The real estate market is no stranger to change, but this time it’s the federal government that’s shaking things up. The U.S. Financial Crimes Enforcement Network (FinCEN) is looking to put a stop to money laundering in South Florida. Miami is widely known to be a problem area for money laundering and secret sales, causing the government to take a closer look at its luxury real estate market. FinCEN has issued an order which will force title insurance companies to turn over the real names of shell company owners that pay over $1 million in cash for homes in Miami-Dade County.
The policy also extends to New York City, but only for homes purchased for over $3 million. This policy is only temporary, but could be extended if the search lends credence to the suspicions. As it stands now, the crackdown will be in place from March 1 to August 27 of this year.
What brought this on?
The real estate markets in Miami and New York City have made headlines in the past for questionable secret sales. However, until recent years no real effort was made to deter criminals from money laundering through real estate. It was actually a New York Times article, published last year, that seems to have brought national attention to the issue. The article uncovered that Time Warner Center Condominiums in New York City had been purchased by upwards of 200 shell companies. Since the article came out, FinCEN has been paying closer attention to secret sales of high priced properties.
But why, Miami? Miami has always attracted well-known personalities who prefer to remain anonymous, so South Florida luxury real estate brokers have engaged in secret sales before. While many of these buyers simply value the privacy such sales allow for, others have ill intentions. Secret sales can be a means of money laundering, or hiding where illegally obtained money came from by transferring it to a business or foreign bank.
Álvaro López Tardón is a prime example how money laundering has been running rampant in Miami. The Spanish drug lord had spent millions of dollars in laundered cash on condos and exotic cars in Miami. Cases like this explain why FinCEN deemed the crackdown necessary.
What the crackdown means for buyers
Title insurance companies in Miami-Dade will be required to identify the owners of shell companies being used to purchase million-dollar homes. Unfortunately, that means anonymity for owners is no longer an option. In the event that a red flag is raised, an investigation will be initiated on the buyer. In these cases, it would be wise for the buyer to speak with a lawyer immediately.
Currently, the policy isn’t targeting nearby luxury real estate markets, like Palm Beach County. This is good news for buyers who don’t want the threat of a bothersome investigation hanging over their heads while purchasing their dream home. If that sounds like you, contact Jack Elkins today to be paired up with the perfect home for you.