U.S. expands crackdown on secret real estate buyers

Feds want to seize $1 billion in corrupt assets
Feds want to seize $1 billion in corrupt assets

The government's crackdown on anonymous real estate buyers hiding behind shell companies seems to be working.

In January, the Treasury Department announced a temporary initiative that requires title insurance companies to identify all-cash buyers of certain high-end real estate in Manhattan and Miami.

Now, it's expanding the order into other markets in New York City, Florida, California and Texas.

The rule will soon apply in all New York City boroughs, San Diego County, Los Angeles County, three counties in the San Francisco area and two counties directly north of Miami (Broward and Palm Beach).

It's also expanding into Bexas County, in Texas, which includes San Antonio.

Related: The U.S. is cracking down on anonymous real estate buyers

The rule only applies to non-financed purchases above a certain amount, and that threshold varies by market, but typically includes homes priced at the top 10% of each market.

For instance, cash purchases made with shell companies above the $2 million mark in the California counties and above $1 million in Florida markets would be tracked.

The order is temporary -- lasting for 180 days starting on August 28.

Currently, buyers can avoid having their name attached to an address by making the purchase through a shell company, like a limited liability company or other entity.

In early 2015, the New York Times published an investigation that found high-end properties in New York City were increasingly being purchased by shell companies. The report claimed that in 2014, more than 80% of the units sold in the Time Warner Center were purchased using shell companies. (CNN's New York offices are also located in the Time Warner Center.)

Related: Did San Francisco's housing market finally peak?

The original initiative started on March 1, and has helped authorities track and identify suspicious money activity, according to FinCEN, the Treasury Department's financial crimes unit.

"FinCEN remains concerned that all-cash purchases (i.e., those without bank financing) may be conducted by individuals attempting to hide their assets and identity by purchasing residential properties through limited liability companies or other opaque structures."

A FinCen official said a significant portion of the records being reported by title insurance companies have been tied to possible crimes, including one person involved in a $16 million suspicious withdrawal, another involved in a possible counterfeit check scheme and a buyer involved in shuffling millions around through suspicious wire transfers in South America.

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