US Will Investigate Who Is Buying Up Luxury Real Estate In New York
Who really lives in all those luxury skyscrapers going up across New York, from The Plaza, One57, Trump International to Time Warner Center? Apparently, no one. Instead, shell companies that often shield purchasers’ identities are responsible for the influx of global cash fueling New York’s high-end real estate boom, reports the New York Times.
The Treasury Department states that they will begin begin identifying and tracking secret buyers of high-end properties with all-cash purchases.
“We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money,” said FinCEN Director Jennifer Shasky Calvery. “Over the years, our rules have evolved to make the standard mortgage market more transparent and less hospitable to fraud and money laundering. But cash purchases present a more complex gap that we seek to address. These GTOs will produce valuable data that will assist law enforcement and inform our broader efforts to combat money laundering in the real estate sector.”
The New York Times reports states:
It is the first time the federal government has required real estate companies to disclose names behind all-cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers…The initiative is part of a broader federal effort to increase the focus on money laundering in real estate. Treasury and federal law enforcement officials said they were putting greater resources into investigating luxury real estate sales that involve shell companies like limited liability companies, often known as L.L.C.s; partnerships; and other entities.
Further, the NY Times adds:
In New York, The Times examined a decade of ownership at an iconic condominium complex near Central Park, the Time Warner Center, and found a number of hidden owners who had been the subjects of government investigations. They included former Russian senators, a former governor from Colombia, a British financier, and a businessman tied to the prime minister of Malaysia, who is now under investigation.
For the US Federal Government, it appears that this is less about how these owners are affecting housing markets, and more about the possibility that they might be able to nab a few criminals.
This unsavory real estate trend has also become a major problem in London, with many of the properties not being maintained, literally left to rot, while turning London into the most expensive housing market in the world.
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