US Treasury Widens Probe Into Real Estate Money Laundering

US Treasury
US Treasury

A new federal government crackdown on money laundering in real estate deals has cast suspicion on over a quarter of the all-cash luxury home purchases transacted via shell companies in Manhattan and Miami, the Treasury Department revealed this past week. This discovery is prompting officials to expand the program to other sections of the United States.

Due to the widening effort to identify and follow the individuals behind shell companies, the New York Times reports there will now be more intense examination of luxury real estate purchases made in cash throughout New York City, counties north of Miami, Los Angeles County, San Diego County, the three counties around San Francisco and the county that includes San Antonio.

“The information we have obtained from our initial geographic tracking orders suggests that we are on the right track,” stated Jamal El-Hindi, the acting director of the Treasury Department’s Financial Crimes Enforcement Network. “By expanding the G.T.O.s to other major cities, we will learn even more about the money laundering risks in the national real estate markets, helping us determine our future regulatory course.”

One notably suspicious transaction that the Treasury Department discovered to be tied to sales in New York or Miami this year was a $16 million cash withdrawal, a person involved in counterfeit checks and an individual who participated in moving $7 million around in shell companies associated with South America.

The areas of the country to be added to the order are places where buyers frequently purchase luxury real estate through the medium of shell companies, officials explained. The dollar values involved purchases in excess of $500,000 or more in Bexar County, which encompasses San Antonio; $1 million in Florida; $2 million in California; $3 million in Manhattan; and $1.5 million in the other boroughs of New York City. The order will be carried out by title insurance companies, which are involved in nearly all real estate transactions.

Treasury officials claimed they have already witnessed benefits to the program in Manhattan and Miami, as there have been more suspicious-activity reports filed by banks.

The expansion of the rule indicates that the Treasury Department believes the benefits to law enforcement from this type of data collection are likely worth the cost to the industry, noted Eric Berg, a Milwaukee lawyer and former member of the kleptocracy unit at the Department of Justice.

“There’s a lot of pushback from industry,” Berg told the New York Times. “Clearly some sort of internal dialogue came to the conclusion that this is worth doing.”

Leave a Reply

Your email address will not be published. Required fields are marked *