A bipartisan team of Congresspersons from New York plan to reintroduce legislation that would require disclosure of information about the beneficial owners of LLCs used in real estate transactions. Pursuant to the Incorporation Transparency and Law Enforcement Assistance Act (“ITLEAA”), states would be required to collect information about the beneficial owners. In states that are unable to meet the collection requirement, the Dept. of Treasury will be tasked with collecting the information. In a related move, the Financial Crimes Enforcement Network announced in January that title insurers will temporarily be required to provide the names of beneficial owners of LLCs that are used to acquire certain properties in Miami and Manhattan.
Proponents of the ITLEAA argue that the bill will help prevent criminals or corrupt foreign officials from using real estate purchases to launder ill-gotten funds. Detractors have expressed concern that the ITLEAA may weaken the attorney-client privilege, to the extent that it imposes new or modified reporting requirements on attorneys for information they learn from their clients. The pending reintroduction of the ITLEAA comes on the heels of a 60 Minutes segment regarding the use of attorneys to set up shell companies and other vehicles. In a hidden-camera investigation that was the subject of the segment, 13 attorneys were asked in initial consultations about how to help an ostensibly corrupt foreign official acquire real estate and a private jet without detection. Of the 13 attorneys approached, 12 provided at least some advice about how to make the property acquisitions, despite clear hints that the funds to be used for the purchases were dirty.
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