Today the Treasury Department announced that it would begin identifying and tracking buyers of high-end properties made in all-cash purchases in an effort to crack down on money laundering through real estate. The initiative is set to start in two major wealth magnet real estate markets in the United States: Manhattan, New York and Miami-Dade County, Florida.
This is the first time that the federal government is requiring real estate companies to disclose the names behind all-cash transactions, ones that are usually conducted through shell companies meant to shield the purchaser’s identity. This is part of a broader federal initiative with officials from the Treasury and federal law enforcement stating that greater resources are being put into investigating luxury real estate sales involving shell companies like LLCs, partnerships and other entities.
Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network at the Treasury said “We are concerned about the possibility that dirty money is being put into luxury real estate.” The department will focus on both, purchases made all in cash and conducted through shell companies. The government is requiring title insurance companies to discover the identities of the buyers and submit the information to the treasury, which will then be collated into a database for law enforcement. This initiative is being launched for sales of more than $3 million in Manhattan, and sales of more than $1 million in Miami-Dade County, from March through August of this year.
Ms. Calvery added that if the program captures considerable illicit dealings, permanent requirements would be developed to apply nationally. On a smaller scale, the New York City Finance Department had already implemented a less reaching requirement since last spring which requires shell companies buying real estate to report their members to the city. The federal program, however, is looking beyond identifying nominees of shell companies but rather is identifying the beneficial owners behind them.