Treasury to track some real estate deals in NY and Miami

The effort will require some title insurance companies in the target areas of Manhattan and Miami-Dade County to report the beneficial owner behind shell companies – which can be used to hide a buyer’s identity.

“There is a wave of willful blindness about the source of a good portion of the money coming into real estate investments in South Florida”, former assistant U.S. Attorney Charles Intriago told The Real Deal in 2013.

Real estate developer Kevin Maloney, founder of Property Markets Group, which has built in New York, Miami and Chicago, said he doubts that the announcement will affect sales.

The department will focus on sales that are both paid for all in cash and conducted using shell companies. The Treasury department is now mandating that title insurance companies provide the identities of buyers and give the data to the government. Information collected will go to law enforcement.

The Treasury’s program will affect billions of dollars in real estate transactions. The median Manhattan home sold for $1.15 million at the close of 2015 – a 17.3 percent leap from a year ago, according to the real estate brokerage Douglas Elliman. If Treasury officials find that many sales involved suspicious money, Calvery said, they would develop permanent reporting requirements across the country. “We generally know our buyers because they come in, and they interface with us”. Almost half the purchases were all-cash. In Manhattan and Los Angeles, the figure is higher. The same NYT report from a year ago was able to track shell companies that purchased units at the Time Warner Center in Manhattan back to owners who were the subjects of global investigations.

“People who are buying in the luxury sector want privacy, want anonymity”, Maloney said. That rule, however, is less far-reaching than the Treasury action. “Law enforcement can follow the thread”, he says. The area is known as a hotspot for money laundering. Buyers often mask their identities by layering companies on top of other shell companies.

We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium USA real estate to safely and secretly invest millions in dirty money. The department already requires mortgage lenders to scrutinize buyers.

Over the summer FinCEN said that check-cashing stores in Miami-Dade and Broward would need to record more information about customers cashing tax refunds of more than ,000.