NY State Senate introduces a new LLC transparency legislation

Senator Brad Hoylman and Assemblymember Emily Gallagher introduced a new bill that would bring transparency to limited liability companies (LLC) and uncover international purchases of NYC real estate. According to the New York State Senate, the bill would help shine a light on the assets of international oligarchs, who often hide their wealth behind shell companies. 

The legislation would require LLCs to disclose their owners to the NYS Department of State and include that information on their annual tax returns. In addition, the bill would also require the Department of State to create a public database where people can search the owners of LLCs and find out which LLCs have common ownership. 

“LLCs have operated in near total darkness for too long and our legislation would shine a badly needed light on them. For the international super-rich, LLCs are used as shell companies to move vast sums of money without little concern of detection,” said Senator Hoyman in the statement released with the bill. 

The proposed bill follows Russia’s invasion of Ukraine and, as a result, sanctions imposed by the U.S. government. The new measure might make it harder for oligarchs to anonymously invest in NYC real estate and avoid paying taxes.  

“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. Sometimes tenants don't even know who their landlord actually is,” said Assemblymember Gallagher. 

In 2016, the U.S. Treasury Department’s Financial Crimes Enforcement Network issued federal disclosure regulations known as Geographic Targeting Orders (GTOs), 6 sqft reports. 

These measures require identifying an actual person behind LLCs when purchasing residential real estate in several cities, including New York and Miami. However, the regulations imposed in 2016 did not allow public databases and were less helpful in identifying international oligarchs. For example, entering a buyer’s name into the database did not trigger a new investigation, it only supported a pre-existing one. 

Resources:

“New transparency bill would make it harder for international elites to hide behind LLCs in NY,” by Michelle Cohen (6 sqft, 2022)

“New LLC Disclosure Law Probably Won’t Have Much Impact on the Condo Market,” by Michelle Sinclair Colman (6 sqft, 2022)

“Shine a Light on Secretive LLCs - Senator Hoylman & Assembly Member Gallagher Introduce LLC Transparency Legislation,” by Senator Brad Hoylman and Assemblymember Emily Gallagher (The New York State Senate, 2022)