Lawmakers seek to unmask property owners behind LLCs

New bill would require public disclosure of beneficial owners

New York /
Mar.March 01, 2022 06:20 PM
Assemblymember Emily Gallagher and Sen. Brad Hoylman (Getty, iStock)

Assemblymember Emily Gallagher and Sen. Brad Hoylman (Getty, iStock)

As officials call for action against Russian oligarchs who own real estate in New York City, state lawmakers are seeking to make it easier to find.

Their measure, though, would not only apply to oligarchs.

A new bill would change disclosure rules for limited liability companies, requiring them to disclose “beneficial owners,” defined as those who have a membership interest in the LLC.

The legislation would require that this information be disclosed on an LLC’s annual tax returns, and that the Department of State assign each beneficial owner an identification number that would appear in a database along with the LLCs tied to that person.

That information would then be available through public records requests. Foreign limited liability companies doing business in New York would also be required to provide such identification information.

If approved, the measure could shed light on an opaque system that has allowed high-net-worth individuals to anonymously park cash in the city, at times to conceal illegal activity. The bill could help curb money laundering, tax evasion and code violations that go unaddressed by anonymous landlords, according to the bill’s sponsors.

“We are often in the dark about who is the beneficial owner of a company,” said state Sen. Brad Hoylman, a Manhattan Democrat. “It would appear that you are required to provide less information to form an LLC than you are to apply for a library card in New York.”

The measure had been in the works long before the increased focus on real estate owned by wealthy Russian individuals tied to Vladimir Putin.

In a memo about the bill, the lawmakers noted that some tenants were unable to receive aid from the state’s Emergency Rental Assistance Program because they could not track down their landlords to fill out the paperwork.

Assembly member Emily Gallagher, who is sponsoring the bill with Hoylman, said the measure was inspired, in part, by her experience working with tenants, and would not have unintended consequences.

“It’s really just going to be a problem for people abusing the system,” she said. “This is already done in other places in the world.”

Under federal rules, title companies are already required to disclose beneficial ownership information for residential transactions of $300,000 or more in New York City, when such deals are done without outside financing. That information is reported to the U.S. Treasury.

The state approved a measure in 2019 that required LLCs involved in certain real estate transactions to disclose the identities of all owners and managers in tax filings. The law, however, only applies to properties with one to four units. The bill proposed Tuesday eliminates that threshold and applies the rule to all residential deals.

Last week, Manhattan Borough President Mark Levine said properties in his borough owned by Russian oligarchs should be seized given the country’s invasion of Ukraine, though he does not have the authority to put such a measure in place — and it’s not clear other agencies do either.





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