January 21st, 2016 6:31 AM by Eileen Denhard
The U.S. Financial Crimes Enforcement Network (FinCEN) has issued Geographic Targeting Orders (GTO) that will temporarily require certain U.S. title insurance companies to identify the individuals behind LLC “shell companies” used to pay all cash for high-end residential real estate in the borough of Manhattan in New York City, and in Miami-Dade County, Florida. The increasing scrutiny results from the concern that such luxury property transactions may be conducted by corrupt foreign political figures, drug lords and other nefarious characters looking to hide their ill-gotten gains anonymously in U.S. real estate (money laundering).
NAR reports that all-cash sales rose to 27 percent of all real estate transactions in November, and individual investors, who account for many of those cash sales, purchased 16 percent of all homes purchased in November.
“Over the years, our rules have evolved to make the standard mortgage market more transparent and less hospitable to fraud and money laundering,” says FinCEN Director Jennifer Shasky Calvery. “But cash purchases present a more complex gap that we seek to address.”