Gov. Hochul Should Sign LLC Transparency Act, Say No to Money Launderers and Narco-Traffickers

The LLC Transparency Act (S995-B (Hoylman-Sigal) / A3484-A (Gallagher)), which requires New York State to publish a list of the actual owners of Limited Liability Companies, is now on the Governor’s desk. LLCs are a notorious tool for creating shell “companies” to hide who really owns a property or business. 

93% of New York property owners are already disclosed in public databases – why keep a loophole for shady actors? 

Governor Hochul has a simple choice: She can sign the bill, which is supported by law enforcement officials, watchdog groups, editorial boards, tenants’ rights groups, and labor unions, or she can bow down to international money launderers, narco-traffickers, oligarchs, and bad landlords. 

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 Miami or Central Park skyscrapers the same way they do in shell companies. An LLC or trust can be listed as the owner. A lawyer can sign the paperwork. Indeed, sometimes the only thing these luxury properties are home to are ill-gotten gains – they’re money laundromats on the 81st floor.

Reinvent Albany’s research confirmed why Central Park skyscrapers are such a hotbed for money laundering: 37% of Manhattan properties are owned by LLCs, five times the New York State average.

Supporters of the bill include Attorney General Tish James, Comptroller Tom DiNapoli, Manhattan DA Alvin Bragg, Brooklyn DA Eric Gonzalez, and Bronx DA Darcel Clark. The AFL-CIO and 1199 SEIU support the bill, as well as the New York District Council of Carpenters and the Hotel Trades Council.

Why Governor Hochul Should Sign the LLC Transparency Act

1. Basic fairness and consistency: The responsible owners of about nine in ten NYC properties already have their identity disclosed in NYC government open data (see table here and at bottom). The New York State database created by the LLC Transparency Act (S995-B (Hoylman-Sigal)/A3484-A (Gallagher)) will be the nation’s first to publicly disclose LLC beneficial owners.
   
   
2. No additional reporting burden to businesses: Under the U.S. Corporate Transparency Act, LLCs must report their beneficial owners to a database managed by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) starting in 2024. However, that database will not be public and will be accessible only to law and tax enforcement officials. The Treasury estimates it will cost an LLC $85 to prepare and submit their initial Beneficial Owners Information report.
   
   
3. Protects renters from abusive landlords: Tenants’ rights groups overwhelmingly support the LLC Transparency Act because it publicly discloses the true owners of apartment buildings, and makes it harder for bad landlords to hide behind layers of LLC shell companies. NY State has the largest share of renters of any state.
   
   
4. Anti-corruption: According to the U.S. Treasury, disclosing beneficial owners “will strengthen the integrity of the U.S. financial system by making it harder for illicit actors to use shell companies to launder money or hide assets.”

• Public integrity and anti-corruption investigators in New York have repeatedly told Reinvent Albany that their enforcement is overwhelmingly driven by public complaints. Thus, New York’s public database of the true owners of LLCs is a far more powerful anti-corruption tool than the non-public federal one.
• New York City real estate’s role as a “stash pad” for global hot money has been well documented in reporting (see articles below).
• The authoritative UN/World Bank StAR “Puppet Masters” report says corporate vehicles like LLCs are the one thing major corruption scandals have in common.

List of Supporters

Attorney General Tish James
Comptroller Tom DiNapoli
Office of the New York County District Attorney Alvin Bragg
Office of the Kings County District Attorney Eric Gonzalez
Office of the Bronx County District Attorney Darcel Clark

1199SEIU
AFL-CIO
American Economic Liberties Project
BetaNYC
Beyond Plastics
Bricklayers and Allied Craftworkers Local No. 1
Churches United for Fair Housing
Common Cause NY
Community Service Society
Fight Corporate Monopolies
Fifth Avenue Committee and Neighbors Helping Neighbors
Financial Accountability and Corporate Transparency (FACT) Coalition
Good Jobs First
Hotel Trades Council
Housing Justice for All
Housing Rights Initiative
League of Women Voters of New York State
New York City and Vicinity District Council of Carpenters
New York Coalition for Open Government
New York State Land Title Association
New York State Regional Conference of the Bricklayers and Allied Craftworkers
North Atlantic States Regional Council of Carpenters
NYPIRG
OpenCorporates
OpenOwnership
Reinvent Albany
Stabilizing NYC Coalition
Strong Economy For All
Tenants PAC
Westchester for Change