NY and National Labor, Housing, and Anti-Corruption Groups Urge Governor Hochul to Sign Nation’s First LLC Transparency Act

Over 20 groups, including Reinvent Albany and the NYC Carpenters Union, sent a letter urging Governor Hochul to sign the LLC Transparency Act (S995-B (Hoylman-Sigal) / A3484-A (Gallagher)), which creates a the nation’s first public database of the real owners of LLC shell companies.

On Wednesday, September 27th at 10am, housing, labor, and anti-corruption groups and state legislators will gather at Billionaires Row in Manhattan (111 W 57th St between 6th and 7th Ave) to urge Governor Hochul to sign the LLC Transparency Act.

The LLC Transparency Act is supported by a long list of unions, watchdogs, housing advocates, and law enforcement officials, including the Hotel Trades Council, the Community Service Society of New York, and New York County District Attorney Alvin Bragg.

At the Summit for Democracy on December 9, 2021, US Secretary of the Treasury Janet Yellen highlighted New York’s global importance to international money laundering:

There’s a good argument that, right now, the best place to hide and launder ill-gotten gains is actually the United States. And that’s because of the way we allow people to establish shell companies … Many corrupt actors can hide their money in Central Park skyscrapers … an LLC can be listed as the owner. Sometimes the only thing these luxury properties are home to are ill-gotten gains – they’re money laundromats on the 81st floor.

The letter is here and below.

September 22, 2023

Governor Kathy Hochul
New York State Capitol Building
Albany, NY 12224

Re: Approval of the LLC Transparency Act (A3484A/S995B)

Dear Governor Hochul,

We, the undersigned, write to request your unconditional approval of Assembly bill A3484A (Gallagher) / S995B (Hoylman-Sigal).

Approval of this legislation would make New York a national leader on the issue of corporate transparency by creating the first public beneficial ownership database in the country and setting a standard other states would follow. Beneficial ownership databases have been created or are being implemented in 130 countries worldwide, and the majority are publicly-accessible, unlike the private database currently being implemented by the federal Treasury Department. Groups including Small Business Majority and The Clearing House, a consortium of lenders in New York City who process nearly $2 trillion in transactions daily, have endorsed the enactment of beneficial ownership transparency measures. The national Financial Accountability and Corporate Transparency (FACT) coalition, which includes organizations like the AFL-CIO, Oxfam, and Transparency International among many others, has offered its full support for the legislation. Within New York, a diverse array of groups including labor unions, housing activists, and transparency advocates support this bill unequivocally, and in the Assembly the legislation featured bipartisan co-sponsorship. The bill has already inspired copy-cat efforts, for example SB 594 (Durazo) in California.

Beneficial ownership transparency offers unalloyed benefits for business, local government, civil society, law enforcement, tenants, homeowners, and organized labor. In Ernst and Young’s 2016 global fraud survey, 91% of senior executives thought that knowing the beneficial owners of corporations they transacted with was very important. Lenders and title agents need this information to facilitate compliance with federal Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) regulations. Public beneficial ownership information helps facilitate law enforcement investigations by allowing journalists and others to more easily identify and report suspicious activity and by allowing investigators more easily to “follow the money.” For local government, it facilitates routine activities such as code enforcement by allowing officials to identify the true owners of problematic properties. For the bar, public beneficial ownership information allows attorneys to identify responsible parties more easily, potentially lowering insurance premia for defendants and preventing innocent parties from being unnecessarily named in complaints. For homeowners, public beneficial ownership information can help deter deed theft schemes, and for renters can help identify common ownership of neglected buildings. For agencies, beneficial ownership transparency allows conflicts of interest and fraudulent contractors to be identified before they can rig bids on public contracts. And for workers, especially in the building and construction trades, it allows malicious contractors to be identified and held to account.

Anonymous shell companies have been used for far too long to break the law and harm New Yorkers. They are a favorite tool of narcotics traffickers, tax cheats, and oligarchs, including those responsible for supporting Russia’s bloody invasion of Ukraine. This legislation balances public and private interests by deterring these types of wrong-doing while allowing individuals with legitimate privacy interests to request waivers. Detractors seem to come from exactly one place: the real estate market for luxury condominiums in New York City, a market historically rife with money laundering facilitated by anonymous shell companies, exactly the type of illicit activity this legislation is designed to curb. We cannot claim it is a panacea, but approving this bill is a much-needed step in the right direction with tangible benefits for an unusually broad swath of society.

When you first took office as Governor, you pledged to usher in a new era of transparency in New York. We ask that you please approve this bill unconditionally to demonstrate your unwavering and ongoing commitment to that pledge.

Sincerely,

American Economic Liberties Project
BetaNYC
Beyond Plastics
Churches United for Fair Housing
Common Cause NY
Fight Corporate Monopolies
Financial Accountability and Corporate Transparency Coalition
Good Jobs First
Housing Justice for All
Housing Rights Initiative
League of Women Voters of New York State
Legal Aid Society
New York City and Vicinity District Council of Carpenters
New York Public Interest Research Group
New York State Council of Churches
New York StateWide Senior Action Council
NY Coalition for Open Government
North Atlantic States Regional Council of Carpenters
OpenOwnership
Reinvent Albany
Stabilizing NYC Coalition
Strong Economy for All
Tenants PAC
Westchester for Change

Partial Press Contacts:
Reinvent Albany: 917-388-9087, info@reinventalbany.org
Ritti Singh, Housing Justice for All: ritti@housingjusticeforall.org
Alejandra Lopez, Legal Aid Society: AILopez@legal-aid.org
Paul Wolf, NY Coalition for Open Government: 716-435-4976
Rashida Tyler, New York State Council of Churches: 845-282-6022
Michael King, Strong Economy for All: michael.kink@strongforall.org

Click here to view the letter as a PDF.