BILL NUMBER: S8432
SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:
An act to amend the limited liability company law, in relation to the
scope of certain provisions relating to beneficial owners of limited
liability companies
 
PURPOSE OR GENERAL IDEA OF BILL:
This bill provides technical changes to the definitions of section 1106
of the limited liability company law.
 
SUMMARY OF PROVISIONS:
This bill makes technical changes to the definitions of
 
JUSTIFICATION:
The LLC Transparency Act was a landmark, first-in-the-nation piece of
legislation passed in 2023 to crack down on white-collar crime fostered
by anonymous shell companies incorporated as LLCs. The bill was neces-
sary given the role of LLCs as vehicles for bad actors to launder money,
evade accountability, traffic drugs, and mask other illicit conduct. It
requires the beneficial owners of limited liability companies registered
to do business in New York state to disclose their identities to the New
York Department of State. In 2021, the United States Congress passed the
"Corporate Transparency Act" ("CTA"), which implemented similar disclo-
sure requirements at the federal level. To reduce confusion among
reporting entities and create consistency, the LLCTA incorporated defi-
nitions by cross-reference to the CTA and its implementing regulations.
However, in March of this year, the federal government announced it
would no longer be implementing the CTA with respect to domestic corpo-
rations and issued a Final Interim Rule significantly gutting regu-
lations upon which the LLCTA depends. This action is unfortunately
consistent with the current federal administration's significantly more
relaxed posture towards white-collar crime and corruption.
This bill incorporates statutory definitions from federal law in order
to inoculate the LLC Transparency Act from shifting federal guidelines
or attempts to repeal the CTA and to provide certainty and reduce
confusion as a result of changes in federal regulation. Instead of
relying on federal regulatory interpretations of the CTA, the Department
of State is authorized to provide guidance and/or regulation on the
interpretation and application of the newly incorporated statutory
language.
 
LEGISLATIVE HISTORY:
This is a new bill. FISCAL IMPLICATIONS: None.
 
EFFECTIVE DATE:
This bill is effective immediately.