Real Estate Industry may possibly been used for money laundering. To prevent this from really happening, the U.S has regulated the use of LLC in buying luxury properties particularly in Manhattan and Miami.
Biz Journal reports that the end is near for mysterious shell companies from placing down millions of dollars for real estate properties specifically in Miami-Dade County. It has been noted that cash sales are unusually high in this area. Based on the data taken from Miami Association of Realtors, existing houses sold in November 2015 reached to 54.9%. This also includes the 67.5% cash sales of existing condominiums.
As a result, The Financial Crimes Enforcement Network (FinCEN) has released a temporary order with the purpose to "to end the secrecy in $1 million-plus cash deals in Miami-Dade and Manhattan to combat potential money laundering." It is expected that title insurance companies would be able to give out the natural individual/s behind the name of the companies that are buying luxury properties to legal authorities. However, it is noted that such "information likely wouldn't be made public in court records."
The Real Deal also reports that "the U.S. Treasury Department is rolling out a program in New York and Miami to monitor those transactions and identify buyers, starting in New York and Miami."
Jennifer Shasky Calvery, from the U.S. Treasury Department, said in an interview with New York Times that the department is concerned with the dirty money that is being plunked down in the luxury real estate. She also said that the bigger risk is around the least transparent dealings.
It is noted that real estate transactions that are above $3 million, the US government will already demand from the title insurance companies to find out the names of the buyers. The information will then be submitted to a "database that Treasury will make available to law enforcement." Starting March 2016 to August 2016, a trial will run for this program. This will become permanent if it would be discovered that there is a sufficient evidence of money laundering.
What is your take in this money laundering program spearheaded by the U.S. Treasury Department? Share your thoughts in the comment box below.
