UNMASKING BENEFICIAL OWNERS: CORPORATE TRANSPARENCY LAWS FOR REAL ESTATE MARKETS AND NATIONAL SECURITY

Abstract

In the United States, Limited Liability Companies (LLCs) are widely used as vehicles for property ownership, from small-scale rental/purchase investments to large institutional ones. While LLCs provide important benefits, including limited liability protection and operational flexibility, their ability to shield Beneficial Owners (BOs) from public view has long been a source of concern for regulators, law enforcement, and communities. Anonymity of BO for LLCs in real estate transactions has been linked to financial crime, including money laundering, tax evasion, and foreign influence, while also complicating housing regulation in jurisdictions experiencing sharp increases in corporate real estate ownership

Ongoing legislative developments represent a shift toward transparency at the federal level with the implementation of Corporate Transparency Act (CTA) which requires companies to disclose BO information (BOI) to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Recently however, interim final rule was issued by FinCEN effective March 2025 due to ongoing litigation Texas Top Cop Shop, Inc. v. Garland exempting US based corporations’ requirement to file BOI temporarily. At the state level, New York is set to enact its own LLC Transparency Act built on CTA but with a stronger public access component. In contrast, implementation of such effective transparency regime in the state of Delaware is lacking, especially considering that Delaware is known to be the leading LLC incorporation state in the US.