Last Minute Change to New York's LLC Ownership Database Limits Public Access
Governor Hochul's Signing of the LLC Transparency Act Sparks Controversy Late in the Workday on the Eve of Christmas Eve
New York State - In a move that draws both attention and criticism, Governor Hochul's signing of the LLC Transparency Act has created a database granting exclusive government and law enforcement access to the LLC ownership database (Limited Liability Corporation).
While touted as a measure to combat criminal activities and enhance transparency, concerns are growing over the restricted access for the public, which was added to the bill late on 23 December, the same day it was signed.
Searchers of the database made available through the NYS Department of state will still be able to see the name and registered agents of LLCs. A registered agent serves as a liaison between NYS and the company itself.
Many of those registered agents are also key leaders in those companies. Still, many LLCs will use other LLCs as registered leading to an endless loop of secrecy.
Further complexities arise with registered agent services, which are plentiful in the Empire State, generating many an advice column and ‘top ten’ lists on the subject.
We emailed the Governor’s press office with the following question but have not yet heard back.
“As the public's unfettered access to information is clearly limited by this action, does the LLC Transparency Act imply that we simply trust that New York State will do a better job of enforcing the law now that the public is less informed?
Does the Christmas-time release speak to that very same issue of a high-level resistance to public consciousness?”
Privacy Compromised Amidst Fight Against Financialization
The LLC Transparency Act, known as Legislation S.995B/A.3484, aims to establish a beneficial LLC ownership database accessible to federal, state, and local government law enforcement across New York State.
This legislation is anticipated to provide authorities with the necessary tools to unveil criminal activities concealed within Limited Liability Corporations.
Governor Hochul's Perspective
"For far too long, bad actors have been protected by the loose disclosure requirements of LLC ownership," Governor Hochul said. "Wage theft, money laundering, tenant mistreatment, and other unlawful activity have been masked by the opaque ownership structure of an LLC. The new LLC Transparency Act will give law enforcement and State regulators the tools they need to hold bad actors accountable."
Impact on Public Oversight
One of the central concerns voiced by skeptics is the potential for decreased public oversight. With the implementation of enhanced capabilities in the LLC ownership database, the public is set to be shut out from accessing crucial information. Individuals who previously had the ability to scrutinize LLC ownership for potential irregularities or connections may find their watchdog role severely restricted.
In a separate investigation conducted by GVO, disturbing findings emerged concerning the ownership of a hotel in Henrietta. The GVO examined a case where a white woman was alleged to have been kidnapped by Black human traffickers operating in the area.
Verified guests reported the hotel to be extremely filthy, and they expressed feeling unsafe during their stay. Furthermore, the GVO uncovered evidence suggesting that the Microtel in Henrietta was part of a larger national organization of South Asians.
The investigation hinted at business associations formed along racial lines, a practice that might be challenging to expose without public access to comprehensive corporate lookup databases.
The Balancing Act: Privacy vs. Transparency
While Governor Hochul's compromise with the Legislature addresses privacy concerns among LLC owners, the broader question of finding a balance between privacy and transparency remains.
As citizens resist New York State's financialization, the need for open access to information becomes a pivotal point in the ongoing debate.
Conclusion
As the LLC Transparency Act takes effect, the tension between pursuing criminal activity and preserving privacy intensifies. The debate over the trade-off between enhanced law enforcement capabilities and the public's right to scrutinize LLC ownership is likely to persist, sparking discussions about the delicate balance between privacy and transparency in our evolving digital age.
There is something similar going on at the Federal level. A new tax regulation that CPAs are being educated on. In the details are plenty of exemptions for large corporations to have their owners hidden.