The federal government is ramping up its efforts to ID and track buyers of Manhattan real estate who use shell companies and LLCs to shield their identity, the Times reports. The announcement comes months after the Times released a damning investigative series about the use of shell companies to shield scandal-plagued buyers in one of Manhattan's most prestigious buildings, and months after the city imposed less extensive disclosure requirements on shell companies involved in real estate transactions in the city.
The new initiative, which will target buyers of properties asking more than $3 million, will also zero in on all-cash buyers. It is the first time the federal government has required real estate companies to disclose identifying information about all-cash buyers, the Times says. The measure is part of an effort to monitor money laundering in the United States. The Times elaborates:
The use of shell companies in real estate is legal, and L.L.C.s have a range of uses unrelated to secrecy. But a top Treasury official, Jennifer Shasky Calvery, said her agency had seen instances in which multimillion-dollar homes were being used as safe deposit boxes for ill-gotten gains, in transactions made more opaque by the use of anonymous shell companies. The initiative is being directed by the Financial Crimes Enforcement Network within the U.S. Treasury, and will function in part by requiring title insurance companies to ascertain buyer identities then submit them to the Treasury. The initiative will require that parties that own at least a 25-percent stake in the property be identified by name by the title insurance companies.
The initiative is being launched in two markets in the country that are a destination for foreign buyersManhattan and Miami-Dade Countyand will run from March through August. If the Treasury deems that enough fishy activity is occurring, permanent channels for reporting requirements will be set up across the country. Here's an alarming stat: Nearly half of houses in the country worth $5 million or more were purchased through shell companies or LLCs. In 2014, 54-percent of sales over $5 million in Manhattan were to shell companies.
· U.S. Will Track Secret Buyers of Luxury Real Estate [NYT]
· People No Longer Allowed to Buy NYC Condos Anonymously [Curbed]
· Scandal-Plagued Foreigners Park Millions In Midtown Condos [Curbed]