BILL NUMBER: S9310
SPONSOR: BRISPORT
 
TITLE OF BILL:
An act to amend the limited liability company law and the executive law,
in relation to establishing a publicly available database of business
entities in the state that enter into procurement contracts with procur-
ing entities in the state
 
SUMMARY OF PROVISIONS:
Section one amends section 1106 of the limited liability company law to
define "procurement contract" and "procurement entity."
Section two amends section 1107 of the limited liability company law to
exempt procurement entities from the confidentiality requirements that
otherwise apply to beneficial ownership information reported to the
department of state.
Section three amends the executive law to add a new section 100-b to
create a business entity database maintained by the department of state.
The database shall be publicly accessible and list the business address
and beneficial ownership information related to entities that have
entered into procurement contracts with the state.
Section four is the effective date.
 
JUSTIFICATION:
Transparency in public contracting is vital for protecting the public
fisc and public trust.
Anonymous shell companies are used to mask the identities of their real,
controlling beneficial owners. Often, layers of shell companies are
utilized to further confound the normal task of "following the money"
when investigating corruption or crime. This makes anonymous shell
companies, like LLCs, the perfect vehicles for financial crime and
corruption. Three in four grand corruption cases involve anonymous shell
companies, according to a landmark study by the World Bank.
By masking the identities of criminals and tax evaders, shell companies
inhibit the ability of law enforcement agencies, journalists and other
civil society actors to investigate, expose and punish illegal activity.
Corruption schemes can utilize government contracts to conceal illicit
money flows, and anonymous shell companies can facilitate this by making
it difficult to see who the real winners of the contracts are and where
the money goes. This practice harms small businesses, who rely on fair
and transparent procurement practices. It also undermines the ethics of
procurement, which must be fair and open to ensure these deals are based
on prior performance, best value for money, and in the interest of the
taxpayers, Beneficial ownership transparency makes it difficult it will
be for corrupt individuals to hide. Combining open contracting data and
beneficial ownership can make it easier to detect corruption and money
laundering risks as well as deter fraud.
The issue has rightly attracted global attention, with the G8, the G20,
and the Financial Action Task Force all supporting the disclosure of
beneficial ownership information. The UK, Canada, and dozens of other
countries around the world require beneficial ownership information to
be publicly disclosed. In 2023, New York passed the LLC Transparency
Act. Although this law was a major step forward in beneficial ownership
transparency, and will undoubtedly help the state crack down on finan-
cial crime, money laundering, and corruption, it does not require public
disclosure of any kind. This legislation would create public transparen-
cy around public contracts, which is necessary to ensure these processes
are free from corruption and undue influence. Because the necessary
beneficial ownership information is already, being submitted to the
Department of State under the LLC Transparency Act, the burden of
publishing such information is minimal.
 
PRIOR LEGISLATIVE HISTORY:
New Bill
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S9310: 1106 limited liability company law, 1107 limited liability company law