Delaware

HB57(S) – Preventing Nefarious LLC Formation

State Representative John Kowalko has introduced a bill that attempts to regulate the wild and unrestrained use of the LLC entity under Delaware law for all sorts of types of nefarious purposes (i.e. silencing porn stars who have affairs with the President) by infamous criminals.

HB57(S) says that the Secretary of State shall not certify for formation or domestication nor register a limited liability company (LLC) for any person, group, organization, or government placed on the lists of the Active Sanctions Program of the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury (DOT) whether requested by a registered agent or the sanctioned person, group, organization or government directly.  Further, registered agents under contract with the Department of State, Division of Corporations, shall use the OFAC sanctions lists to screen potential clients in order to avoid filing certificates for formation, domestication, or registration of a limited liability company for persons, groups, organizations, or governments whose names appear on said lists. The Secretary of State shall provide to all registered agents a link to the OFAC website and its Resource Center.

The bill says other registered agents who file applications for clients shall also use the OFAC sanctions lists to screen out potential clients who appear on any of the sanctions lists. Registered agents identifying a match of an applicant with a name on one of the sanctions lists shall not be required by this law to report the match to any government authority. The registered agent’s obligation will be to simply reject the applicant as a client.

My question: if the registered agent does not meet his obligation to reject the applicant, what is the sanction or punishment?   Nothing?

I say disbarment, as most registered agents are attorneys in Delaware.

HB57(S) – LLC Reform
SPONSORSKowalko, Ennis, K. Williams
YES
NO
ABSENT
STATUS – House Judiciary 3/15/18
HISTORY – Waiting on a hearing

Delaware politics from a liberal, progressive and Democratic perspective. Keep Delaware Blue.

4 comments on “HB57(S) – Preventing Nefarious LLC Formation

  1. Point of Order

    FYI, Department of State has this requirement in place now. The policy requires Registered Agents to continually check the list.

  2. All for disbarment, the LLC game needs to be restrained even if it costs a few criminal enterprise bucks. As noted it’s been used by more than a few sleazy individuals. And now I feel the urge to sing: “Oh Stormy……”, except in this case will not be brining back that sunny day.

  3. elizabeth

    Kowalko is the best. I was wondering when or if any legislator would take this issue on. Drug dealers , Russian oligarchs ,, dictators etc are laundering money in this state. Its time to end this outrageous practice.

  4. Pingback: This week at progressive state blogs: Sen. Tester and bank reform; doomed to repeat internet hoaxes – Headlines

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