Earlier this month, the Treasury Department began a new initiative to identify and track buyers of Manhattan (and Miami) real estate who make those purchases through anonymous LLCs. It turns out the program, which will run from March through August, has a big loophole: The Real Deal reports that it won't track wire transfers.
The Treasury Department will track all-cash transactions of more than $3 million, but only those made with actual paper—e.g. checks, or good old-fashioned dollar bills. But transactions at that level are most commonly done with wire transfers, according to experts. "We don't have people coming to closings with suitcases full of cash," Stuart Saft, who heads Holland & Knight's real estate practice, told TRD.
The feds, for their part, say they're ready for the future. "We adapt in the future accordingly," a FinCEN spokesperson said. They elaborated further on why the initiative will be run this way, which comes down to paperwork:
"We're asking the title insurers to use an existing form with existing definitions," a FinCEN spokesperson said. "A covered transaction is triggered only when 'such purchase is made, at least in part, using currency or a cashier's check, a certified check, a traveler's check, or a money order in any form.' This generally conforms to existing Form 8300 requirements (which are not triggered by wire transfers), which reduces burden on covered businesses because they are already familiar with the Form 8300 filing requirements and have filed Form 8300's in the past." Got it? The tracking begins in March.
· The biggest weakness in the Treasury's new LLC order? Wire transfers [TRD]
· Feds Will Now ID Anonymous Buyers of Manhattan Real Estate [Curbed]
· All LLC coverage [Curbed]