Advocates Push for Enhanced Transparency in New York's Limited Liability Company Ownership

 Advocacy groups focused on ethics are urging stricter disclosure regulations pertaining to limited liability companies (LLCs) and their ownership. 

Reinvent Albany, a prominent group, recently called for the enactment of a measure aimed at revealing the individuals behind LLCs, highlighting the prevalence of LLC contributions in political campaigns and the potential for illicit activities such as money laundering through the use of shell companies. 

In New York, LLCs contribute a substantial amount of campaign funding, yet their identities and ownership details often remain opaque, making it challenging to identify the true sources of donations. Although a change in the law in 2019 mandated increased disclosure for LLCs used as political donation vehicles, watchdog organizations believe it has not gone far enough in providing transparency and accountability for these entities.

The group's objective is to ensure that information regarding LLC ownership is accessible to local tax and law enforcement authorities. They argue that publicly disclosing the identities of beneficial owners would assist government regulators and law enforcement agencies in identifying potential illegal financial activities and tax evasion facilitated through LLCs. 

The proposed measure also seeks to require the state's business entity database to disclose the comprehensive legal names of all beneficial owners for each reporting LLC and foreign LLC. Additionally, the database would include relevant information such as the entity's business name, street address, and filing history.

The measure does incorporate a waiver process to address concerns related to significant privacy interests that may arise.

"We firmly believe that this bill establishes a robust foundation for enhancing transparency in the ownership of New York's LLCs," stated the group in a memorandum of support. 

"We hope that in the future, the Legislature will take further steps, such as facilitating the sharing of beneficial owner data between the New York State Departments of State and Taxation and Finance, as well as implementing appropriate penalties for enforcing the law."