Ethics watchdogs are calling for more teeth in disclosure laws for limited liability companies and their ownership.
The group Reinvent Albany on Friday called for passage of a measure that would strip owners of limited liability companies, pointing to the prominence of LLCs in political campaigns and the potential for money laundering through shell companies.
LLCs are behind a significant amount of campaign cash in New York, but their names and ownership are often opaque, making it difficult to discern who is behind the giving. A change to the law in 2019 required more disclosure for LLCs when used as political donation vehicles, but government watchdogs believe it did not go far enough to open the entities to scrutiny.
The group wants to ensure that LLC ownership information is available to local tax and law enforcement authorities.
“Opening the identity of beneficial owners to the public will help government regulators and law enforcement determine whether LLCs are being used to illegally move cash and evade taxes,” the group wrote in a memorandum of support
The proposed measure would also require the state’s business entity database to disclose the full legal name or names of each beneficial owner for each LLC and foreign LLC that serves as a reporting entity. The database would include the business entity’s name, address and filing history.
The measure includes an opt-out process if “significant privacy interests” are raised.
“We believe this bill provides a strong foundation for making the ownership of New York LLCs more transparent,” the group wrote. “We hope that in the future, the Legislature will go even further by establishing the sharing of beneficial owner data between the New York Departments of State and Taxation and Finance, and mechanisms to enforce the law, such as appropriate penalties.” .
