U.S. Crackdown on Money Laundering in Real Estate Swells

A federal program that aims to root out illicit money flowing into luxury real estate will greatly expand its footprint, targeting hundreds if not thousands more home purchases across the U.S. Obama-era regulations have been expanded to include Las Vegas, Seattle, Chicago, Boston and Dallas-Fort Worth and their surrounding counties, the Treasury Department said on Thursday—marking a vast increase from the original list of major cities, like New York, Miami and Los Angeles, where buyers often hide their identities behind limited liability companies or shell companies. The treasury’s Financial Crimes Enforcement Network, or FinCEN, launched the program in 2016. It requires that title companies, which are involved in virtually all residential sales, disclose to the government the true identity of buyers who shield themselves behind an LLC and pay all cash. Until now, the nearly three-year-old program had specifically targeted the luxury real estate sector, but the new rules will vastly expand the government’s mandate to even moderately priced home sales, lowering the sales price threshold to only $300,000. Previously, expensive metro areas like Manhattan were only required to report such transactions for home purchases of $3 million or more. That equated to less than 150 deals in the first year of the program, Mansion Global exclusively reported last year. But now expensive places like Manhattan, where the average home price is over $1 million, will have to report nearly every all-cash purchase made using an LLC.