WASHINGTON, D.C. – Today, Congressman Stephen F. Lynch (D-Boston), the Ranking Member of the National Security Subcommittee and a member of the Financial Services Committee’s Terrorism and Illicit Financing Subcommittee, introduced H.R. 3544, the Aircraft Ownership Transparency Act of 2017. Despite statutory requirements for the Federal Aviation Administration (FAA) to record ownership history and lien information on civil aircraft, some aircraft owners shield their identity by registering aircraft with a trustee – a legal practice, but one that can be vulnerable to abuse, particularly when the FAA does not have information on the trustor, beneficiary, or those using the aircraft. Companies with anonymous or opaque structures can hide beneficial ownership information to mask aircraft ownership posing risks to national security and public safety. Congressman Lynch’s bipartisan Aircraft Ownership Transparency Act of 2017 requires the disclosure of beneficial ownership information for aircraft registration to ensure that the FAA has a more complete picture on who owns aircraft prior to approving a certificate of registration in the United States. H.R. 3544 is cosponsored by Congresswoman Carolyn Maloney (D-New York) and Congressman Peter King (R-New York).
A recent report from the Department of Transportation’s Office of Inspector General cited examples of illicit activity tied to aircraft registered on behalf of foreign trustors, underscoring the need for strong beneficial ownership legislation to address dangerous consequences of lapses in beneficial ownership reporting. For example, a U.S. bank, serving as an aircraft trustee, discovered that a U.S. Government-designated terrorist organization financially backed their trustor, a Lebanese politician. In addition, an FAA inspector found a Boeing 737 aircraft operated contrary to U.S. regulations as its foreign trustor leased the aircraft, possibly for illegal revenue, to a rental service basing the plane in the United Arab Emirates. The Office of Inspector General also highlighted that the President of a foreign oil corporation, an aircraft trustor, sold a large share of his company to a company owned by the Government of China.
“Without beneficial ownership information for aircraft registration, the FAA may be registering aircraft that do not meet its own requirements. There are serious national security risks when the FAA approves an aircraft registration, but does not have all the information, particularly if an aircraft is owned by a shell corporation or a foreign entity. We need increased transparency in aircraft registration, as well as improved accountability from the FAA, to prevent fraud, corruption, or illicit activity by bad actors. The Aircraft Ownership Transparency Act of 2017 will help mitigate fraud and reveal who actually owns and funds the trusts tied to aircraft registered here in the United States,” said Congressman Lynch.
In particular, H.R. 3544, requires that the beneficial ownership of an aircraft is identified prior to approval of a certificate of aircraft registration by the FAA. In the case of an aircraft owned or controlled by more than one entity, the legislation requires identification of the relationship between entities. In addition, in the case of a trust or association, the legislation calls for the chain of control including the owner, trustee, and beneficiary. The legislation defines a beneficial owner as “each natural person, who directly or indirectly, exercises control over the covered entity through ownership interests, voting rights, agreements, or otherwise; or has an interest in or receives substantial economic benefits from the assets of the covered entity.”
H.R. 3544, the Aircraft Ownership Transparency Act of 2017, is supported by Global Witness, the Financial Accountability and Corporate Transparency (FACT) Coalition, and Global Financial Integrity.
“Purchasing luxury items like aircraft and other high-end vehicles, using anonymous companies, is a time-tested strategy used by the corrupt and the criminal to move and launder their ill-gotten gains without being detected,” said Mark Hays, Anti-Money Laundering Campaign Director for Global Witness. “While ultimately all companies formed in the U.S. should disclose their real owners to help deter crime and corruption across the board, legislation such as this that shines a light on sectors prone to significant risk can help fill in critical gaps in transparency in the meantime.”
Earlier this month, Congressman Lynch sent a letter along with Congressman Peter King to the Government Accountability Office (GAO) requesting that the GAO’s Forensic Audits and Investigative Service examine risks within the FAA aircraft registration program. This examination would include how the FAA tracks aircraft registrant information in order to conduct oversight, how anonymous ownership can circumvent existing registration requirements, as well as the extent to which the FAA informs its law enforcement and national security partners about information regarding opaque ownership structures among its aircraft registration data.
The text of H.R. 3544, the Aircraft Ownership Transparency Act of 2017, is available here.
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