 2017. See also US Department of the Treasury Press Center. “Treasury Announces Key Regulations and Legislation to Counter Money Laundering and Corruption, Combat Tax Evasion.” Press Release from 5 May 2016. https://www.treasury.gov/press-center/press-releases/Pages/jl0451.aspx. Consulted 25 June 2017.

[2] US Department of Treasury Financial Crimes Enforcement Network. “Customer Due Diligence Requirements for Financial Institutions.” https://www.federalregister.gov/documents/2016/05/11/2016-10567/customer-due-diligence-requirements-for-financial-institutions. Consulted 29 September 2017. More formally, Section 1010.230(d) of the rule defines beneficial owners with reference to two core prongs, as follows: “each individual, if any, who directly or indirectly owned 25 percent of the equity interests of a legal entity customer (the ownership prong); and a single individual with significant responsibility to control, manage, or direct a legal entity customer, including an executive officer or senior manager or any other individual who regularly performs similar functions (the control prong).”

[3] H.R. 3089. “Corporate Transparency Act of 2017.” https://www.congress.gov/bill/115th-congress/house-bill/3089/text?format=txt. Consulted 22 September 2017. The original co-sponsors include Peter King (Republication), Gwen Moore (Democrat), Edward Royce (Republican), and Maxine Waters (Democrat).

[4] See Ibid. Section 3. “Definitions.” Consulted 29 September 2017.

[5] S.1717. “Corporate Transparency Act of 2017.” https://www.congress.gov/bill/115th-congress/senate-bill/1717/text. Consulted 22 September 2017. For a brief analysis of both bills, see https://www.gtlaw.com/en/insights/2017/8/new-bill-introduced-in-the-us-senate-to-require-the-disclosure-of-ultimate-beneficial. Consulted 22 September 2017.

[6] FACTCOALITION: Finance Accountability and Corporate Transparency. “FACT sheet: Differences in Beneficial Ownership Legislation.” 3 August 2017. https://thefactcoalition.org/fact-sheet-differences-in-beneficial-ownership-legislation?utm_medium=policy-analysis/fact-sheets. Consulted 22 September 2017.


United States's Commitments

  1. Federal Data Strategy

    US0105, 2019, E-Government

  2. Grants accountability

    US0106, 2019, E-Government

  3. public access to federally funded research

    US0107, 2019, E-Government

  4. Workforce Data Standards

    US0108, 2019, E-Government

  5. Chief Data Officers

    US0109, 2019, Capacity Building

  6. Open data for public health

    US0110, 2019, E-Government

  7. Enterprise Objective

    US0111, 2019, Capacity Building

  8. Developing Future Action Plans

    US0112, 2019, OGP

  9. Reconstitution of the USA.gov

    US0053, 2015, E-Government

  10. Accessibility of Government information online

    US0054, 2015, Marginalized Communities

  11. Access to Educational Resources

    US0055, 2015, Open Data

  12. Public Listing of Every Address in the US

    US0056, 2015, Open Data

  13. Informed Decisions About Higher Education.

    US0057, 2015, Open Data

  14. new authentication tools to protect individual privacy and ensure that personal records go only to the intended recipients.

    US0058, 2015, Public Service Delivery

  15. Transparency of Open311

    US0059, 2015, E-Government

  16. Support Medicine research throught opening up relevant data of the field

    US0060, 2015, Health

  17. Access to Workforce Data

    US0061, 2015, Open Data

  18. Using evidence and concrete data to improve public service delivery

    US0062, 2015, Capacity Building

  19. Expand Use of the Federal Infrastructure Permitting Dashboard

    US0063, 2015,

  20. Consolidation of Import and Export Systems

    US0064, 2015, E-Government

  21. Improving Government Records

    US0065, 2015, Open Data

  22. Starred commitment Ammendments to FOIA

    US0066, 2015, Open Data

  23. Streamline the Declassification Process

    US0067, 2015, Capacity Building

  24. Implement the Controlled Unclassified Information Program

    US0068, 2015, Open Data

  25. Transparency of Privacy Programs and Practices

    US0069, 2015, Capacity Building

  26. Transparency of Federal Use of Investigative Technologies

    US0070, 2015, E-Government

  27. Increase Transparency of the Intelligence Community

    US0071, 2015, Capacity Building

  28. Starred commitment Open Science through open data

    US0072, 2015, Open Data

  29. Open Data Portal

    US0073, 2015, E-Government

  30. Increase Transparency of Trade Policy and Negotiations

    US0074, 2015, E-Government

  31. Develop a Machine Readable Government Organizational Chart 

    US0075, 2015, E-Government

  32. Improving public participation

    US0076, 2015, Public Participation

  33. Expand Public Participation in the Development of Regulations

    US0077, 2015, Public Participation

  34. Civic engagement in decision-making processes

    US0078, 2015, Public Participation

  35. Open Mapping

    US0079, 2015, E-Government

  36. Tracking OGP implementation

    US0080, 2015, OGP

  37. Strengthening Whistleblower Protection

    US0081, 2015, Capacity Building

  38. Transparency of Legal Entities

    US0082, 2015, Beneficial Ownership

  39. Extractive Industries Transparency

    US0083, 2015, Extractive Industries

  40. Spending transparency

    US0084, 2015, E-Government

  41. Enhance the Use of U.S. Foreign Assistance Information

    US0085, 2015, Aid

  42. Participatory Budgets and Responsive Spending

    US0086, 2015, Participation in Budget Processes

  43. Expand Access to Justice to Promote Federal Programs

    US0087, 2015, E-Government

  44. Starred commitment Build Safer Communities with Police Open Data

    US0088, 2015, E-Government

  45. Open Federal Data to Benefit Local Communities

    US0089, 2015, E-Government

  46. Support the Municipal Data Network

    US0090, 2015, E-Government

  47. Foster Data Ecosystems

    US0091, 2015, Capacity Building

  48. Extend Digital, Data-Driven Government to Federal Government’s Support for Communities

    US0092, 2015, Capacity Building

  49. Promote implementation of SDGs

    US0093, 2015, Open Data

  50. Starred commitment Promote Open Climate Data

    US0094, 2015, E-Government

  51. Air Quality Data Available

    US0095, 2015, E-Government

  52. Promote Food Security and Data Sharing for Agriculture and Nutrition

    US0096, 2015, Capacity Building

  53. Promote Data Sharing About Global Preparedness for Epidemic Threats

    US0097, 2015, Capacity Building

  54. Promote Global Interconnectivity

    US0098, 2015, Aid

  55. Open Contracting

    US0099, 2015, Capacity Building

  56. Harness the Data Revolution for Sustainable Development

    US0100, 2015, OGP

  57. Open Government to Support Global Sustainable Development

    US0101, 2015, Anti-Corruption Institutions

  58. Open Collaboration onf the Arctic

    US0102, 2015, Environment and Climate

  59. Support Capacity Building for Extractives Transparency

    US0103, 2015, Capacity Building

  60. Support Responsible Investment and Business Practices for Companies

    US0104, 2015, Private Sector

  61. Improve Public Participation in Government

    US0027, 2013, Capacity Building

  62. Modernize Management of Government Records

    US0028, 2013, Records Management

  63. Modernize the Freedom of Information Act

    US0029, 2013, Capacity Building

  64. Transform the Security Classification System

    US0030, 2013, Records Management

  65. Implement the Controlled Unclassified Information Program

    US0031, 2013, Security

  66. Increase Transparency of Foreign Intelligence Surveillance Activities

    US0032, 2013, E-Government

  67. Make Privacy Compliance Information More Accessible

    US0033, 2013, E-Government

  68. Support and Improve Agency Implementation of Open Government Plans

    US0034, 2013, OGP

  69. Strengthen and Expand Whistleblower Protections for Government Personnel

    US0035, 2013, Capacity Building

  70. Increase Transparency of Legal Entities Formed in the United States

    US0036, 2013, Legislation & Regulation

  71. Starred commitment Implement the Extractive Industries Transparency Initiative

    US0037, 2013, Environment and Climate

  72. Make Fossil Fuel Subsidies More Transparent

    US0038, 2013, Extractive Industries

  73. Starred commitment Increase Transparency in Spending

    US0039, 2013, Fiscal Transparency

  74. Increase Transparency of Foreign Assistance

    US0040, 2013, Aid

  75. Continue to Improve Performance.Gov

    US0041, 2013, E-Government

  76. Consolidate Import and Export Systems to Curb Corruption

    US0042, 2013, Private Sector

  77. Promote Public Participation in Community Spending Decisions

    US0043, 2013, Infrastructure & Transport

  78. Expand Visa Sanctions to Combat Corruption

    US0044, 2013, Anti-Corruption Institutions

  79. Further Expand Public Participation in the Development of Regulations

    US0045, 2013, Capacity Building

  80. Open Data to the Public

    US0046, 2013, E-Government

  81. Continue to Pilot Expert Networking Platforms

    US0047, 2013, Public Participation

  82. Reform Government Websites

    US0048, 2013, E-Government

  83. Promote Innovation Through Collaboration and Harness the Ingenuity of the American Public

    US0049, 2013, Capacity Building

  84. Promote Open Education to Increase Awareness and Engagement

    US0050, 2013, E-Government

  85. Deliver Government Services More Effectively Through Information Technology

    US0051, 2013, E-Government

  86. Increase Transparency in Spending

    US0052, 2013, E-Government

  87. Reform Records Management

    US0001, 2011, Records Management

  88. Lead a Multi-Agency Effort

    US0002, 2011, Capacity Building

  89. Monitor Agency Implementation of Plans

    US0003, 2011, OGP

  90. Provide Enforcement and Compliance Data Online

    US0004, 2011, Environment and Climate

  91. Advocate for Legislation Requiring Meaningful Disclosure

    US0005, 2011, Legislation & Regulation

  92. Apply Lessons from Recovery Act to Increate Spending Transparency

    US0006, 2011, Fiscal Transparency

  93. Government-wide Reporting Requirements for Foreign Aid

    US0007, 2011, Aid

  94. Use Performanc.gov to Improve Government Performance and Accountability

    US0008, 2011, Public Service Delivery

  95. Overhaul the Public Participation Interface on Regulations.gov

    US0009, 2011, Legislation & Regulation

  96. Launch ExpertNet

    US0010, 2011, E-Government

  97. Launch International Space Apps Competition

    US0011, 2011, E-Government

  98. Launch “We the People”

    US0012, 2011,

  99. Open Source “We the People”

    US0013, 2011,

  100. Develop Best Practices and Metrics for Public Participation

    US0014, 2011, Capacity Building

  101. Professionalize the FOIA Administration

    US0015, 2011, Right to Information

  102. Harness the Power of Technology

    US0016, 2011, Right to Information

  103. Advocate for Legislation on Whistleblower Protection

    US0017, 2011, E-Government

  104. Explore Executive Authority to Protect Whistleblowers

    US0018, 2011, Legislation & Regulation

  105. Implement the EITI

    US0019, 2011, Extractive Industries

  106. Partnership to Build on Recent Progress

    US0020, 2011, Extractive Industries

  107. Promote Data.gov to Spur Innovation through open sourcing

    US0021, 2011, Open Data

  108. Data.gov: Foster Communities on Data.gov

    US0022, 2011, Education

  109. Begin Online National Dialogue with the American Public

    US0023, 2011, Public Participation

  110. Update Government-wide Policies for Websites

    US0024, 2011,

  111. Promote Smart Disclosure to ensure timely release of information

    US0025, 2011, Capacity Building

  112. Publish Guidelines on Scientific Data

    US0026, 2011, Capacity Building