A new bill by state lawmakers seeks to bring more transparency to so-called limited liability companies, which help business owners and landlords shield their identity from public view.
The piece of legislation would require LLCs to disclose their ownership to the New York Department of State and make the agency create a searchable database so that people can look up what else the companies own.
“Money laundering, tax avoidance, evasion of sanctions, and systemic code violations have been protected for too long in New York by the veil of LLC anonymity,” said Assembly Member Emily Gallagher (D–Brooklyn), who sponsored the bill, along with state Senator Brad Hoylman (D–Manhattan).
The database won’t publish LLC’s owners, however, and getting that information will still require filing a Freedom of Information Law request with the Department.
The federal government in 2021 already required LLCs to report their beneficial ownership to the US Treasury.
But in New York, owners only need to register an LLC’s name, the county where it will operate and a post office box.
“It’s easier to get an LLC than it is to get a library card,” Gallagher told amNewYork in an interview.
While the setup can have legitimate purposes, LLCs have been used for tax evasion and money laundering, and make it difficult for tenants to track down their landlords.
The lawmaker recalled a tenant protest about five years ago, where the demonstrators tried to hold their landlords accountable.
“All of these tenants from all of these different buildings, when they tried to find out who their landlord was, it all pointed at the mailboxes, and that was the dead end,” she said.
The structure has also allowed fat cats from around the globe, such as Russian oligarchs, to park their wealth in Manhattan’s high-end real estate.
“For the international super-rich, LLCs are used as shell companies to move vast sums of money without little concern of detection,” said Hoylman in a statement.
Manhattan Borough President Mark Levine recently called for Russian assets in the Big Apple to be seized in response to Vladimir Putin’s recent invasion of Ukraine.
Governor Kathy Hochul said on Sunday she is “looking at all options,” when asked by amNewYork Metro about targeting Russian assets, adding that she has been in talks with banking leaders about how to “have an impact.”
The state also ceased business transactions with Russia or Russian-backed entities.
Under the bill, a new database by the state would make it easy to look up what else an LLC owns, but not list owners directly, which would still require a FOIL request with the DOS.
Gallagher and her staff told amNewYork Metro that this provision protects people’s privacy if it’s for legitimate reasons, such as someone who’s a victim of domestic abuse or people who have been stalked and harassed.
“There is still an element of privacy there and I think there are some concerns sometimes that people form LLCs to protect their identity from reasonable concerns,” Gallagher said. “If you’re not a bad actor, we don’t think that your name should just be out there.”
“It should be something that you can discover if necessary, but it is not just putting people’s names and addresses in a public database for all to see,” she added.
