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A federal government investigation has found that a “significant” portion of cash used by foreign buyers in Manhattan and Miami high-end real estate transactions comes from illegal activity.
In order to crack down on buyers who use shell companies to hide their identities, the Treasury Department’s Financial Crimes Enforcement Network issued a Geographic Targeting Order (GTO) requiring title insurance companies in Manhattan and Miami to identify the individuals behind the cash-only companies, HousingWire reports.
The results found that more than 25% of all-cash transactions involved a “beneficial owner” linked to possible criminal activity, supporting FinCEN’s theories of these transactions being abused for money laundering.
FinCEN acting director Jamal El-Hindi remains concerned over how many of these transactions are occurring outside the investigated markets. The initial investigation wasn't only helpful for FinCEN, Jamal told reporters, as law enforcement agencies have new leads and insight on the assets of investigated people.
FinCEN will expand the investigation into other major metropolitan areas—including LA, Northern California, San Diego and Bexar County, TX—with different thresholds for each market.
The new GTOs will take effect Aug. 28, and will cover personal and business checks as well as cash and money orders. Wire transactions, however, aren’t covered. [HW]
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