CORPORATE JET INSIDER

Transparency Act Seeks to Identify True Aircraft Owners

Feb 7, 2018 | Industry News

In July 2017, Rep. Stephen Lynch, D-Mass., introduced a bill that, if passed, will affect jet aircraft owners and those looking to purchase. The Aircraft Ownership Transparency Act of 2017, H.R.3544, would require beneficiary verification in addition to the owner’s identification before the Federal Aviation Association (FAA) would allow aircraft registration. What are the underlying reasons for this new legislation — and what could it mean for new and existing aircraft owners if passed?

Behind the bill

Current statutes require FAA personnel to record ownership and lien information for every civil aircraft they register. However, as it stands, owners can hide their identities through the use of agents. These agents can create trusts or “shell companies” to purchase aircraft on behalf of owners who — for various reasons — want to conceal their identities.

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This makes it easy for foreign entities or even individuals with nefarious plans to register their aircraft anonymously. Although the FAA oversees registration, it is difficult to verify identities without accurate information about actual aircraft owners, beneficiaries, or users. And often, shell company owners do not have this information to pass on to the FAA. Legislation supporters believe this lack of oversight is a significant threat to national security and public safety. Planes can be — and have been — used as weapons, to launder or transfer money secretly, or to transport drugs, other prohibited cargo, or people traveling illegally.

What the bill does

If it passes, the Aircraft Ownership Transparency Act of 2017 will require “the disclosure of beneficial ownership by a foreign person of aircraft registration” before the FAA approves a certificate of registration. The bill mandates that, if the true owner is hidden behind a trust or association, the relationship among the owner, trustee, and beneficiary be disclosed. The bill defines beneficiary 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.”

If the bill passes, private and business jet owners as well as those looking to purchase could expect stricter disclosure regulations when registering their aircraft. For those with nothing to hide, however, it shouldn’t be problem.

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