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U.S. Treasury Department Tightens LLC Disclosure Rules To Combat Real Estate Fraud

The U.S. Treasury Department is determined to put an end to real estate fraud. With money laundering proving to be an ongoing issue in the industrythe department has pushed to include wire transfer deals in the disclosure rules for limited liability companies.


Companies will now be required to reveal the identity of any buyer purchasing luxury real estate through a wire transfer and using an LLC, The Real Deal reports. Previously, companies were only required to disclose names when a deal involved cash transactions.

Real estate has become a relatively easy industry in which to launder money because people can create a number of accounts in shell corporations around the world to buy assets. Once that asset has been sold, the money appears to be authentic, TRD reports.

The new regulations also include a revised geographic targeting order, which in addition to New York City, Florida, California and Texas, now extends to transactions taking place in Honolulu, Hawaii.

The LLC disclosure rule was first launched in March 2016 and has since received a lot of pushback from critics claiming the rules have been too lenient. These rules have been renewed by the Financial Crimes Enforcement Network twice, The Real Deal reports.