ShareThis Page

High-end, all-cash home purchases to be targeted by feds looking for money launderers

| Wednesday, Jan. 13, 2016, 7:54 p.m.

WASHINGTON — Suspecting that criminals may be hiding their ill-gotten gains in luxury real estate, the federal government Wednesday announced a new strategy to identify the secret buyers.

The effort by the Financial Crimes Enforcement Network, a unit of the Treasury Department, is aimed at lifting the veil on shell companies that often use all-cash purchases to snap up high-end residential real estate.

“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.

Treasury issued Geographic Targeting Orders that will require some title insurance companies to identify the individuals behind companies that pay cash for expensive homes in Manhattan and Miami-Dade County, two areas that officials say are hotbeds for such deals. Sales in excess of $1 million will be targeted in Miami-Dade, and in excess of $3 million in Manhattan. The information will be shared with law enforcement.

The orders will be in effect from March 1 through Aug. 27 but could be made permanent through rulemaking or expanded to other cities, depending on the findings.

For several years, Treasury's FinCEN division has worked with mortgage brokers, as well as government-sponsored mortgage giants Fannie Mae and Freddie Mac, to identify buyers who may attempt to launder illicit money through mortgaged purchases of high-end homes. But all-cash purchases have represented a gap in the system.

Title insurance companies or buyers that provide false information would face penalties, says Stephen Hudak, a FinCen spokesman.

Of 32,050 sales of existing homes in Miami-Dade last year, 1,176 were all-cash transactions of more than $1 million, according to the Miami Association of Realtors. Many buyers are from Latin American countries and have valid reasons for shielding their identities, including ensuring their safety, association CEO Teresa Kinney says.

She says she supports Treasury's new initiative. If buyers are using home purchases to launder money, “That's not what we want for our market,” she says.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.