During the previous 112th Congress, the Senate and House considered, but declined to pass, several gatekeeper bills, including: the “Incorporation Transparency and Law Enforcement Assistance Act” (S. 1483, sponsored by Sen. Carl Levin, D-MI; and H.R. 3416, sponsored by Rep. Carolyn Maloney, D-NY); the “Stop Tax Haven Abuse Act” (S. 1346, Sen. Levin; and H.R. 2669, Rep. Lloyd Doggett, D-TX); and the “Cut Unjustified Tax Loopholes Act” (S. 2075, Sen. Levin). All five of these measures contain provisions that would have regulated many lawyers and law firms as “formation agents” and subjected them to the anti-money laundering (AML) and suspicious activity reporting (SAR) requirements of the Bank Secrecy Act when they help clients to establish companies, trusts or certain other entities. S. 1483 and H.R. 3416 also would have imposed new federal “beneficial ownership” reporting requirements on many lawyers, businesses and state secretaries of state that help form new companies.
S. 1483 and H.R. 3416 were referred to the Senate Homeland Security & Governmental Affairs Committee and the House Financial Services Committee, respectively. In addition, S. 1346 and S. 2075 were referred to the Senate Finance Committee and H.R. 2669 was referred to the House Ways & Means and Financial Services Committees. In December 2011, the ABA sent a letter to all members of the Senate Homeland Security & Governmental Affairs Committee expressing its strong opposition to S. 1483. No committee hearings or markups were held on any of the five bills, however, and the measures died at the end of the 112th Congress.
On February 11, 2013, Sen. Levin reintroduced the “Cut Unjustified Tax Loopholes Act” as S. 268, and the bill was referred to the Senate Finance Committee. In addition, Rep. Doggett reintroduced the “Stop Tax Haven Abuse Act” on April 15, 2013 as H.R. 1554, and the measure was referred to the House Ways & Means and Financial Services Committees.
On May 4, 2012, the ABA also submitted a comment letter to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) objecting to language in the agency’s Advance Notice of Proposed Rulemaking that would require law firms to disclose confidential information about their clients’ identities and beneficial ownership whenever they deposit their advance legal fees into the firms’ trust accounts or if they establish new bank accounts on behalf of clients. In its comments, the ABA expressed concerns that the FinCEN proposal, if adopted, could impose unreasonable and excessive burdens on many lawyers and law firms with client trust accounts and could undermine both the confidential lawyer-client relationship and traditional state court regulation of lawyers.