Treasury Department finally adds teeth to LLC disclosure rule

FinCEN decree now includes wire transfers

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
Suburbanites with pitchforks as two hands ripping building plans
Suburban Nimbys oppose more housing. Do they have a point?
Suburban Nimbys oppose more housing. Do they have a point?
Gale Brewer (Getty, Gale Brewer)
City takes aim at landlords’ empty retail space
City takes aim at landlords’ empty retail space
From left: Silverstein Properties' Larry Silverstein and New York City Councilmember Julie Won along with a rendering of Innovation QNS (Getty Images, Julie Won for City Council, Innovation QNS Official Site)
Silverstein’s Astoria megaproject ups affordable housing commitment
Silverstein’s Astoria megaproject ups affordable housing commitment
MR Property Builders' Rich Rauff and 45th Street between Pacific and Prospect Streets in Copiague (Getty Images, Google Maps, MR Property Builders)
Honey, they shrunk the housing: Long Island project withers
Honey, they shrunk the housing: Long Island project withers
Village of Lawrence mayor Alex Edelman (Facebook, Getty)
Shovels down! Hempstead Town halts development in two villages
Shovels down! Hempstead Town halts development in two villages
A photo illustration of Daniel Brodsky and 75 West End Avenue (Getty Images, Google Maps)
Brodsky brings challenge to NYC Airbnb law
Brodsky brings challenge to NYC Airbnb law
arrow_forward_ios

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

Loading...