http://wolfstreet.com/2016/07/27/us...ami-san-francisco-silicon-valley-los-angeles/
US Government Mucks up Money-Laundering in Real Estate, Puts Luxury Housing Bubbles at Risk:
Cash sales of homes ? mostly the domain of foreign and affluent buyers ? fell to 32% of total home sales in April, down 2.8 percentage points from a year ago, according to a new report from CoreLogic. For the first four months, cash sales dropped to 34%, the lowest since 2008.
So is it just the ?strong dollar? and ?global uncertainty?? Or could there be more to the story?
Today, the Treasury Department?s Financial Crimes Enforcement Network (FinCEN) announced that it would expand a program it had kicked off in January to identify and track secret homebuyers who hide behind shell companies.
The expanded program will ?temporarily require US title insurance companies to identify the natural persons behind shell companies used to pay ?all cash? for high-end residential real estate in six major metropolitan areas,? up from the two areas designated in January, Manhattan and Miami, among the biggest destinations of global wealth.
Real estate purchases in the US have been a perfectly good way to launder large amounts of money, no questions asked. Brokers and banks and other industry professionals have played along. Everyone in the world knew it. And they came to launder their cash.
It is the first time the federal government has required real estate companies to disclose names behind cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers.
Apparently, this first experiment in Manhattan and Miami was successful for the government, according to the release today:
The initial GTOs [Geographic Targeting Orders] are helping law enforcement identify possible illicit activity and informing future regulatory approaches. In particular, a significant portion of covered transactions have indicated possible criminal activity associated with the individuals reported to be the beneficial owners behind shell company purchasers.
This corroborates FinCEN?s concerns that the transactions covered by the GTOs (i.e., all-cash luxury purchases of residential property by a legal entity) are highly vulnerable to abuse for money laundering.
So with these successes under its belt, FinCEN outed its expanded list and the minimum purchase prices for each area that would trigger the reporting requirement:
New York: Manhattan with a threshold at $3 million; Brooklyn, Queens, Bronx, and Staten Island at $1.5 million.
Florida: Miami-Dade County, Broward County, and Palm Beach County, all at $1 million.
California: San Diego County and Los Angeles County; plus in the Bay Area, San Francisco, San Mateo County, and Santa Clara County, all at $2 million.
Texas: Bexar County (San Antonio area) with a threshold of $500,000.
Through this expansion, ?we will learn even more about the money laundering risks in the national real estate markets, helping us determine our future regulatory course,? the release said.
US Government Mucks up Money-Laundering in Real Estate, Puts Luxury Housing Bubbles at Risk:
Cash sales of homes ? mostly the domain of foreign and affluent buyers ? fell to 32% of total home sales in April, down 2.8 percentage points from a year ago, according to a new report from CoreLogic. For the first four months, cash sales dropped to 34%, the lowest since 2008.
So is it just the ?strong dollar? and ?global uncertainty?? Or could there be more to the story?
Today, the Treasury Department?s Financial Crimes Enforcement Network (FinCEN) announced that it would expand a program it had kicked off in January to identify and track secret homebuyers who hide behind shell companies.
The expanded program will ?temporarily require US title insurance companies to identify the natural persons behind shell companies used to pay ?all cash? for high-end residential real estate in six major metropolitan areas,? up from the two areas designated in January, Manhattan and Miami, among the biggest destinations of global wealth.
Real estate purchases in the US have been a perfectly good way to launder large amounts of money, no questions asked. Brokers and banks and other industry professionals have played along. Everyone in the world knew it. And they came to launder their cash.
It is the first time the federal government has required real estate companies to disclose names behind cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers.
Apparently, this first experiment in Manhattan and Miami was successful for the government, according to the release today:
The initial GTOs [Geographic Targeting Orders] are helping law enforcement identify possible illicit activity and informing future regulatory approaches. In particular, a significant portion of covered transactions have indicated possible criminal activity associated with the individuals reported to be the beneficial owners behind shell company purchasers.
This corroborates FinCEN?s concerns that the transactions covered by the GTOs (i.e., all-cash luxury purchases of residential property by a legal entity) are highly vulnerable to abuse for money laundering.
So with these successes under its belt, FinCEN outed its expanded list and the minimum purchase prices for each area that would trigger the reporting requirement:
New York: Manhattan with a threshold at $3 million; Brooklyn, Queens, Bronx, and Staten Island at $1.5 million.
Florida: Miami-Dade County, Broward County, and Palm Beach County, all at $1 million.
California: San Diego County and Los Angeles County; plus in the Bay Area, San Francisco, San Mateo County, and Santa Clara County, all at $2 million.
Texas: Bexar County (San Antonio area) with a threshold of $500,000.
Through this expansion, ?we will learn even more about the money laundering risks in the national real estate markets, helping us determine our future regulatory course,? the release said.