The federal government has tried to crack down on the use of pricey New York real estate as a laundromat for washing foreigners’ dirty money while they hid behind the veil of limited liability companies, also known as LLCs or shell companies.
In 2016, the U.S. Treasury ordered title insurance companies to begin reporting the names of any incoming LLC owners who were buying properties for more than $3 million in cash in New York and more than $1 million in Miami, two hot spots for money laundering. The order has since been expanded to a dozen cities, including Los Angeles, San Francisco, Seattle, Dallas, Honolulu and Chicago, the New York Post reports.
Now U.S. Rep. Carolyn Maloney, a New York Democrat, says she hopes to introduce a bipartisan bill “early this Congress” that would finally force every LLC to fully reveal its owners.
“Law enforcement has been asking for years for new laws so that they can follow the money and not be stymied in their investigation by anonymous shell companies,’’ Maloney says. “The U.S. should not be a safe haven for money-laundering and criminals’ funds.”
Some people think real-estate brokers should be part of the solution. “The Treasury Department needs to issue regulations requiring real-estate agents, not just title companies, to know their customers, screen suspect funds and report suspicious activity to law enforcement,” says Elise Bean, a former staff director of the Senate Permanent Subcommittee on Investigations.
Critics say the program should be expanded beyond the current handful of cities – to every section of the country, from Aspen, Colorado to the Hamptons on Long Island, where, they say, big money from suspicious sources has been known to park itself. Otherwise, like a high-stakes game of Whac-A-Mole, money launderers will just move from covered areas to uncovered ones.