Title insurance companies required to disclose identity of all-cash investors
The Financial Crimes Enforcement Network (FinCEN) is to demand the identification of luxury real estate cash buyers to help prevent the flow of illicit money into the high-end property market.
The Geographic Targeting Orders (GTOs), which start from March 1 2016, temporarily require certain US title insurance companies to disclose buyers’ names behind companies that pay ‘all cash’ for upmarket residences in both Manhattan, New York City and Miami Dade County, Florida. The government will then add the buyers’ details to a database for law enforcement.
FinCEN is concerned that some individuals are attempting to hide their assets and identity by purchasing residential properties through limited liability companies or other secretive structures, without finance.
According to the New York Times, in the US, more than half of real estate transactions over $5m are purchased through shell companies, often with unnamed buyers.
“We are concerned about the possibility that dirty money is being put into luxury real estate,” Jennifer Shasky Calvery, the director of the Financial Crimes Enforcement Network at the Treasury Department, told the newspaper. “We think some of the bigger risk is around the least transparent transactions.”
In New York, buyers of property worth $3m or more must be reported, and in Miami, $1m or more.
The GTOs will be in effect for 180 days and will expire on August 27, 2016. If FinCEN discovers many purchases made with “dirty money”, permanent reporting requirements will be rolled out across the country.
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