U.S. banks and companies who are specialized in their business, have served as trustees to hold legal titles of aircrafts which are enlisted on the registry of the FAA. A report published by New York Times stated that offshore law firms were involved in tax-avoidance schemes and security threats by secretly registering their aircrafts in Oklahoma City, using banks as a stand-in.
It was also reported that through a loophole in FAA regulations, an aircraft owner trust called Aircraft Guaranty registered more than 1,000 aircrafts. The Globe has responded that thousands of foreign-owned airplanes registered to the FAA are scattered around the globe. This can create a fuss to the national security of the U.S. The aircrafts in question, can fly in U.S. airspace flying bringing with them security issues for the entire nation.
A bill introduced in the House would require that the entity wanting to register an aircraft with the FAA would have to disclose the beneficial owner of the entity. According to the bill, the owner has directly or indirectly control over the entity or has a financial interest in the assets.
Here is something to clear this up for you.
First, there is no problem with a non-U.S. citizen owning an aircraft and registering it under the FAA through aircraft trust companies. The owner just has to satisfy the requirements of the FAA to own the airplane and registering it in the U.S. There are two options to do this: the ‘based and primarily used’ test for the corporation and an owner trust. One allows non-U.S. citizens to register the airplane in the U.S. until it is based here and 60% of the flight hours are completed in U.S. airspace every six months. The situation is not the same however for trust owners. The trustee is recorded as the aircraft owner, as they hold the aircraft in the trust on the beneficiaries behalf. The beneficiaries are not registered as owners. Through the trust instrument and documents, the registration is completed. The instruments are reviewed by the FAA registry counsel and approved by them.
Many trust companies are not transparent with information about their beneficiaries. In that case, the aircraft is registered in the name of special entities. But the Lynch’s Bill would solve all of these problems because of its transparency. This bill requires disclosure of the ultimate beneficiary of the aircraft, not just the name of the trusts.
We, Aviation Trust are well acquainted with all the rules and new regulations from the FAA and it is our job to stay compliant with the law and to help the beneficiaries get their aircraft operated without any hassle. Come to us and stay out of all possible security issues pertaining to your airplane.