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The federal government has announced a new initiative to identify certain individuals that may be using dubious limited liability company structures to cover their all-cash purchases of luxury residential real estate in New York City and Florida’s Miami-Dade County.
The Financial Crimes Enforcement Network (FinCEN) issued Geographic Targeting Orders (GTO) that will temporarily require certain U.S. title insurance companies to identify and report the true “beneficial owner” behind any legal entities making luxury real estate purchases in these two high-priced markets. The GTO initiative is based on concerns that some of these transactions involve shell companies that only exist as a cover for money laundering schemes.
FinCEN did not publicly state how many transactions could be potentially targeted in this operation. The GTOs will go into effect on March 1 and expire on Aug. 27.
“We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money,” said FinCEN Director Jennifer Shasky Calvery. “Over the years, our rules have evolved to make the standard mortgage market more transparent and less hospitable to fraud and money laundering. But cash purchases present a more complex gap that we seek to address. These GTOs will produce valuable data that will assist law enforcement and inform our broader efforts to combat money laundering in the real estate sector.”