Want to keep your LLC anonymous in NY? That’ll be $250
It's long been a dream of investigative reporters — that the beneficial owners of faceless LLCs could just be looked up with a simple web search. Now, that dream is one step closer to reality, with the passage in the New York State Assembly of the LLC Transparency Act.
Why it matters: The stated aim of the act is to "strike a blow against slumlords, human traffickers, fentanyl importers, tax cheats, terrorists, political corruption, kleptocrats and Russian oligarchs."
How it works: The bill has not yet been signed into law. If and when that happens — and the bill's sponsors tell Axios they expect that to happen by the end of the year — the law will come into effect one year later. Say Q4 2024.
- At that point, all LLCs — the limited-liability corporations often used to buy real estate or otherwise hide who's buying what — will have to register their beneficial owners with New York State. They're also going to have to do the same thing with the U.S. government, thanks to the passage in 2020 of the federal Corporate Transparency Act.
- In the New York law, however, unlike the federal law, the names of the beneficial owners will be revealed in a public database.
The catch: The penalty for noncompliance is not particularly frightening: After two years and 60 days, there's a fine of $250.
- "I have serious doubts about whether the enforcement mechanism as set forth in the statute is going to be sufficient," says Joshua Bromberg, a litigator at Kleinberg, Kaplan, Wolff & Cohen in Manhattan.
The bottom line: The individuals who most want to hide their identity behind an anonymous LLC will probably prefer to pay the modest fine.