Overview

Title

To amend title 31, United States Code, to provide for access to certain beneficial ownership information.

ELI5 AI

The Ownership Clarity Act is a plan to help certain people check who really owns things, like businesses, to make sure everything is safe and fair. They can only look at this information to prevent bad things like financing bad activities, and they have to ask permission and follow rules to do so.

Summary AI

S. 5631, titled the "Ownership Clarity Act," seeks to modify title 31 of the United States Code to make certain beneficial ownership information accessible. This bill would allow financial institutions, or entities assisting them, to obtain an access license for this information primarily for national security and economic stability reasons. The bill stipulates that access is granted only to authorized personnel for specific purposes like risk management against activities such as terrorism financing and money laundering. Licenses are valid for two years and can be renewed, with regulations governing their use, disclosure, and retention.

Published

2024-12-19
Congress: 118
Session: 2
Chamber: SENATE
Status: Introduced in Senate
Date: 2024-12-19
Package ID: BILLS-118s5631is

Keywords AI

beneficial ownership ownership clarity act access license national security economic stability financial institutions terrorism financing money laundering data protection cybersecurity

Sources

Bill Statistics

Size

Sections:
2
Words:
892
Pages:
6
Sentences:
20

Language

Nouns: 281
Verbs: 79
Adjectives: 54
Adverbs: 6
Numbers: 26
Entities: 43

Complexity

Average Token Length:
4.46
Average Sentence Length:
44.60
Token Entropy:
4.96
Readability (ARI):
25.18

AnalysisAI

The bill in question, referred to as the "Ownership Clarity Act," aims to amend title 31 of the United States Code to provide specified financial institutions with controlled access to beneficial ownership information. The intent is to aid these institutions in identifying and preventing international illicit financial activities that pose risks to national security, such as terrorism financing and money laundering. While the bill is presented as a legislative measure to enhance the transparency and security of financial dealings, it also poses several complex issues worth examining.

General Summary of the Bill

The "Ownership Clarity Act" is designed to authorize financial institutions, or entities assisting them, to access information about the ownership of companies. This access is meant for the purpose of screening services, helping to identify and mitigate risks related to international illicit activities. The process involves obtaining an "access license," which is issued by a government Director. The bill lays out the framework for how these licenses are granted, used, and renewed, with an emphasis on protecting U.S. national security and economic stability.

Significant Issues

Several issues arise from the bill's current language and provisions:

  1. Unclear Definitions and Processes: The definition of an "access license" is not detailed, particularly in terms of the application process and criteria, leading to possible inconsistencies. Similarly, the term "permitted purpose" is narrowly defined, potentially limiting the useful application of the information.

  2. Privacy Concerns: There is a lack of specified data protection measures, raising concerns over the privacy and security of the accessed information. This absence is particularly concerning given the sensitive nature of beneficial ownership information.

  3. Director's Authority: The bill grants significant discretion to the Director in issuing and renewing licenses without clear checks and balances, which could lead to favoritism or misuse.

  4. Broad Definitions: The definitions of what constitutes "international illicit activities" are broad and could be subject to subjective interpretation, potentially leading to inconsistent application.

Impact on the Public

For the general public, particularly those involved in financial institutions or businesses, the bill could mean increased scrutiny and regulatory oversight. If effectively implemented, it could enhance national security by preventing funds from being used for illicit activities. However, this comes with the risk of overreach, where legitimate businesses might face unnecessary hurdles or privacy breaches due to unclear criteria.

Impact on Stakeholders

For financial institutions, the bill could provide a structured framework for conducting risk management activities, thereby potentially strengthening their role in safeguarding national security. Nevertheless, these institutions might face operational challenges and increased compliance costs due to the ambiguous nature of the application and renewal processes for access licenses.

On the other hand, the government, particularly the agency or Director responsible for issuing access licenses, is given substantial authority. This could empower the agency to act decisively in preventing misuse of financial systems but also places a significant burden to maintain transparency and accountability in their decision-making processes.

Ultimately, while the intent of the "Ownership Clarity Act" is to bolster the national security framework, much will depend on the execution and oversight of the law to protect against possible misuse of the significant powers it introduces.

Issues

  • The term 'access license' under Section 2 lacks clear definition on crucial aspects such as the application process and criteria, which may lead to inconsistencies or potential misuse.

  • Section 2 defines 'permitted purpose' narrowly as only for screening services, potentially limiting the broader legitimate uses of beneficial ownership information and thus restricting its utility.

  • The bill does not specify detailed data protection measures in Section 2 to safeguard beneficial ownership information, raising privacy and cybersecurity concerns.

  • The authority granted to the Director in Section 2 to issue access licenses lacks adequate checks and balances or oversight mechanisms, which could lead to favoritism or misuse.

  • The bill provides no explicit criteria in Section 2 for what constitutes 'reasonable concern for United States national security and United States economic stability', potentially resulting in arbitrary application.

  • Section 2 does not include sufficient detail on the renewal process for access licenses, such as specific timelines or criteria, which could lead to ambiguity and inconsistent practices.

  • The definitions of international illicit activities under Section 2 are broad and vague, which may lead to subjective interpretations and misuse.

Sections

Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.

1. Short title Read Opens in new tab

Summary AI

In Section 1 of the bill, it states that the official name of the law is the "Ownership Clarity Act".

2. Access to beneficial ownership information Read Opens in new tab

Summary AI

The section amends U.S. Code to allow certain financial institutions to apply for licenses to access information about who owns companies. This is meant to help manage risks to national security by identifying and preventing activities like terrorism financing and money laundering.