A bipartisan group of U.S. senators recently reintroduced sanctions legislation targeting Russia that includes a provision to fight money laundering in all-cash purchases of real estate.
Bill may make cash-sale financial disclosures nationally
The provision is targeted on residential real estate purchases done in cash by limited liability corporations, also referred to as shell companies. Under the Geographic Targeting Order – which pertains to all-cash purchases of residential real estate above $300,000 made by shell companies in 12 metro areas, including Manhattan and Miami – title insurance companies must report the names of beneficial owners to the U.S. Treasury Department.
The geographic targeting program, which began in January 2016, is subject to renewal twice yearly, however the new bill seeks to expand it nationwide as well as make it permanent.
While shell-company, all-cash property purchases are legal, they’re popular with money launderers since they are often made anonymously without explaining the original source of the funds. By requiring disclosure of the buyer’s name – the individual who directly benefits from the shell company purchase – it will be tougher for criminals to launder money through real estate transactions.
“U.S. real estate is a great place to stash dirty money,” says Clark Gascoigne, deputy director of the Financial Accountability and Corporate Transparency Coalition.
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