U.S. issues substantial expansion of real estate transparency

The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced this week that its most successful luxury real estate transparency program would be expanded across much of the country, and would extend to non-luxury real estate purchases as well.

It’s one of the most substantial steps to date in the U.S.’s efforts to end its role as a favorite destination for foreign kleptocrats’ stolen monies — and to help tamp down some of the spiraling real estate costs across the country.

The program, known as Geographic Targeting Orders (GTOs), was first initiated by the Obama administration in 2016. By forcing title insurance providers to identify the actual owners behind luxury real estate purchases, the program sought to undercut one of foreign kleptocrats’ favorite tactics: stashing their funds in U.S. real estate.

All indications over the past two years point to the program being a resounding success, at least when it comes to anonymous buyers snapping up mansions and luxury condos. Earlier this year, one study found that anonymous purchases via corporate entities like LLCs have declined some 70 percent in Miami, Florida, a haven for kleptocrats from places like Venezuela.

But the GTO program wasn’t nationwide, and only extended to a handful of jurisdictions, including New York, Honolulu, and San Antonio. And the program only included high-end real estate purchases. While each city’s threshold varied, real estate purchases had to stretch into the millions before buyers would be forced to reveal themselves.

No more, though. On Thursday, FinCEN announced that the program would be extended to new locales, including places like Dallas, Boston, Las Vegas, and Seattle. Even more impressively, the program is dropping reporting requirements to any purchase over $300,000, meaning it will no longer be dedicated solely to luxury purchases, but will extend to most home buyers in the cities covered.

“Previous GTOs provided valuable data on the purchase of residential real estate by persons implicated, or allegedly involved, in various illicit enterprises including foreign corruption, organized crime, fraud, narcotics trafficking, and other violations,” FinCEN said in a statement. “Reissuing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector.”

The announcement is a necessary stopgap in thwarting people looking to stash their cash in Vegas properties or Dallas high-rises. For years, America’s luxury real estate sector has been a favorite for the criminal and corrupt looking to move large sums of money out of their countries. Time and again, corrupt officials from Equatorial Guinea to Iran to Haiti have snapped up swank apartments and Malibu beach-fronts in order to keep their money safe — all anonymously, so the properties couldn’t be traced back to them.

The move is the latest bit of good news when it comes to the U.S. cleaning up its own house in the global efforts to combat rising kleptocracy. From new momentum to end the U.S.’s anonymous shell company formation industry to even enforcing foreign agents registration, the FinCEN announcement builds on an unprecedented push for the U.S. to end its role as a prime destination for funds pillaged by regimes abroad.

To be sure, there are still workarounds kleptocrats and criminals of all stripes can find, whether it’s parking their stolen loot in places still not covered by the reporting requirements — say, Washington, D.C., or Houston — or divvying up purchases so they don’t meet the new $300,000 threshold. But even though the program still hasn’t been extended nationally, this week’s expansion is a welcome development — at least, for anyone who’s not a member of a kleptocratic regime looking for a new spot on the Seattle skyline.


Source: thinkprogress