On June 20, 2023, The New York legislature passed a bill called the LLC Transparency Act which would require the beneficial owners of limited liability companies (“LLC”) to disclose their identities. This disclosure of information could then be found in a newly created, public searchable database maintained by New York’s secretary of state.
Governor Hochul signed this bill into law on December 23, 2023, and it will be effective one year after. However, the bill was amended to remove the requirement of the public searchable database to preserve the privacy and security protections LLCs provide in real estate transactions. Instead, the collected information will be entered into a database only accessible internally to agencies of law enforcement.
An LLC is a business structure in the United States that protects its owners from personal responsibility for its debts or liabilities. A beneficial owner of an LLC is any person who exercises substantial control over the entity or owns or controls at least 25 percent of its ownership interests, directly or indirectly.
The LLC Transparency Act aims to provide the necessary information needed by law enforcement to tackle unlawful activities involving possible corruption, fraud, theft, money laundering, tax evasion, etc.
The database would include the full legal name of the beneficial owner(s) of New York organized LLCs as well as foreign LLCs qualified to do business in New York. This will include the entity’s full name, business address, date of birth, unique identification number from a passport or other government issued identification document and other detailed information.
The penalty imposed under the ACT for failure to comply with beneficial ownership within the required timeframe would be a fine of $250.00 as well as a non-compliance public listing.