U.S. Department of Treasury Crack Down on Large Cash Real Estate Purchases in Manhattan and Miami by Shell Corporations or Other Entities
In its continuing efforts to curtail money laundering activities, the U.S. Department of Treasury has now turned to scrutinizing large “all cash” real estate purchases (i.e., those without bank financing) in certain U.S. cities. With the proliferation of international “all cash” purchases of high end real estate in New York City and Miami, Florida, and the corresponding concern of government officials that these transactions may be used for illicit money laundering purposes, on January 13, 2016 the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of Treasury issued a Geographic Targeting Order (“GTO”) that will temporarily require certain U.S. title insurance companies to identify the natural persons behind companies which pay “all cash” for high-end residential real estate purchases in the Borough of Manhattan in New York City, and in Miami-Dade County, Florida.
For this initial GTO, FinCEN is requiring that “all cash” real estate purchases by corporations or other entities in excess of $3,000,000 in Manhattan and in excess of $1,000,000 in Miami-Dade County will require title insurance companies to identify and make disclosures regarding the “true owners” of these entities. These disclosures will then be utilized by law enforcement officials charged with safeguarding against improper money laundering activities.
This initial GTO becomes effective as of March 1, 2016 and is scheduled to expire on August 27, 2016, although there is a possibility that such directives may be extended or made permanent by further rulemaking.
As an international law firm that specializes in domestic and international corporate, transactional, and tax matters, Solomon Blum Heymann LLP has extensive experience with assisting foreign purchasers in all aspects of U.S. real estate transactions. For questions regarding compliance with this GTO, or generally with the purchase by foreign persons of real estate in the United States, please contact Michael J. Semack or Robert A. Solomon at (212) 267-7600.