Treasury Department finally adds teeth to LLC disclosure rule

FinCEN decree now includes wire transfers

TRD New York /
Aug.August 22, 2017 05:55 PM
 

The Treasury Department closed a gaping loophole in its effort to crack down on money laundering in real estate on Tuesday, extending its LLC disclosure rules to deals that involve wire transfers.

In a revised geographic targeting order (GTO), Treasury officials said wire transfers would now be subject to regulations that require title insurance companies to disclose the identity of buyers who purchase luxury real estate through LLCs.

The revised GTO — which covers deals in New York City, Florida, California, and Texas — was also extended to transactions in Honolulu, Hawaii.

The latest changes are meant to give teeth to regulations that critics have said are too lax and have had little impact.

On Tuesday, FinCEN also published an eight-page advisory for financial institutions, alerting them to money-laundering risks associated with real estate. “Many real estate transactions involve high-value assets, opaque entities, and processes that can limit transparency because of their complexity and diversity,” said the advisory, which cited the 1MDB fund scandal, in which embezzled funds out of Malaysia paid for luxury real estate in Beverly Hills and New York, including the Park Lane Hotel.

“In addition, the real estate market can be an attractive vehicle for laundering illicit gains because of the manner in which it appreciates in value, ‘cleans’ large sums of money in a single transaction, and shields ill-gotten gains from market instability and exchange-rate fluctuations,” the advisory said.

According to FinCEN, 30 percent of transactions covered by the GTOs involve an owner who’s been the subject of a suspicious activity report.

The Treasury Department initially launched the LLC disclosure rule in March 2016 in an attempt to crack down on the flow of illicit funds. Since then, FinCEN has renewed the regulation twice, most recently in February. Since July 2016, the rule has covered deals in all five boroughs of New York City; Miami, Broward and Palm Beach counties in Florida; Los Angeles; San Francisco; San Diego; and San Antonio, Texas.  The rule applies to cash deals above $3 million in Manhattan and $1.5 million in the other boroughs.


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Matt Borstein, Deutsche Bank’s global head of CRE, is moving to Oak Hill Advisors (Photo via Deutsche Bank)

Deutsche Bank’s CRE head moves to Oak Hill Advisors

Deutsche Bank’s CRE head moves to Oak Hill Advisors
Bank OZK CEO George Gleason (Unsplash; Bank OZK)

Bank OZK’s lending up in third quarter

Bank OZK’s lending up in third quarter
Mayor Bill de Blasio and the Lucerne Hotel at  201 West 79th Street (Getty; iStock; Google Maps)

Lawsuit blasts NYC’s “capricious” Covid-19 homeless response

Lawsuit blasts NYC’s “capricious” Covid-19 homeless response
Steve Cohen and Citi Field (Getty)

Citi Field lease clause could stymie billionaire’s quest for the Mets

Citi Field lease clause could stymie billionaire’s quest for the Mets
WeWork CEO Sandeep Mathrani (Wikipedia Commons; iStock)

WeWork bonds, already junk, downgraded by Fitch

WeWork bonds, already junk, downgraded by Fitch
(Getty, iStock)

Cash-strapped borrowers are increasingly giving keys back to lenders

Cash-strapped borrowers are increasingly giving keys back to lenders
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...