The US Treasury has announced that it is extending its Geographical Targeting Orders to identify purchasers of luxury real estate properties in six areas in the US. The GTOs require title insurance companies to identify the natural persons behind shell companies used to pay all cash for high-end residential real estate.
A Special Agent with the US Department of Homeland Security said: “We don’t come across [money laundering in real estate] once every 10 or 12 cases – we come across real estate being purchased with illicit funds once every other case.”
FinCEN reported that 30% of the transactions covered by the GTOs involve a person (natural or legal) that is the subject of a previous suspicious activity report for money laundering, and is consistent with the concerns of FinCEN that shell companies and beneficial structures are used to buy luxury real estate. The GTOs are important to understand financial crime being used for real estate. As a Miami area lawyer noted
: “It’s not good for real estate or for business if illicit dollars are artificially inflating the market. And law enforcement doesn’t want real estate to be a safe haven for money laundering.”