The United states Treasury Department said it's concerned about illicit money streaming into luxury real estate.
As a result, they'll start identifying and tracking secret buyers of high-end properties.
Guess where the apex of such luxury retail sales are occurring? You guessed right: Manhattan.
Oh, they'll also track buyers and sellers of luxury real estate in another destination for the United States' global wealth: Miami-Dade County, according to The New York Times.
The new initiative will illuminate the dustiest corner of the real estate market: all-cash purchases made by companies that shield the purchasers' identities.
This will be the first time the federal government is requiring real estate companies to disclose the names of the people responsible for cash transactions.
We're envisioning actual trembles are erupting all over the real estate industry, since, obviously, the real estate industry has benefitted a lot from wealthy, secretive buyers.
This specific initiative is part of a larger push for the federal government to increase its focus on money laundering in real estate.
Treasury and federal law enforcement officials announced that they'd start designating more resources to investigations of luxury real estate sales that involve limited liability companies.
Of course, this shell company purchasing was the case for the first apartment sold at 432 Park Avenue, which was purchased for $18.2 million under the name "LLC, 432 PARKVIEW."
The treasury said these investigations will focus on professionals who assist in money laundering, like real estate agents, lawyers, bankers, and LLC formation agents.
The initiative was spurred in part by an investigation undergone last year by The New York Times which showed the rising use of shell companies that helped foreign buyers seeking safe havens for their money in the United States.
In fact, it showed that nearly have of homes nationwide that cost at least $5 million were purchased using shell companies. Of course, that percentage is higher in Manhattan and Los Angeles.
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The investigation showed that real estate professionals, especially in the luxury market, don't know much about buyers. Until now, they haven't been required to.
Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network in the Treasury, said she's seen instances in which multi-million-dollar homes were being used as safe deposit boxes for ill-gotten gains. These transactions have hidden behind the anonymous use of shell companies.
"We are concerned about the possibility that dirty money is being put into luxury real estate," said Ms. Calvery.
The government will now require title insurance companies to discover the identities of buyers and submit the information to the Treasury.
So how will this affect luxury sales in Manhattan?
In Manhattan the initiative will require, from now on, that buyers of sales in more than $3 million be reported. In Miami-Dade County, they'll have to report on sales of more than $1 million.
Ms. Calvery said the investigation will run from March through August, and that if they find suspicious transactions, they'll extend the watchful eye to the rest of the country.
"Repeated anecdotal information where we see criminals of different stripes putting money into real estate all suggest to us that this is an area we need to pay attention to," Ms. Calvery said.
We're not really sure what we're hoping will come out of this investigation. We think we're hoping for high amounts of corruption, so we can move into NYC's luxury high rises ourselves. Is that how it works? If they find corruption, we get to move in?
We're pretty sure that's how it works.
We're glad they aren't investigating the rents of us plebeians, because then they'd find out how we can barely afford our rents due to a high volume of Seamless purchases, and that'd be embarrassing.[via The New York Times] [Feature Image Courtesy Instagram]