Federal watchdog expands anti-money laundering disclosure rules for high-end real estate buyers

Anti-money laundering
Anti-money laundering

A federal watchdog agency is extending disclosure rules for shell companies aimed at combating money laundering and criminal syndicates buying high-end U.S. real estate.

The U.S. Treasury Department’s Financial Crimes Enforcement Network, FinCen, is requiring title companies to identify persons involved with shell companies set up to buy expensive U.S. residential real estate.

Federal regulators worry about all-cash real estate sales are linked to money laundering or criminal networks trying to hide assets.

Wealthy buyers and real estate investors often set up shell companies and limited liability corporation to limit legal and bankruptcy exposures but also to sometimes hide the identities of the persons involved.

FinCen first issued the disclosure rules for Manhattan and Miami, two high-end real estate markets popular with foreign buyers.

The federal agency is now extending the disclosure rules to Broward and Palm Beach counties in Florida, Los Angeles, San Diego, San Francisco, San Antonio and San Mateo and Santa Clara counties in California.

The latter includes Silicon Valley. Broward County includes Fort Lauderdale.

Arizona is not on the list but wealthy submarkets such as Paradise Valley, Scottsdale and Phoenix’s Arcadia area do see all-cash sales and LLC buyers.

There is also plenty of wealthy Californians and California-based investment groups that buy, sell and flip real estate in the Phoenix area and other Arizona markets.

Arizona is also a top entry U.S. entry point for Mexican drug cartels. Past investigations have found, however, that Mexican cartels and smuggling outfits tend to take their illicit cash back to their home regions.

Regulators in the United Kingdom have instituted some disclosure rules aimed shining some light on high-end real estate sales in London.

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