(The Center Square) — A coalition of good government groups is urging New York Gov. Kathy Hochul to sign a bill requiring limited liability corporations to disclose their owners, arguing that it will reduce the state’s role in global money laundering and corruption.
In a letter to Hochul, the coalition of unions, fiscal watchdogs and anti-corruption groups called on the Democrat to sign the LLC Transparency Act to create the nation’s first public database of the real or “beneficial” owners of so-called “shell” companies.
The coalition said the new law would make New York “a national leader on the issue of corporate transparency by creating the first public beneficial ownership database in the country and setting a standard other states would follow.”
“Beneficial ownership transparency offers unalloyed benefits for business, local government, civil society, law enforcement, tenants, homeowners, and organized labor,” they wrote. “For local government, it facilitates routine activities such as code enforcement by allowing officials to identify the true owners of problematic properties.”
The coalition, which includes Common Cause NY, Legal Aid Society and Reinvent Albany, said much of the opposition to the plan comes from NYC’s real estate market, which they said is “historically rife with money laundering facilitated by anonymous shell companies, exactly the type of illicit activity this legislation is designed to curb.”
“We cannot claim it is a panacea, but approving this bill is a much-needed step in the right direction with tangible benefits for an unusually broad swath of society,” they wrote.
An LLC is a company where the entity or entities that control it have limited responsibility for upholding its contractual obligations and other legal liabilities. Owners aren’t required under current state law to provide their or their company’s name on official documents, including real estate deeds.
The groups said an estimated 37% of Manhattan properties are owned by LLC “shell” companies – five times the New York state average — which fosters money laundering.
Treasury Secretary Janet Yellen has said the large concentration of LLCs in New York City is one of the reasons the U.S. may be “the best place to hide and launder ill-gotten gains.”
“Many corrupt actors can hide their money in Central Park skyscrapers,” Yellen said in 2021 remarks. “Sometimes the only thing these luxury properties are home to are ill-gotten gains – they’re money laundromats on the 81st floor.”
Coalition members are expected to hold a rally on Wednesday in midtown Manhattan to call on Hochul to sign the measure.