US broadens data targeting on real estate

The US Treasury Department has taken the decision to widen its crackdown on US real estate money laundering activities. The order governs the all cash purchases of premium homes through shell companies. 

The Treasury Department, in March, needed disclosure of names of all individuals who run the show being the cloak of limited liability companies. These Limited Liability Companies, or LLCs as they are widely known, are involved in exclusive cash trabsactions in Miami and at Manhattan in New York City. The new step expanded the number of cities to include Los Angeles, San Francisco and San Diego. The suburban counties of these cities were also included. The counties of San Antonio of New York City and near Miami were also included. This new order will be operational from August 28- the day post six month orders expire in Miami and Manhattan. It will henceforth continue for about six months.

According to the Treasury, the aim is to make harder for buyers, specially non-US citizens to launder their money via property purchases in the United States. According to a Treasury official, the expansion of Geographical Targeting Orders or GTOs will enable the administration to learn more about risks concerning money laundering in real estate market.

A few brokers, however, predicted that these orders will have little effect on new markets under the order. This is as the worldwide economic turbulence have already spooked buyers to pull back. When these orders were announced, many were afraid that the real estate market will crumble as a number of buyers did not complete the deals during the final stages.

Miami and New York real estate brokers, however, said that such new orders until now had minimal impact on the real estate transactions until this point of time. They said that people who buy property under LLCs utilize them to preserve privacy, and not to launder money. Payments were also done via wire transfers which bypassed the requirement.

The new order needs individual buyers who puchase via an LLC and also do not apply for a mortgage to offer title insurance companies their drivers’ licenses and names, along with passports or any other kind of identification. The companies would then provide data to Treasury Department. The banks are already obligated to review all transactions that includes mortgages for the many risks of money laundering.

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