So if the titles will only be tracked in New York and Miami, not San Francisco, it doesn't take a genius to see where the money will go: San Francisco. Why isn't this something that applies everywhere?
6
At last!! Treasury wakes up! I hope they investigate retroactively. It is shameful that foreigners are legally hiding dirty/blood money in our country.
Thank you NYTimes for your journalism.
Thank you NYTimes for your journalism.
7
This secrecy of anonymous owners has been going on for years.
Why now the big push to follow the trail of money?
Why now the big push to follow the trail of money?
4
It is utterly grotesque that the government even allows non-disclosure of real estate purchased with cash. The rest of us have to play by the rules, why not the 0.01%?!
I have long been angry about foreign purchases of US property - we have many shell companies in GA that own homes throughout the state - all since 2008 downturn in housing. But paying in cash?!!!!!
Sounds like the US allows money laundering as long as it's tied to real estate. Wonder how much of the US is owned by drug lords? Of course Fanny and Freddie have bought up whole neighborhoods in FL, no disclosure.
I thought we had finance reform in 2010? Not.
I have long been angry about foreign purchases of US property - we have many shell companies in GA that own homes throughout the state - all since 2008 downturn in housing. But paying in cash?!!!!!
Sounds like the US allows money laundering as long as it's tied to real estate. Wonder how much of the US is owned by drug lords? Of course Fanny and Freddie have bought up whole neighborhoods in FL, no disclosure.
I thought we had finance reform in 2010? Not.
9
Kudos to the NYT for this brilliant series, which showed that buyers who hide behind anonymous LLCs can and will try to game the system. Wonderful reportage.
8
Manhattan & Miami-Dade only? That will be a boom for markets in Brooklyn, San Francisco, LA, Tampa, Chicago, etc., etc. I know only too well that my neighborhood is inundated with these new buildings and people (or corporations. if you follow the Supreme Court definition of them)--all you have to do is look up and see how many apartments have lights on at night. Not too many.
7
I'm told this program may be expanded nationally, so those other markets may be included as well..
3
I hope to God that this brings down the price of real estate, and rents, in the city altogether. And I say that as someone who would like to sell his nice comfortable apartment in Park Slope one day.
All the interesting people have been priced out of this once great city. The only tie I have left is the profit I will make from selling my apartment. I would rather stay and work for the rest of my life though if a more creative and vibrant population were allowed to thrive. The West Village, once overflowing with people and light at all hours, is now a museum of itself. Darkened windows, and darkened streets, too quiet for it's own history.
All the interesting people have been priced out of this once great city. The only tie I have left is the profit I will make from selling my apartment. I would rather stay and work for the rest of my life though if a more creative and vibrant population were allowed to thrive. The West Village, once overflowing with people and light at all hours, is now a museum of itself. Darkened windows, and darkened streets, too quiet for it's own history.
8
They'll track the purchases but in reality, the Treasury Department is toothless when it comes to the wealthy.
5
I am more pessimistic on this than ever, and hope it is not another case of "Big Thunder and No Rain" syndrome. So what happens if all the buyers are foreigners. What can the government do? It is perfectly legal that foreigners can purchase properties in US. And we cannot go to their countries to check them out whether the money is legal or not. There are thousands of corrupted officials or ex-officials from China and their relatives hiding in US. And we have no treaty with China to exchange private information. Till this day, only few financial crime offenders have been sent back to China. So I really don't have high hope this act will do any good for the society except benefiting the real estate companies and agents. They will want more not less.
7
The exact same thing is happening in Canada - with the majority of buyers being Iranian and Chinese. Hopefully the Canadian government will do something because we are the laughing stock of immigration and real estate rules.
5
How much has this capture of real estate by shell companies, removing inventory, caused the gold rush building of real estate in downtown Brooklyn?
The article states this is going to start in March, so all drug laundering, tax dodging, ill gotten gainers cut your losses and sell now because it is a buyers market! Or is it a sellers market until March since it is dirtbags last chance to get in before prying eyes makes them leave this carcass and move onto the next host? Ah the mysteries of capitalism!
The article states this is going to start in March, so all drug laundering, tax dodging, ill gotten gainers cut your losses and sell now because it is a buyers market! Or is it a sellers market until March since it is dirtbags last chance to get in before prying eyes makes them leave this carcass and move onto the next host? Ah the mysteries of capitalism!
2
Thank you New York Times for publicizing this! We bought a house last year for $500,000 and the amount of paperwork was staggering, the stack was at least 1 1/2 inches high! What's with all this "cash is king?" Tear the wrappers off these secret buyers; it's excellent for our economy, our neighborhoods and homeland security! I hope the Feds pour a huge number of resources into this and get hopping!!
12
Terrific -- now I just won't buy any property with my ill gotten proceeds during the window of inspection -- I can wait this trial balloon out. Really, if Treasury is serious about this problem, just do it!
6
I asked the head of Fincen why people wouldn't just wait the 6 months out, and she said that the program may very well be extended so people shouldn't count on it ending.
3
“We are concerned about the possibility that dirty money is being put into luxury real estate,” said Ms. Calvery, the director of the Financial Crimes Enforcement Network, the Treasury unit running the initiative. “We think some of the bigger risk is around the least transparent transactions.”
Next, the Treasury Department can look into the dirty money pouring into the art market by way of the dealers and auction houses: the same corrupt actors who are making the real estate transactions also making cash purchases by way of opaque agencies.
Next, the Treasury Department can look into the dirty money pouring into the art market by way of the dealers and auction houses: the same corrupt actors who are making the real estate transactions also making cash purchases by way of opaque agencies.
10
About freaking time! Now please add Los Angeles to the list...
6
This is good news!
3
Good to see the the not-to-be-denied-anything set may have actually hit a bump in the road. It makes me wonder why it takes an excellent piece of investigative journalism from the NY Times to make the authorities spring into action with something that would appear to be obvious. The average person is tied up in knots now making a simple international transfer of a few thousand while huge money from shell companies floods in. As always the soft options get hammered and the big fish are left alone to do as they like.
11
1. this makes sense.Follow the money.Cant the same dirty money launderer finance a presidential candidate anonymously through the same type of LLC structure? be transparent totally!!!
4
This investigation is overdue. Our courts have judged with more evidence than needed that some of these secret buyers are actually shells for "charities" that are fronts for financing terrorism both here and abroad.
The layers of secrecy cover up not only units used as rentals to launder money funneled to support terrorists but ownership used for insurance fraud.
Hats off to the Times and New York City in exposing and beginning to stop this practice.
The layers of secrecy cover up not only units used as rentals to launder money funneled to support terrorists but ownership used for insurance fraud.
Hats off to the Times and New York City in exposing and beginning to stop this practice.
14
Am I missing something? If you *really* want to collect data on how many luxury real estate transactions are tied to shadowy figures or ill-gotten money, but you are only collecting it for a short amount of months and also announcing when the data collection will be taking place, how do you expect to garner any meaningful data? I'm sure a guy looking to dump millions into a luxury condo can hang on an extra 7 months. Or buy outside of Manhattan or Miami.
Plus, as others have mentioned, it's not going to be as simple as making a few calls to find out who the person behind the shell company is. There are going to be a lot of seriously complicated structures possibly spanning over multiple countries and banks that were made with the specific intent of hiding the people behind it.
This sounds like lip service at worst and a foolish attempt at best. So, am I missing something? I read the article 3 times..... Is there more to this?
Plus, as others have mentioned, it's not going to be as simple as making a few calls to find out who the person behind the shell company is. There are going to be a lot of seriously complicated structures possibly spanning over multiple countries and banks that were made with the specific intent of hiding the people behind it.
This sounds like lip service at worst and a foolish attempt at best. So, am I missing something? I read the article 3 times..... Is there more to this?
6
If the structures are so complex that beneficial owners cannot be determined, they won't be able to buy the properties.
3
The Treasury effort is more aggressive than anything else we've seen on the question of opacity of real estate from other governments. The head of Fincen told me they will evaluate if even more aggressive steps are needed. I will monitor carefully to see how/if it seems to be working. Stay tuned.
4
This is not a problem that is limited to the luxury market in NYC. Cash deals and shadow buyers are tearing through the outer boroughs and not only buying up the properties, but also creating a black market economy by transforming one and two family homes into multiple dwellings, hotels, gambling houses, sweatshops, brothels, dormitories... If the Feds limit their investigations to the luxury market they are overlooking a huge dark money economy that is shaping the housing market in NYC and making homeownership impossible for the majority of people living and working in NY.
18
Best idea - only Americans can own American land and real estate.
7
So how about looking at all the money that marijuana growers are hiding because they can't get access to banks. In Southern Oregon properties are being bought with cash to finance growing marijuana that can illegally be sold across state borders. They don't make for good neighbors.
Only Manhattan and Miami? Please consider doing this in Hoboken NJ.
5
It should be the law of the land.
4
Anyone who doesn't know why a buyer would use an LLC to purchase property - especially luxury real estate - doesn't know what the "LL" in "LLC" stands for.
Limited Liability. Your point being? Perhaps related to tax liability...
Why don't you enlighten us? I know what a L.L.C. means. What does limited liability have to do with a cash purchase of luxury real estate?
1
My point being this is a common structure for the purchase of rental real estate.
1
Did I read it correctly that this will only happen from March until August and only be extended if they find a problem? Huh? I suppose there will be a very slow Spring and Summer real estate market in Miami and NY for high end luxury condos and sales will pick up in the Fall.
5
Exactly. Why are so many commenters so pleased about this 'long overdue' experiment? Did they not read the procedures for collecting the data? If you're informing the entire world that you're going to do this, as well as exactly where (Manhattan and Miami) and exactly when (only between March and August), what's the point?
To call it half hearted is kind. It is a completely phony attempt to do anything about this very real issue. "Survey says, less than 1% of transactions are nefarious". Back to business as usual.
To call it half hearted is kind. It is a completely phony attempt to do anything about this very real issue. "Survey says, less than 1% of transactions are nefarious". Back to business as usual.
2
That's crazy, almost makes this meaningless.
2
Miami-Dade ? How about Palm Beach, Boca Raton, Fort Lauderdale, Delray ? I guess this is good news for them and all the builders building in these towns as well as the land owners. All these people need to do is to go 20 miles north for safety. If you're going to crack them down do it right! This is giving the LLCs or whomever these buyers are to Broward County on a silver platter.
2
American laws are contradictory.If you make a deposit or withdrawal of more than 10.000 $ in cash,they investigate you. If you buy a 5 million apartment with cash,no problem . It seem they were made to protect BIG CROOKS .As a Venezuelan citizen I would love for the US authorities to check ALL TRANSACTIONS that could have been made since Chavez got into power ,by any company or individual that might be covering for government officials ,politicians or corrupt busineesmen with ties to them. More than one hundred billion dollars are missing which might have been funneled to the States.
6
The major cities of the world have competed, welcomed, thrived, grown and flourished on laundered money-who do you think is eating, shopping etc in all the new places???Why do you think London has boomed? Not because Mr & Mrs Normal are paying for it!..'Downsize to Freedom' (free ebook) and get out of the trap for good.
1
They’re going to find them, huh? Is this our same government that couldn’t find Bernie Madoff when he was standing right in front of them?
2
Treasury’s announcement looks cut and pasted from the Times’ articles of the past year. This does no honor to either. The government can always investigate suspected wrongdoing, but blanket demonization of LLC’s as “shell companies” hiding money laundering is outrageous and foolish.
If wrongdoing is found, the company’s immovable, multimillion-dollar asset is available to satisfy a judgment. How is that a “shell”? Corporate identity in the U.S. has always been private. That’s one of the reasons why companies are established: to provide a corporate veil against liability and to insulate shareholders from claims against their personal assets. Why is this suddenly wrong?
Funds are already checked for terrorist and money-laundering connections by various databases when wire transfers are made. This new rule is another ‘check-the-box’ bureaucracy to cut down an imaginary bogeyman.
The hyperbole surrounding this issue is frightening. Some will not be satisfied until the Time Warner Center is emptied and the owner’s heads are paraded on stakes down Fifth Avenue. Robespierre would be proud.
I’d be interested to know if the very wealthy principal owners of this newspaper will be disclosing their personal real estate holdings to the general public.
If wrongdoing is found, the company’s immovable, multimillion-dollar asset is available to satisfy a judgment. How is that a “shell”? Corporate identity in the U.S. has always been private. That’s one of the reasons why companies are established: to provide a corporate veil against liability and to insulate shareholders from claims against their personal assets. Why is this suddenly wrong?
Funds are already checked for terrorist and money-laundering connections by various databases when wire transfers are made. This new rule is another ‘check-the-box’ bureaucracy to cut down an imaginary bogeyman.
The hyperbole surrounding this issue is frightening. Some will not be satisfied until the Time Warner Center is emptied and the owner’s heads are paraded on stakes down Fifth Avenue. Robespierre would be proud.
I’d be interested to know if the very wealthy principal owners of this newspaper will be disclosing their personal real estate holdings to the general public.
3
Better get it done fast. If we get a "security minded" Republican administration a year from now, lobbyists will again rule and secrecy will return.
5
Time to lift the veil! No more oligarch embezzled, dictator stolen, drug dealer laundered money should be hidden in this country. Find them and confiscate the property!
Not until after August.
As someone who is often harshly critical of the Times; I want to say how proud I am of the reporting they did regarding this issue. As I long-time resident of Manhattan, I am deeply saddened by how these shell companies have been turning parts of the city into "shadow neighborhoods". Thank you!
4
"The Treasury is looking for the actual owners behind shell companies, often referred to as the beneficial owners."
Here's a tip -- try cross-referencing with your list(s) of large pools of non-taxed corporate funds seeking back-door 'repatriotation' into the states. Start with General Electric...
Here's a tip -- try cross-referencing with your list(s) of large pools of non-taxed corporate funds seeking back-door 'repatriotation' into the states. Start with General Electric...
4
Exactly.
1
This is a loophole big enough to drive a truck through:
"In its order, the Treasury defined beneficial owners as “each individual who, directly or indirectly, owns 25 percent or more of the equity interests” of the entity that bought the property. Once title companies identify those people, they are required to copy driver’s licenses or passports and also pass the individuals’ names to the Treasury Department."
So now all of these purchases will be in the names of 5 or more people so each ownership percentage is under 25%, thus completely circumventing the requirement.
Why not just say "ANY and ALL owners and partial owners of record." ?????
"In its order, the Treasury defined beneficial owners as “each individual who, directly or indirectly, owns 25 percent or more of the equity interests” of the entity that bought the property. Once title companies identify those people, they are required to copy driver’s licenses or passports and also pass the individuals’ names to the Treasury Department."
So now all of these purchases will be in the names of 5 or more people so each ownership percentage is under 25%, thus completely circumventing the requirement.
Why not just say "ANY and ALL owners and partial owners of record." ?????
5
Why all the attention to the strange world of out of control people?
Creepy people and their practices have destroyed New York's integrity. Would you please take your antics to the moon? I understand there are future openings.
1
Don't like alot of things you write about cause it just don't set well with the folks in the part of the country where I live. But, that being said, the Times has looked into many things that does need attention by "Them People in Washington" who are said to be on top of everything. The bottom line is this, the country is in trouble, so keep on looking and writing and hopefully some of "Them People" will decide to do something about things like secret buyers of real estate which is driving up the cost of all real estate for all.
1
I find it puzzling that so many people are outraged on behalf of these persecuted rich people being treated like everyone else. Where does the strange idea come from that the government has no business knowing where you got your money? Have they never filled out a tax return? Uncle Sam is VERY interested in how you got your money, how much you have, etc. They have special forms for that very purpose. Why should someone whose income derives from working and makes $35k have to tick all the boxes & answer all the questions, but not someone who buys a $5M property for all cash?! People applying for food stamps or welfare have to disclose more about their finances than the billionaire real estate buyer.
2
The issue of secret buyers is not limited to high-end real estate. The Times has recently reported on unscrupulous buyers who con less financially savvy sellers out of the deeds to their homes. They do this while shielding their identities behind LLCs. Let's see this tracking of previously anonymous buyers broaden to include the bad guys who are operating at the other end of the spectrum.
If you're interested, the article I'm referencing is at: http://www.nytimes.com/2015/11/08/nyregion/real-estate-shell-companies-s...
If you're interested, the article I'm referencing is at: http://www.nytimes.com/2015/11/08/nyregion/real-estate-shell-companies-s...
3
When a city is owned by more secret criminals, its future won't look good.
1
It's pretty simple really. The data collection runs March through August because they want the list ahead of the election so they know which conservatives to smear before the presidential election. I'm sure Harry Reid can't wait to use that data just like he did to Koch in 2012, by leaking tax filing data.
What's even simpler is: don't hide your ill-gotten funds in the luxury real estate markets of Manhattan or Miami between the months of March and August.
I doubt there will be a shred of data collected, because this is not a serious thing, clearly.
I doubt there will be a shred of data collected, because this is not a serious thing, clearly.
perhaps this can be extended to the egregious offshore flux of 'legal money laundering' that benefits those higher rollers with a vested interest in keeping their shyster arranged money free of tax obligation. tax laws conceived back in the days of H Hoover must be thoroughly appraised for their efficacy in meting out a fair and honest distribution of obligation. the transparency of reporting should not be limited to only sanctioned government activity (to protect the taxpayer interests) but also to those who seek to divest themselves from any scrutiny. just as the hidden systems of money transactions between muslim operatives via the old Hawala scheme evades detection, the security of all US citizens must be ensured. the IRS holds each low income earner to standards that are often cause for unusual and punitive action.
It certainly is very sanguine of you, but a couple of more things must be done in order to make the process of identifying ill-gotten wealth. It should be done in conjunction with other cities such as London, Paris, Luxembourg, Dubai, Naples, etc. If we put in place requirements for disclosure on all cash sales the buyer could just go elsewhere to buy real estate. The Buyer could put cash in a shell company’s account and borrow against it; it is a loan to the shell company that is writing the check for the property. We must include banks and the title companies.
If the reason for the law is to collect fines and to impound the property – very similar to what we (our government) have been doing with some countries for decades – impound & adjudicate the property of foreign government or individuals.
In my opinion we must do the right thing and that is to return the ill-gotten wealth to the country from where it was stolen or commissioned out. We must also punish the corporations who paid these bribes/fees etc. to the individuals.
Let us involve other major cities of the world where we know these moneys are kept in the form of palatial palaces, only to be laundered when sold into white money.
If we do it right, we would make an impact on worldwide corruption of political elite and bureaucrats. We would improve the lives of many in the Africa, Asia, Middle East and Europe, and have helped the under developed countries and we would have done something very good for the world.
If the reason for the law is to collect fines and to impound the property – very similar to what we (our government) have been doing with some countries for decades – impound & adjudicate the property of foreign government or individuals.
In my opinion we must do the right thing and that is to return the ill-gotten wealth to the country from where it was stolen or commissioned out. We must also punish the corporations who paid these bribes/fees etc. to the individuals.
Let us involve other major cities of the world where we know these moneys are kept in the form of palatial palaces, only to be laundered when sold into white money.
If we do it right, we would make an impact on worldwide corruption of political elite and bureaucrats. We would improve the lives of many in the Africa, Asia, Middle East and Europe, and have helped the under developed countries and we would have done something very good for the world.
1
Only Donald Trump can be trusted to stand up to the Real Estate lobby. Trump can not be bought and does it like it is.
That's hysterical! Trump is the real estate lobby!
5
Amazed that our government hasn't been taking steps all along to check out foreigners buying up U.S. real estate. New York is the fave target for people from Russia and China gobbling up apartments in the city, according to Forbes; as Chinese buyers tend to buy properties in higher-priced markets such as California, Washington, and New York. One has to wonder if it's due to money laundering, safe havens for tax purposes, or methods to ensure the Chinese have a firm grasp on U.S. soil, after which they could become your landlord in the Big Apple.
4
The US would be wise to expand their investigations to the Bay Area in general and Silicon Valley in particular where prices for residential real estate never went down during the last financial meltdown due to massive Chinese buy ups.
1
The feds should look at LLC buys in ski resorts too such as Steamboat Springs Colorado, Vail, etc. Those same places, Steamboat for sure, are really involved in the marijuana businesses. Steamboat has almost constant turn over of its city managers these days and for years had a (secretly) convicted felon running city council. As far as money laundering, look at time shares and short term rentals. No one expects the owners to live in them.
1
Duh marijuana is legal in Colorado haven't you heard?
This is a first step. For too long the wealthy regardless of how they became rich have done as they please. They need to pay taxes and follow the rules that the rest follow.
3
The Treasury should also hold in escrow all sales of property over $6MM until the beneficiary is identified.
6
It is time the Times refuses to accept advertising from the real estate market. Every day and especially on weekends, I turn page after page of luxury realestate advertising. Given the Times general bent against landlords and real estate developement the Times should vet all real estate advertising to be sure everything is being done ethically and legally.
2
Don't forget about the scam where money is laundered, through the sale of overpriced goods to charities and governments. Tracking devices and many other things are being sold at top dollar to launder money collected by drug and chemical companies into more unethical research and products people don't want...
1
Off shore bearer share companies have been used to purchase New York real estate since at least the 1970s. It is relatively easy to have the bearer shares owned by an offshore trust, for example, whose actual beneficiaries are difficult to determine, For a person living in a dictatorship or politically unstable country foreign real estate is a prefect hedge as it can't be repatriated. Anonymity is essential to avoid being forced under duress to sell and return the proceeds to the owner's home country.
This is a well developed industry and I doubt the government has the sophistication and resources to make a dent in the anonymous holding of US real estate by foreigners.
This is a well developed industry and I doubt the government has the sophistication and resources to make a dent in the anonymous holding of US real estate by foreigners.
2
So, at $5 million we're talking about individual units and not whole buildings, right? So who lives in these "residences"? Do they stay empty? Are they rented out? Most condo/co-ops have rules about rental activity, which limit it. Are the "secret buyers" living in what they buy at least some of the time? If so, they're not so secret. I wish the article had said more about this...
I have a few friends who live in luxury Manhattan buildings that are 50% or more ghost towns. Only cleaners and maintenance workers are ever seen entering or leaving. Manhattan is becoming London, and not in a good way.
2
No reason to worry about the implications of new reporting requirements as the realty industry will be testing them in court very shortly. And without a doubt a Supreme Court that has already permitted the entry of cartel money and other corrupt funding into the electoral process via "dark money" contributions to PACs will find these reporting requirements violate privacy considerations, free political expression, or some other constraint on the mobilization and use of wealth. In an era when wealth confers special access to regulatory processes (see the Times' recent coverage on the IRS and wealthy taxpayers), when political candidates propose deep tax cuts for high-income individuals despite adverse impacts on the deficit, and when Congress ignores empirical evidence of the negative consequences of concentrating wealth on the American economy we can hardly expect the U.S. Treasury to do much more than pay lip service to controls on privilege and power. This purported policy shift provides great political cover during the presidential campaign without creating more than temporary inconvenience for those using such transactions to launder money or position themselves advantageously in other ways.
3
The cost to New York City from these untraceable and staggering amounts of money purchasing $100 million dollar apartments is huge! One 57 to name just one billionaire condominium received $65 million dollars (that's your tax dollars) in tax abatements supposedly for $14 million dollars of low income housing built in the Bronx. Do the math. Then these LLC's shelter money I suspect most of it from ill gotten gains-that is money from wherever it came which was never taxed in the first place. Hidden from city, state, and federal agencies which will never be taxed again. This megatower imposes itself over Central Park casting shadows onto the park putting it and part of 57th Street into shadow. But who cares about our public parks built for all the people? Certainly not the Mayor or the Governor! And look up on any night at that spiring tower and you might find six apartments lit. How many stories? Seventy, eighty? While New York's middle class and low income residents struggle to have a home here. And homelessness is rampant once again. These billionaire megatowers are going in all over the City. With their unknown owners who float from country to country paying none of the costs you and I would incur and spending four weeks a year here. I hope the Federal government exposes them down to their BVD's. Kind of like they do to the rest of us when we fly, cash a check, get a driver's license, file our taxes, apply for a mortgage, apply for a credit card, or purchase an apartment!!
13
Ted Cruz might accidentally be on the money with his ad depicting bankers streaming across the border. Those briefcases are of course filled with cash headed for the welcoming arms of real estate brokers in NY and Miami.
1
I wonder how a guy/woman who lives paycheck to paycheck feels when reading this piece. Five year from now, Manhattan will be seal off for folks like me. The gazillionaires might as well charge us money to walk up/down 5th Ave.
8
As a member of the 1%, Manhattan is sealed off to me too. Of course I could afford to live there if I really wanted to, but not with a decent lifestyle for a family as I did growing up (fourth generation Manhattan). Markets change. People move around. Always have, always will. I'm fine having left the city and with De Blasio as mayor say good riddance. I guess I don't feel the sense of entitlement that you seem to with respect to where I can afford to live.
Oh honey, you feel a sense of entitlement. Trust me and it comes through loud and clear.
Of course, you can choose to live where ever you like because transportation isn't an issue for you - you can afford a car. Or a chauffeur. Or a helicopter. You have the funds to move.
Manhattan is not "sealed off" to you. You have choices. That's what money provides.
Of course, you can choose to live where ever you like because transportation isn't an issue for you - you can afford a car. Or a chauffeur. Or a helicopter. You have the funds to move.
Manhattan is not "sealed off" to you. You have choices. That's what money provides.
2
I read the article twice.
I see that the use of shell companies is legal.
I do not see mention of PROOF of dirty money used for a purchase.
I see mention of buyers who were subject to investigations, but no convictions.
So I have to wonder how the DoJ can rationalize this layer of regulations that pierces the LEGAL anonymity of the shell company. They are on a fishing expedition, find themselves thwarted by the law, so they propose to circumvent the 4th Amendment via administrative rules.
I see that the use of shell companies is legal.
I do not see mention of PROOF of dirty money used for a purchase.
I see mention of buyers who were subject to investigations, but no convictions.
So I have to wonder how the DoJ can rationalize this layer of regulations that pierces the LEGAL anonymity of the shell company. They are on a fishing expedition, find themselves thwarted by the law, so they propose to circumvent the 4th Amendment via administrative rules.
1
By no stretch of the imagination is this a fourth amendment issue.
– – Retired lawyer
– – Retired lawyer
1
Of course it is. They are attempting to collect data that is not available to them by any legal means short of a warrant.
It's troubling that Mayor de Blasion hadn't acted immediately on assuming office.
Evidence for his beholding to real estate and developer special interests: his early focus on Central Park Horse Carriage Rides and his total silence on what was an act of cultural pillage: the destruction of 5 Pointz.
The NYPD certainly has some capabilities as well to investigate these foreign real estate speculators. Not utilized! The US State Department has resources to investigate how all this foreign loot was accumulated: matters like slave factories, inhumane work conditions, unions smashed or not tolerated, person trafficking, arms black marketing, drug merchandizing. Not done!
Surely, these foreign speculators should go through all the checks DHS routinely performs!
In this regard, is there one instance on record where any mega-million property deal in NYC was terminated because of any of these considerations? NO!
de Blasio is quick to land a lot of blame and divert criticism by blaming Cuomo and Albany. Yet, there is much he could have done and can still do in terms of transaction taxes for foreign nationals, he could institute strict residency requirements, he could seek means to recuperate immense financial incentives, tax relief schemes by NYS/NYS to developers where our people here don't benefit one cent.
These speculators come with ill-gotten loot, they enjoy clean air and water, our lovely parks, our great cultural institutions - all free!
It's payback time surely!
Evidence for his beholding to real estate and developer special interests: his early focus on Central Park Horse Carriage Rides and his total silence on what was an act of cultural pillage: the destruction of 5 Pointz.
The NYPD certainly has some capabilities as well to investigate these foreign real estate speculators. Not utilized! The US State Department has resources to investigate how all this foreign loot was accumulated: matters like slave factories, inhumane work conditions, unions smashed or not tolerated, person trafficking, arms black marketing, drug merchandizing. Not done!
Surely, these foreign speculators should go through all the checks DHS routinely performs!
In this regard, is there one instance on record where any mega-million property deal in NYC was terminated because of any of these considerations? NO!
de Blasio is quick to land a lot of blame and divert criticism by blaming Cuomo and Albany. Yet, there is much he could have done and can still do in terms of transaction taxes for foreign nationals, he could institute strict residency requirements, he could seek means to recuperate immense financial incentives, tax relief schemes by NYS/NYS to developers where our people here don't benefit one cent.
These speculators come with ill-gotten loot, they enjoy clean air and water, our lovely parks, our great cultural institutions - all free!
It's payback time surely!
5
Is this retroactive? Will the secret sales of the last few years be investigated requiring the identification of owners?
3
I've heard reports on the BBC that much of the priciest real estate in London's poshest neighborhoods sits idle and empty most of the time. Just sitting there. Wonder why?
11
I have to show my drivers license just to buy a house brand Sudafed and the powers that be also keep track of the last purchase I have made in order to ensure that I do not have too many in my possession.
But then I am not wealthy!
But then I am not wealthy!
10
From the article:
"Future investigations, they said, will focus increasingly on professionals who assist in money laundering, including real estate agents, lawyers, bankers and L.L.C. formation agents."
Why wait? Start this now and the nail will be put in the coffin in a hurry. The Feds can find out who and where in the process. Everyone involved knows the deal here. Put a real end to it! Without these enablers, it doesn't happen anymore!
"Future investigations, they said, will focus increasingly on professionals who assist in money laundering, including real estate agents, lawyers, bankers and L.L.C. formation agents."
Why wait? Start this now and the nail will be put in the coffin in a hurry. The Feds can find out who and where in the process. Everyone involved knows the deal here. Put a real end to it! Without these enablers, it doesn't happen anymore!
6
The Treasury Department was finally awakened by NY Times and the snooze fest is over. Banks have long been reporting all single cash transactions greater than 10k and verifying a customer's identity because of the Bank Secrecy Act or "Anti-money laundering" law which has since been amended to include terrorism under Title III of the Patriot Act. It makes you wonder about the shady characters of these beneficial owners.
Next stop is bitcoins.
Next stop is bitcoins.
2
I suspect this law will have the same effect on illegal activity as the banking industry's $10,000 reporting requirements...none.
1
It's about time! Watch the > $1m market in Miami drop and the $500-$999K market go nuts. This already became an all-cash market of single family homes that get knocked down for all-cash-construction McVillas that are rarely used.
7
You hear that, Westport, Rye, Short Hills, Alpine? Your luxury real estate market just got a boon.....
4
About time. The US real estate market from Seattle to New York to Miami to Los Angeles has been the preferred vehicle of money laundering from the world's most corrupt for at least the past decade if not longer. Billions if not trillions of dirty money has flooded in from the world's most corrupt countries that suddenly became rich in the past 2 decades including all the BRIC countries.
Corrupt government officials and businessmen from China in particular love to buy real estate in the US which comes with a free EB-5 investor visa which is their #1 get-out-of-jail-free card. The recent "disappearance" of 2 billionaires in China who were then found alive and living well in NYC was ample proof that the US has become the preferred safe haven for China's most corrupt.
Many of the rich Chinese who bought US real estate and got their EB-5s were government officials who took bribe or factory owners who bribed government officials and build highly polluting factories without any pollution control, and paying their workers pennies while making them work in horrid conditions. These people should not be allowed to escape to greener pastures with their ill gotten gains while leaving behind a corrupt, polluted hell for their countrymen to live in.
Kudos to the NYT for exposing these scoundrels of the world and how the US is helping them by allowing them to launder money through our real estates. The Time's reporting on this last year was investigative journalism at its best.
Corrupt government officials and businessmen from China in particular love to buy real estate in the US which comes with a free EB-5 investor visa which is their #1 get-out-of-jail-free card. The recent "disappearance" of 2 billionaires in China who were then found alive and living well in NYC was ample proof that the US has become the preferred safe haven for China's most corrupt.
Many of the rich Chinese who bought US real estate and got their EB-5s were government officials who took bribe or factory owners who bribed government officials and build highly polluting factories without any pollution control, and paying their workers pennies while making them work in horrid conditions. These people should not be allowed to escape to greener pastures with their ill gotten gains while leaving behind a corrupt, polluted hell for their countrymen to live in.
Kudos to the NYT for exposing these scoundrels of the world and how the US is helping them by allowing them to launder money through our real estates. The Time's reporting on this last year was investigative journalism at its best.
15
Charles Schumer started this and so did Mike Bloomberg. When we find the level of dirty behavior lets make sure all roads lead to them.
2
Manhattan and Miami aren't the only places where real estate is being snapped up using cash and nameless LLC's. So many residential properties in Tampa have owners with names like Investors Real Estate LLC and no one knows who is responsible for whatever goes on in those places. These efforts are very slow in coming, but it is something. Ever since this cash and corporate LLC buying has been going on en mass here, I have said this is going to become a huge problem down the road. So far, ears are deaf in the fundamentally stupid leadership here. Soon, though, I think they will have to contend with what this type of ownership will cause for neighborhoods and law enforcement.
4
Would it be possible to make the map in the first video zoom-able so that people could look at communities outside of the 4 that were focused on?
The GOP regrets this outcome. They wanted a war.
6
Claude Rains did the original research which established that what is occurring now is what occurred in Casablanca seventy years ago, when the abstract to the publication of his results said, " I'm shocked, shocked ! "
5
I suggest making this retro-active as well given the real estate market in the last few years. Examine which extravagant homes were bought with straight-out cash and/or by shell corporations and see who occupies (or doesn't occupy them) now. Don't set a dollar value on a single property -- some probably launder by buying multiple properties that cost less -- but rather the overall amount of property someone has.
With the US in its current financial state, we need to re-coup our losses. Real estate bought will ill-gotten gains needs to be seized by the government much as other merchandise (e.g. cars) are.
Being Asian-American and having had friends from Eastern Europe, we've always had our suspicions of just how some people became so fabulously wealthy so rapidly without an obvious reasons (e.g. starting a successful company). Corrupt government regimes full of bribery? Illegal financial activities? Dealings with gangs? Not paranoia but reality.
With the US in its current financial state, we need to re-coup our losses. Real estate bought will ill-gotten gains needs to be seized by the government much as other merchandise (e.g. cars) are.
Being Asian-American and having had friends from Eastern Europe, we've always had our suspicions of just how some people became so fabulously wealthy so rapidly without an obvious reasons (e.g. starting a successful company). Corrupt government regimes full of bribery? Illegal financial activities? Dealings with gangs? Not paranoia but reality.
14
Many other countries do not allow foreigners to buy land or real estate, or impose serious restrictions. Often the rule allows a long term lease, or ownership through a domestic (in that country) legal entity, such as a business or a trust, but not direct ownership by a foreigner per se.
We could do the same here.
We could also sell Iowa to the Chinese for cash (LOTS of cash), and then tell them that if they do not ship it home by December 31st, ownership will default to the US government. (Joke) if not Iowa, then Kansas or Nebraska. The purchase would also make the owners Commodores in the [name of State here] navy. What a deal. Throw in ownership of the Brooklyn Bridge.
We could do the same here.
We could also sell Iowa to the Chinese for cash (LOTS of cash), and then tell them that if they do not ship it home by December 31st, ownership will default to the US government. (Joke) if not Iowa, then Kansas or Nebraska. The purchase would also make the owners Commodores in the [name of State here] navy. What a deal. Throw in ownership of the Brooklyn Bridge.
6
The Patriot Act and our national security enforcement is an absolute joke. As you can see, it is so easy to get around. How can it be that only transactions at financial institutions, and not huge transactions involving the purchase of major assets (apartments) are monitored? Our government seems to be run by fools, and it takes a NY Times article to deliver a wake-up call to our sleeping government. Yet another example of how the wealthiest are treated far differently than the average citizen, even if these wealthy are from Russia and China, two of the most corrupt countries.
14
Trump as the Crown Prince of New York real estate has a lot of questions to answer now. I like Trump but he has a big problem here.
First with the Saudis ("I love the Saudis" he says ) and now with the money laundering, this is all very disturbing. Very disturbing allegations hitting NY real estate, and Trump says he's on top of the whole enterprise.
First with the Saudis ("I love the Saudis" he says ) and now with the money laundering, this is all very disturbing. Very disturbing allegations hitting NY real estate, and Trump says he's on top of the whole enterprise.
7
I'm refinancing my house, with a cash-out. I just discovered that I have to sign a statement about what I'm going to do with the money - and this is a requirement, NOT of the bank but of the federal government. I intend to use it for home improvements, but so what - it's MY money and if I want to spend it all on lottery tickets, isn't that my right? I pay my mortgage on time, have an exemplary credit rating, so whose business is it? Do they truly think i'm going to "launder" $30-40,000? Amazing...
8
While I can understand why you might be annoyed by that request, you should be more annoyed that someone with 10x that amt. of $$ can just set up a shell company and avoid all that. The Treasury Department is, finally, trying to make everyone subject to the same disclosure rules. The rules are antiquated. Most states have a laughably low threshold for cash transactions that trigger a requirement to notify the IRS. In NY it's only $10,000. There was a time when $10k was worth laundering. Not so much now. But is filling out a statement so burdensome? You aren't being told how to spend it. In fact, if you want to, go on and buy lottery tickets. It's your money. It's not personal.
We should stop allowing the mega-rich, whether criminal or not, to hog and waste valuable property. We live in a time of great wealth disparity, when it is harder and harder for ordinary people to afford a place to live. And there are getting to be more people, period, all of them needing housing. If these real estate transactions are actually legal, then let's tax them at an astronomical rate, and use the money for affordable housing.
13
Jan. 13 NY Times: " In Manhattan, the initiative requires buyers in sales of more than $3 million to be reported;"
Jan 14 NY Times ad: "Price Cut! Buy new Manhattan penthouse apartment. Now just $2.99 million!"
Jan 14 NY Times ad: "Price Cut! Buy new Manhattan penthouse apartment. Now just $2.99 million!"
17
Taxpayers should be outraged that this wasn't imposed long ago on all-cash purchases from questionable foreign sources.
18
As with all of the "money laundering" statutes, this action - while seemingly meritorious on its face, is an egregious violation of the privacy of real estate buyers. In effect, EVERY (secret) undisclosed buyer becomes a suspect of criminal action without any supporting evidence.
1
We are bound together in a common society. Part of the contract is that our "privacy" is violated every single day. Get over it or found an island nation built on Randian principles.
Thank you to the Times for exposing this mess. The idea that in California a secret buyer can just about ignore every ordinance and endanger the neighbors with no recourse (no identifiable owner) is utterly crazy and a travesty.
The wealthy get to have secrecy and can ignore rules but the rest of us have to observe the law? No. Under no circumstances, NO.
The wealthy get to have secrecy and can ignore rules but the rest of us have to observe the law? No. Under no circumstances, NO.
15
I am sure this is not news. Spend a day in Manhattan, pick a luxury high rise and observe who goes in and out. Hardly anybody. This is just the US telling the real estate market to get ready for some big changes. It is not rocket science, but then again rocket science isn't rocket science. I remember when Mary Jo White was the scourge of white collar criminals in Manhattan. Now she sits with her feet on a desk in Washington and does nothing about Wall Street fraud or anything, really. They talk the talk, but they don't walk the walk. It's kind of like the war on drugs. Which, as we all know, has been a complete and utter failure, to the tune of 100 billion dollars. Nothing will happen despite what the nice lady from Treasury says. No guts, no tough law enforcement, just politicians like James Comey and whoever is head of Treasury this week. Nice article. Signifying nothing. Manhattan is shell, a shadow of its former self, and frankly, a second rate city.
9
Which cities are the first rate cities?
Wow! Wonder how much political capital it took for the government to finally move against the real estate lobby and shut down this egregious vehicle to launder foreign money. How ridiculous it is that god forbid you deposit $10000 into your bank causing a stir meanwhile some crook buys a $50 million Manhattan apartment without any notice!
26
Congratulations to The Times for its part in inspiring this long-overdue reform. But, the article states there were only 1,045 Manhattan residential sales over $3 million in Manhattan in second half of 2015? Your "sale of the week" real estate column highlighting sales in the $20 million and up range have long implied that multiple-million dollar sales are the new norm in New York. In a city of 8 million, 1,000 big sales are not by any means the norm.
4
To begin with our entire tax code and structure needs a serious overhaul, sorry I'm not a B. Sanders fan so don't jump on the B. S. bandwagon. I have friends who are bookkeepers, accountants and CPA's. And when they try to explain the different ways and processes used in tax computing and reconciling profits and loss my mind about explodes. Some politician talked about just having a flat tax, can't remember which one, but it's starting to sound good to me!
2
The luxury watch business gravitates to the place in the world where their supposed luxury items are in demand. In the past two years China has begun to investigate people who are sporing very expensive watches. As a result luxury watch sales are down in China over 70% and the watch industry has moved to Singapore to attract off-shore customers.
What is the analogy? The ultimate enforcement of dirty money rests with the home country of the robber Barron. The robber Barron will seek another way to accomplish their mission of hiding ill-gotten money.
This attempt at enforcement, as it relates to non-nationals is not in enforcement of any U.S. laws, and therefor is an empty gesture, at best. How has government enforcement been for prosecuting those people and companies who violate both state and Federal 'do not call' blockage of solicitors? Well, it is non-existent. The folks who will be prosecuted are our own realtors and lawyers and title companies and not the maladroit and malevolent.
So we create yet another law that pays lip service to stopping International scandal while putting the risk on out own service economy. What will they do to protect themselves? Hire good lawyers to figure out some loop-holes. So it is a public relations spin by the current administration and not Congress.
And as others have noted, the horse is way out of the barn on this issue anyway.
4
Unbelievable!! What were they waiting for? It has been going on for years and NOW they want to know? Good luck!!
14
They need to go after the slum lords that own shell companies. It would be more lucrative.
13
Times reporting just keeps getting better! And the wealthy, who already have more than enough, should face even greater scrutiny!
Good going!
Good going!
11
This is a fantastic article and is the reason I bought a subscription to the NYT this year.
As a US citizen living in London, I've seen firsthand what anonymous purchases can do to entire neighborhoods. Some of London's most iconic settings are totally vacant of human activity thanks to money laundering. The UK's half steps have done very little to stem the flow of illicit funds into the UK real estate market.
As a US citizen living in London, I've seen firsthand what anonymous purchases can do to entire neighborhoods. Some of London's most iconic settings are totally vacant of human activity thanks to money laundering. The UK's half steps have done very little to stem the flow of illicit funds into the UK real estate market.
29
Paris, too.
Close the door once and for all to this egregious oversight. I was recently outbid by cash buyers on several homes (at much lower price points) and I seriously wonder who among those buyers will actually occupy those homes.
Long overdue.
Long overdue.
20
The Big Brother of Orwell's 1984 is alive and well in the form of the Obama administration and his subservient Justice Department. When they run out of wealthy people to fleece they will be coming for you next.
It's the ultra wealthy who, in fact, have been permitted to fleece the rest of society. This new blue sky rule is merely a minor, long overdue corrective.
But do not feel too bad for the .1 percenters. Among their other advantages, the ultra wealthy have misguided White Plains dwellers to argue in favor of their interests.
But do not feel too bad for the .1 percenters. Among their other advantages, the ultra wealthy have misguided White Plains dwellers to argue in favor of their interests.
1
"Everything you do in private is illegal / everything is legal if the government can see you."
- KRS ONE, Boogie Down Productions
- KRS ONE, Boogie Down Productions
1
Long overdue. It has long been a scandal that while the US applies onerous money laundering rules to foreign states and banks, the gold standard for hiding money was a Delaware LLC shell company and New York real estate.
15
What took so long?
10
There is no mention in this article of what would happen upon discovery of individuals who plowed their ill-gotten gains into Manhattan real estate. Can it be confiscated? Is there potential jail time involved? Will real estate agents be required to forfeit their commissions from these shady deals? I just get the sense that the ultra- powerful/wealthy/crooked would have the resources to hire an army of attorneys and/or bribe key officials to maintain the status quo. Nothing will come of this, I'm afraid.
58
Go read about LA on the subject--one particularly egregious case has a whole hillside being illegally carved away and there's no one of record to put the cease and desist to, nobody to arrest for repeatedly breaking the law. Nobody claims to have anything to actually do with it and all city and court orders have been simply ignored.
3
Deterrent that's all. The message here "we don't want your dirty money, do not bring to our soil."
Let's hope the Republicans don't get in and shut this down.
11
This has been a glaring problem for years now. All those towering eyesores going up in midtown are knowingly built to cater to international criminals (largely corrupt government officials and their cronies) who need a safe place outside their own countries to stash their money.
What many Americans don't know is why the dirty money is flowing almost exclusively into residential real estate. The reason is that almost all other first-world investment vehicles (bank accounts, hedge funds, private equity funds, etc.) are legally required to perform anti-money laundering analysis of every investor or depositor they accept, and this includes a determination of whether the investor is using proceeds of criminal activity or is a foreign political official looting his or her home country.
For whatever reason, real estate historically has not subject to these same requirements, and therefore at condo closings, payment in the form of a duffel bag full of cash, from an unnamed and unseen buyer, is not only accepted but encouraged. There is no logical reason for this exception, other than the fact that real estate developers are happy to facilitate money laundering and looting, and many politicians have trouble looking away from the temptation of the huge dollars.
Subjecting real estate sales to the same legal scrutiny as other financial transactions is way overdue. It will be a big blow to the developers who count on dirty money, but surely that is a good thing.
What many Americans don't know is why the dirty money is flowing almost exclusively into residential real estate. The reason is that almost all other first-world investment vehicles (bank accounts, hedge funds, private equity funds, etc.) are legally required to perform anti-money laundering analysis of every investor or depositor they accept, and this includes a determination of whether the investor is using proceeds of criminal activity or is a foreign political official looting his or her home country.
For whatever reason, real estate historically has not subject to these same requirements, and therefore at condo closings, payment in the form of a duffel bag full of cash, from an unnamed and unseen buyer, is not only accepted but encouraged. There is no logical reason for this exception, other than the fact that real estate developers are happy to facilitate money laundering and looting, and many politicians have trouble looking away from the temptation of the huge dollars.
Subjecting real estate sales to the same legal scrutiny as other financial transactions is way overdue. It will be a big blow to the developers who count on dirty money, but surely that is a good thing.
26
The article is somewhat misleading in that it doesn't define "cash". Is cash in fact duffle bags of money or does it simply mean that the transaction involved no financing. I believe the later. If in fact developers were accepting stacks of bills in payment for multi million dollar apartments, they would be forced to report such transactions when depositing those proceeds into their accounts.
Please do the same in the San Francisco Bay Area as well! Common folk can't compete with these shady buyers from Asia showing up and making million dollar cash offers on homes they will never live in.
24
What will prevent a buyer from purchasing multiple, lower priced properties?
The federal government's response to this 1% 'problem' is questionable.
Not only too little and way too late but what will they do after they find the naughty buyers? And will there any scrutiny of past real estate transactions? Nothing and doubtful.
The federal government's response to this 1% 'problem' is questionable.
Not only too little and way too late but what will they do after they find the naughty buyers? And will there any scrutiny of past real estate transactions? Nothing and doubtful.
2
It concerns me that I can watch the reality show, Drugs Inc., on National Geographic channel and learn a tremendous amount about how drugs are getting into our country and how they launder the money and invest it in expensive real estate in Cancun and such, But, the CIA can't seem to figure all this out and shut down the money trail. It's like they do little bit for show, but not too much.
It's clear to me that the US has a drug problem that penetrates into our most secure prisons and the glass skyscrapers on Wall Street and even into the deepest recesses of our federal government. It is pretty darned certain that our drug policies and our procedures for stopping the proliferation of illegal drugs are an utter failure. The CIA will never stop drug money or make a dent in drug trafficking until our government starts treating addiction as a disease instead of a crime.
It's clear to me that the US has a drug problem that penetrates into our most secure prisons and the glass skyscrapers on Wall Street and even into the deepest recesses of our federal government. It is pretty darned certain that our drug policies and our procedures for stopping the proliferation of illegal drugs are an utter failure. The CIA will never stop drug money or make a dent in drug trafficking until our government starts treating addiction as a disease instead of a crime.
We do not need to be the world's depository nor do we need to launder dirty money. The real estate purchases potentially accomplish both. Clamp down although I would imagine the acquirers are layers of corporate shells (think LLCs, Trusts) in which case it is likely that tracking will produce little worthwhile results, if any.
9
With only transactions in Manhattan and Miami subject to the reporting requirement, it's not a stretch to predict a rush to purchase properties in whatever other major metropolitan cities have available real estate. The feds should plug that loophole before it creates market conditions that advantages only developers and has an adverse impact on housing affordability in those communities by requiring all U.S. real estate transactions be tracked.
12
like, maybe, who has been purchasing large tracts of farmland across the u.s. ...
6
Thank you NY Times for reporting on this! This is why I pay for a subscription.
As a middle class Manhattan resident for the past 8 years I've seen countless glass buildings go up only to be vacant 95% of the time. It creates neighborhoods of empty buildings that were bought as investments. How can local businesses survive without residents? Besides allowing shady money to flow into our country, this practice drives up real estate prices and prices average Americans out of the market.
As a middle class Manhattan resident for the past 8 years I've seen countless glass buildings go up only to be vacant 95% of the time. It creates neighborhoods of empty buildings that were bought as investments. How can local businesses survive without residents? Besides allowing shady money to flow into our country, this practice drives up real estate prices and prices average Americans out of the market.
43
Here's a thought: how about a massive flip tax on buyers with undisclosed identities. Or, not even a flip tax, but an annual property tax bump. You would not have to waste money on resources to find these people. Just apply the tax to any property owned in the name of a non-human who has not submitted the names of beneficial owners.
Now, a lot of people buy in trusts to keep from being stalked or sued, so you would have to keep their identities private (ha, it could and probably would get hacked). But this would not be disimilar to places that have tiered property taxes for non-residents or for on-water vs. water view vs. no view (like Maine). If you are rich enough and want to pay the freight, fine.
That money should then go to fund law enforcement for tax evaders and money-launderers. Kind of like cigarette taxes go to fund anti-smoking campaigns. Any municipality could do this. Looking at YOU, Bay Area...
Now, a lot of people buy in trusts to keep from being stalked or sued, so you would have to keep their identities private (ha, it could and probably would get hacked). But this would not be disimilar to places that have tiered property taxes for non-residents or for on-water vs. water view vs. no view (like Maine). If you are rich enough and want to pay the freight, fine.
That money should then go to fund law enforcement for tax evaders and money-launderers. Kind of like cigarette taxes go to fund anti-smoking campaigns. Any municipality could do this. Looking at YOU, Bay Area...
11
Articles like this amaze me, which is why I rarely read them.. For starters, you cannot just walk into a bank with "cash" in a duffle bag and buy property as an individual or as a "secret corporation" without LOTS of scrutiny. Please let me know what "holes" there are in our vast array of government financial and spy networks that would let me buy a 40M property with cash like I would buy a hoagie off the street?? Second, when presented with a cashiers check for the purchase of property, the money is already in the banking system, which I assume has all of the required documentation the FEDS need to meet compliance standards internationally. Third, just how are the officials going to "scrutinize" foreign buyers?? They would have to do a full audit of how they made their money and account for it. The old adage, "things are not what the seem" applies here. The investigators are going for something else.. because all you would have to do to stop the non sense is to simply put a few bankers in jail when the evidence shows there was collusion on their part in the placement, layering and structuring of funds. Game over.
7
Cash can actually mean a check from a bank in Anguilla for the full value of the property. i.e., not bought with a loan from a bank the way most Americans buy a house. It does not necessarily mean cash in duffle bags because 5 million in cash is quite a large bundle even if in 100 dollar bills.
4
As I commented elsewhere, the article is misleading in that it seems to imply that cash means physical bills, when in fact what's going on here are purchases that involve no financing. Which in turn begs the question: aren't existing anti laundering rules sufficient to ensure that the funds wired from US $ denominated bank accounts in settlement of such deals are "clean".
bankers, brokers, builders, lawyers, politicians, landlords, etc. are drunk on their cut of the massive amounts of money being paid for luxury apartments in nyc and will take it no questions asked. they have sold our streets and skies and overloaded our infrastructure to the point where it is already impossible for the average new yorker to enjoy the quality of life that was once available here. good luck trying to fix this problem. we are years late and many millions of dollars short.
32
No one is being stopped from buying real estate. They just need to shell out (hehe) more information about themselves.
10
Title Insurer: I need to identify the "real" owner for the form.
Lawyer for purchaser: "The Swiss lawyer who hired me says that the Lichtenstein lawyer who hired him said that the majority owner of the Hong Kong LLC that owns the Bahamian limited partnership that manages the Panamanian joint venture that is the controlling holder of the voting shares of the Isle of Man parent company of the LLC that established the Revocable Trust that will hold the deed is "John Doe." Title Insurer: Thanks!
Lawyer for purchaser: "The Swiss lawyer who hired me says that the Lichtenstein lawyer who hired him said that the majority owner of the Hong Kong LLC that owns the Bahamian limited partnership that manages the Panamanian joint venture that is the controlling holder of the voting shares of the Isle of Man parent company of the LLC that established the Revocable Trust that will hold the deed is "John Doe." Title Insurer: Thanks!
23
Excellent post!!, albeit a simple version. Add in cross-holding agreements, splitting of control and percentage of shares owned through share buy-back agreements/options etc and other machinations, then, it begins to look like the real world.
And... The response of both lawyers would likely be "I am not able to provide the requested information due to the privacy laws of my country and the clients" But if they could it would sound like your post...
And... The response of both lawyers would likely be "I am not able to provide the requested information due to the privacy laws of my country and the clients" But if they could it would sound like your post...
4
This is a fantastic result and long overdue. For a second act, may I suggest similar reporting requirements for the art market which is free of reporting requirements much like real estate.
12
It makes sense that criminals, who already spend the lion's share of their time thinking of ways to obtain wealth through illicit activities would then be looking for ways to hide their ill gotten gains, but I'm amazed at the situational morality of those who willingly enable them, from bankers to realtors to politicians who want to strip all oversight and regulations from the responsibilities of the government, laughably suggesting that left to their own devices every person, including criminals, and every corporate or financial entity will do that job themselves. Ironically, these are the same people who are the first to demand action if their own neighborhoods are threatened by crime or trespass and as politicians run on law and order platforms banging on about security in the meantime allowing the back doors of their backers remain open to illegal profit. I must say I would love to hear Donald Trump's views on this particular subject as I imagine his brand of ostentatious luxury would appeal to the very people who will now be scrutinized.
53
Greed is good is the Manhattan mantra. I am sure the DEA has been keeping track of purchases in Miami for a long time, but they will never be mentioned, which is maybe a good thing. Probably the only, or one of the only good things they are able to do. They certainly have failed in the war on drugs, but they have gotten good at computer research and surveillance.
1
"We need to know who is buying," said our sources, who spoke on condition of anonymity.
12
I find this to be a disturbing article and the situation is not something The Times should be proud of helping to bring about. There were other articles a little over a year ago that detailed how government agencies like the IRS are pouring through citizens accounts at financial institutions and seizing funds whenever they can allege improprieties and just their disapproval of the amounts or the timing of deposits is enough to justify forfeiture of funds according to the law (which desperately needs to be changed). It may sound well and good in articles like this that refer to money laundering and, often, make oblique references to "funding terrorism" but the reality is that these are the sorts of laws and regulations that are responsible for ordinary citizens having their money and possessions "forfeited" to the government because some agent had suspicions. Is this really the world we want to live in where people are never afforded the luxury of privacy in their financial dealings? The founders of the United States understood that government must always be kept on a short leash. We are making a terrible mistake in further empowering government to intrude into peoples lives by outlawing privacy at every turn.
20
Dear Nick :
You are indeed fortunate that there are over 150 other countries in the world to which you and your family can move and hide your lucre. Go for it...please.
You are indeed fortunate that there are over 150 other countries in the world to which you and your family can move and hide your lucre. Go for it...please.
11
Nicholas, I understand your worries but really how many "ordinary" citizen are anonymously buying high dollar real estate. This is a situation that needs looking into. There is just too much room for abuse.
5
It's not as though people who buy high value properties anonymously or through shell corporations will just outright be punished. As the article states, there are legitimate reasons some people choose to buy their property that way and, if they are investigated and nothing illegal is found, they won't be prosecuted BUT if there is something illegal going on, we can catch them.
REALLY??...And are we now supposed to applaud?...Then sink back into some artificially-induced acquiescent torpor believing that this will change things one iota? .... Well, guess what. Nothing is going to change. The 'uppers' will remain in the Luxury upper stratosphere, while everyone else will remain banned and barred at the gates, like "Barbarians". No secret here.
4
What is your suggestion? Helpless capitulation?
@NYC
I never once even hinted at that. I'm just calling it the way it unfortunately is. Now, what is YOUR suggestion????
I never once even hinted at that. I'm just calling it the way it unfortunately is. Now, what is YOUR suggestion????
It's past time. Thank you NYT. For too long the real estate industry had been greasing the right palms to prevent tightening of rules. Their argument never held much water, even if 10% of the money had dubious origin (the real number is probably much higher) it is still high enough to warrant scrutiny and disclosure. Not much different than the Swiss helping Nazis hoard assets. That too didn't amount to majority of their deposits but so what? It's like decriminalizing stealing because huge % of people do not steal.
8
How?
LLC's and the anonymity of their beneficial owners are governed by state law. In Delaware, for example, I was unable to find the name of beneficial owners of a particular LLC, only their lawyer or registered agent.
How will the federal government compel real estate agents to learn an unknowable fact, or at least facts unknowable without a court order.
LLC's and the anonymity of their beneficial owners are governed by state law. In Delaware, for example, I was unable to find the name of beneficial owners of a particular LLC, only their lawyer or registered agent.
How will the federal government compel real estate agents to learn an unknowable fact, or at least facts unknowable without a court order.
2
Here are some additional reform ideas:
(1) Require title companies to fill out Suspicious Activity Reports (SARs) on all real estate transaction involving all cash purchases greater than $5 million or if more than two real estate purchases exceed, in total, more than $5 million in one year.
(2) Make it illegal in the US to employ shell companies (either US or offshore) as a means obscuring ultimate beneficial ownership.
(3) States and counties should not accept payment of property and other taxes by shell companies.
(3) Require screening of all names/LLCs/shell companies via the government's Office of Foreign Assets Control (OFAC) list. Banks do this all the time.
(4) Limit use of LLCs to one level with greater transparency of incorporation at the state level.
(5) Limit use of offshore accounts to the residence of the ultimate beneficial owner.
(1) Require title companies to fill out Suspicious Activity Reports (SARs) on all real estate transaction involving all cash purchases greater than $5 million or if more than two real estate purchases exceed, in total, more than $5 million in one year.
(2) Make it illegal in the US to employ shell companies (either US or offshore) as a means obscuring ultimate beneficial ownership.
(3) States and counties should not accept payment of property and other taxes by shell companies.
(3) Require screening of all names/LLCs/shell companies via the government's Office of Foreign Assets Control (OFAC) list. Banks do this all the time.
(4) Limit use of LLCs to one level with greater transparency of incorporation at the state level.
(5) Limit use of offshore accounts to the residence of the ultimate beneficial owner.
4
Miami Beach is betting on keeping Miami safe from the floods based on the property taxes levied on the rich. You stop Miami's mayor from doing that, you will have Miami Waterpark and no beach--just all the way into the Everglades--no city whatsoever. But a great write up.
Usha --
That result is inevitable regardless of real estate reporting rules. No amount of money will keep Miami dry.
That result is inevitable regardless of real estate reporting rules. No amount of money will keep Miami dry.
Agree completely. I don't see eye to eye with the mayor of Miami.
Those complaining of the high rises that have been built have a unique outlook. Millions in dirty money is funneling through their neighborhoods and their concern is bad zoning. The nobility never think like the rest of us.
3
Then logically one with dirty money will wait until after August to possibly make their luxury real estate purchase?
Who exactly is lobbying, (besides the Realtors associations) against issuing the scrutiny of real estate buyers? Obviously, the wealthy sellers! Of course they need to off load their overpriced and oversized manses or penthouses somehow.
The banks salivate as well. It's all a circle game of insane amounts of greed.
Who exactly is lobbying, (besides the Realtors associations) against issuing the scrutiny of real estate buyers? Obviously, the wealthy sellers! Of course they need to off load their overpriced and oversized manses or penthouses somehow.
The banks salivate as well. It's all a circle game of insane amounts of greed.
4
While there is little doubt in my mind that 'money laundering' is a real issue, I believe that these NYTs articles, while useful in some sense, cater to an audience which desires to channel their contempt of wealth into a form of emotional catharsis. One stark element here is contempt of wealth. This is understandable to some degree. But there is a corollary: the desire to establish policies which, it would seem, level the economic field. What else will happen when one has vilified wealth? It is not only criminal wealth that is hated but - it would appear - all wealth. So, the subtext here is a series of articles that caters to this emotional resentment, feeds it, augments it.
I'd wager that only a small percentage (5%-10%?) of these shell company purchases have 'dirty money' behind them (wealth gotten through criminal activity). A very wealth person will always desire to shield their wealth by establishing trusts, shells, and all the rest. Even moderately wealthy people (professionals, doctors, etc) MUST do this. They MUST pre-plan for attacks by hostile people who scheme on their wealth.
And all of a sudden these people are labeled 'criminals'. It is mob mentality in operation.
I'd wager that only a small percentage (5%-10%?) of these shell company purchases have 'dirty money' behind them (wealth gotten through criminal activity). A very wealth person will always desire to shield their wealth by establishing trusts, shells, and all the rest. Even moderately wealthy people (professionals, doctors, etc) MUST do this. They MUST pre-plan for attacks by hostile people who scheme on their wealth.
And all of a sudden these people are labeled 'criminals'. It is mob mentality in operation.
18
Ah, Eugenio, there you are. Would you want a city devoid of middle class and poor? No one said the rich must not do what they must or will do. It is only fair to make sure that the global rich are not money laundering and deceiving their own country's poor. How did you come up with 5 to 10%. You want to demarcate the good wealthy from the bad wealthy. OK. But these rules only want the names of the beneficial owners and that too only for purchases over 5 million in Manhattan. Poor black kids are dragged off to prison for drug distribution, drug paraphernalia and drug possession while the El Chapos of this world whoop it up for a long time. Even if the number is 5 to 10% that's huge on the global market. That's money a poor country's citizens could well use for education and infrastructure and you think that kind of money should be bottled up in empty Manhattan and Miami high rises and wrap around balconies eyeing the shore? No one is labeling docs and professionals criminals. Show your name and your game when you buy. If your money came from Botox and breast augmentation done on the crooked wealthy, I bet it won't matter that you're buying a palace. But if your money comes from art theft, international drug trafficking, sex trafficking, pure absconding with your country's treasury then you have to answer for it. I think that's fair and square don't you?
8
I do not hate money and I do not hate people who made lots of it -- if it was done honestly and fairly.
What we are seeing in the US and other places in the First World is an army of professionals who help people who got money they didn't earn or make in an honest way -- usually somewhere in the developing world -- to safely store the proceeds of their crimes in our countries. Then, when these people tire of the mess they've made in their own countries, they often safely bail out to the First World, leaving their ransacked and mismanaged countries and countrymen further weakened.
I am sick at the thought that we provide a haven and the protection of our laws to a bunch of rich thieves who ripped off people overseas and then come here to hide and spend their millions in the comfort and security of big houses. I do not want these people here. They do not deserve to live in America.
What we are seeing in the US and other places in the First World is an army of professionals who help people who got money they didn't earn or make in an honest way -- usually somewhere in the developing world -- to safely store the proceeds of their crimes in our countries. Then, when these people tire of the mess they've made in their own countries, they often safely bail out to the First World, leaving their ransacked and mismanaged countries and countrymen further weakened.
I am sick at the thought that we provide a haven and the protection of our laws to a bunch of rich thieves who ripped off people overseas and then come here to hide and spend their millions in the comfort and security of big houses. I do not want these people here. They do not deserve to live in America.
6
No one is calling them criminals, the government just want to be able to identify them. Even if we only catch the 5 to 10 percent that are dirty, that is a significant amount. If wealthy people are not doing anything illegal I see no problem.
As a mere middle class NYC property owner, my ownership information is public and obtainable from the city. Why are billionaires any different?
As a mere middle class NYC property owner, my ownership information is public and obtainable from the city. Why are billionaires any different?
6
The shady rich don't have banks reporting them to the Feds for withdrawing or writing a check for a measly $10K like the rest of us.
They don't get searched or grilled by TSA or Border Patrol like the rest of us because they can fly in on private jets or take their yacht.
They don't get background checks for weapons purchases from the FBI or Homeland Security like the rest of us because they hire armed guards whose security corporations maintain their own arsenals.
What's in Your Wallet? Million$ or billion$? Welcome!
They don't get searched or grilled by TSA or Border Patrol like the rest of us because they can fly in on private jets or take their yacht.
They don't get background checks for weapons purchases from the FBI or Homeland Security like the rest of us because they hire armed guards whose security corporations maintain their own arsenals.
What's in Your Wallet? Million$ or billion$? Welcome!
6
I think it is an excellent idea. if not for sneaky or illegal activities why use these shell companies. Of course most of it is to shield the owner from illegal activity.
4
How about an article on why the government let this go on as long as it did, allowing money lauderers to push prices up, ultimately hurting the middle class?
8
In Miami Beach, money launderers and fraudsters who are fleeing their own countries, have sunk millions in shoreline properties that won't last another two decades. The land is sinking there, the water is rising from the broken infrastructure underground and the tide comes in faster and higher as the years pass. But the global oligarchs are impervious and care not a whit about global warming or El Nino. They have the Xerxes mentality which is to say they can command nature and nature must obey. Boy, do they have surprises in store. Far from the madding rats and bed bugs of Manhattan the global rich live in higher and higher buildings and in the sun deprived shadows of these buildings, the law abiding, tax paying citizens of NY wallow in misery. NY City is grossly unaffordable to those who run the city--the hotel maids, the bus boys, the teachers and even the doctors. The artificial inflation of property values caused by the cash down real estate market is pricing artists, graduate students, professors and other intellectuals out of these vibrant cities. In the end cities like Miami Beach and NY can hang signs to declare--"For the Rich Only. We have Apartheid". If this trend continues cities will be the barren wastelands of the drug lords, the robber barons, the rich of the communist apparatchik and anyone else in between who managed to embezzle and whistle past the law, in their own countries and in ours, with impunity.
19
This is as pure a jeremiad as I think can be written!
The shorefront land bought will inundate through the careless evil of these earth-demons, but they have metal wings - ill-gotten of course - and will fly away. But that's not the end: Boy do they have surprises in store for them.
It is unfortunate that the Biblical God has folded his tent and gone back to his star.
Please, I do not mean this as hostile comment. I just notice that it drips with anger and resentment and desires to locate someone/something to blame.
The shorefront land bought will inundate through the careless evil of these earth-demons, but they have metal wings - ill-gotten of course - and will fly away. But that's not the end: Boy do they have surprises in store for them.
It is unfortunate that the Biblical God has folded his tent and gone back to his star.
Please, I do not mean this as hostile comment. I just notice that it drips with anger and resentment and desires to locate someone/something to blame.
What do you want--sweet nothings on this subject? People close to me are priced out. You see their struggles, you write. I am not blaming someone, anyone--I am blaming those involved. Miami beach is a mess. Scroll down and read the lady who lives there. She says it all.
3
People are mad as they see control of the US is slipping out of our hands in a multitude of ways.
America is supposed to be run to benefit our own citizens.
Why should Americans be happy to pay more rent because people from other countries want to live here? Why should Americans in big cities be happy that residential towers of 60, 80, 100 stories are taking over whole neighborhoods while they can't afford to live comfortably anywhere near that city?
America is supposed to be run to benefit our own citizens.
Why should Americans be happy to pay more rent because people from other countries want to live here? Why should Americans in big cities be happy that residential towers of 60, 80, 100 stories are taking over whole neighborhoods while they can't afford to live comfortably anywhere near that city?
3
It's about time and certainly late in the game to be looking at the obvious. I'm glad NYT did an article about this. I'm born and raised in Miami and my town is a zoning nightmare because of these huge monsters going up. They should be looking at corrupt foreign officials and their families too BTW.
22
This is just the tip of the iceberg. I recommend everyone take a look at Robert B. Reich's "Saving Capitalism". He explains how the debate over government vs "free markets" is a ruse to keep our eyes off the real action: how the super-rich rig the rules of the game. Just like they did in the "tax extenders" bill passed by our corrupt Congress last month. The bill was written by lobbyists for the rich.
7
There are other places throughout Florida where new homes are sold for cash. Usually those homes are priced at greater than $500,000. Although many homes are bought by retirees or others who speculate in the leasing market, it is almost impossible to know who the buyer is. Buyers with cash are king. There are no back ground checks for any buyers individual or corporate. There must be a large quantity of homes in the $500,000 to $5,000,000 price range that are owned for the sole purpose of hiding and laundering money. I'd bet that the "ghost" owners are people from across the globe that are almost certainly hiding their wealth from both United States and foreign governments.
8
Bloomberg wanted more of these folks, thank god he's out of office. De Blasio isn't perfect but he's made it clear these folks will not get a free pass any longer.
3
and to make matters even more ridiculous -- the brand new luxury bldgs in NYC in exchange for a few benefits to the community -- public housing or a public space, don't pay real estate taxes for 20 years.
Thank you Obama Administration (no more Clintons to give away the store please).
Art is another area where money laundering takes place. Stolen art from South America, Ira, India, other trans-shipped via Germany or other at which point all kinds of games can and have taken place (Art donations to protect income -- popular game -- esp. w/ exhoribitant auction prices these days.
Thank you Obama Administration (no more Clintons to give away the store please).
Art is another area where money laundering takes place. Stolen art from South America, Ira, India, other trans-shipped via Germany or other at which point all kinds of games can and have taken place (Art donations to protect income -- popular game -- esp. w/ exhoribitant auction prices these days.
2
Oh, but won't this upset cannibal capitalists? After all, if you have all the money, haven't you won the game? I don't get the sense that there is such a thing as dirty money is our culture -- no matter how it's acquired.
5
Honestly, does anyone actually believe some high-end criminal is just simply going to create an LLC with his/her name as the beneficial owner? Come on, you can't be that stupid! If they are a criminal and can afford to purchase millions of dollars of real estate then they have professionally created, multitiered business entities where the beneficial owner is just another foreign corporation or other entity. Or the beneficial owner is an associate or attorney. This is just a fishing expedition to find american citizens buying real estate with cash so they can scare the masses (you people). All the sheeple here say "Baaaa".
2
On a cash sale, title insurance is an option and I wouldn't think these are the type people that you would want to sell a dirty title to. With the government's announcement in advance, it will be very difficult to catch much of anyone that hires a decent lawyer to handle the transaction. This has been a factor in these specific markets for a long time. There are other ways to come at this, but I can assure you they will not be very successful with this method now. The poor title clerk makes about $40K and your going to put them in this position? Good grief. Government agencies tend to lack common sense. First, they tell you who is going to have to report it. Then they tell you where, and when, they are going to look. What self respecting drug dealer or foreign political embezzler is going to not use an attorney to close the deal? And what attorney is not going to now advise them of exactly how not to get caught? Who do you think was setting up the shell companies? The same attorneys that are now going to advise a different method or location or time. Please US Government think before you speak. I really want to believe there are good people trying to do a good job, but then things like this come along......
4
So, I can't bring $10,000 to another country without declaring it, or even buy a plane ticket with cash. But secretive, wealthy people can bring in hidden millions?
Themis lifts her blindfold...
Themis lifts her blindfold...
18
We are the United States the land of the "for sale" sign - Congress is for sale, city governments are for sale, everybody in the US is for sale to the highest bidder.
Doesn't this just make sense that our government agencies turn a blind eye to millions of dollars just flooding in for permits, fees and and the unfettered flow of cash from illegal and questionable entities?
Hello, Its all about the moola here in the land of the fee and home of the dollar sign.
Doesn't this just make sense that our government agencies turn a blind eye to millions of dollars just flooding in for permits, fees and and the unfettered flow of cash from illegal and questionable entities?
Hello, Its all about the moola here in the land of the fee and home of the dollar sign.
25
The fee is only for you and me pal, and the dollar sign is for the oligarch. Love your comment, though. Had a good laugh. That's the least we can do. Laugh at our horrible fate, as the common man, woman and gender fluid. I understand if I left out the last, I'll could be turned to fluid.
Federal forfeiture in money laundering and related cases totaled $2.5 billion in 2006 and 2007. More cases are brought every year in Manhattan and Miami-Dade County than anywhere else. The result of this investigation is apparently shifting more resources to Manhattan and Miami-Dade County. 1450 cases are brought by the federal government each year. It is doubtful that the shift described here will result in more cases unless more investigators are hired. Instead, resources will shift to the two locations where they are already concentrated. The squeaky wheel ...
3
Bit late as the horse left the barn. For me and you that work for a living and pay taxes they track every transaction we make but when it comes to the Chinese buying up millions of dollars under LLC's and other contrivances they have not a clue! Just like the drug cartels that have come across the border with suitcases full of cash and bought millions of dollars of real estate in the desert southwest, no problem and no questions asked. Must be nice to be connected.
21
And we often give expedited green cards to extractive industry titans who stole the wealth from their fellow Russian and Chinese citizens.
2
The Chinese just recently bought an entire Hollywood studio. They want to market Chinese language movies to us. This has been called a historic deal. Heaven help us.
1
The New York Times expose made it clear that these luxury real estate purposes may be being used to launder and sequester drug money, embezzled funds and extorted money from all kinds of illegal sources. In addition these properties and their inflated prices are driving up real estate in New York to the point that it is affordable for even upper-income people. The median price for a condominium in Manhattan is $1.1 Million. Get these oligarchs out of the business of ruining our urban landscape. They occupy these prime properties and don't even live in them.
20
So what if the title insurance company can't find out? Are they supposed to say "we don't know"? Or are they supposed to refuse to issue the insurance? If so, what is the statutory basis for this regulation? Insurance companies are regulated by the states, not the Federal government.
4
Moreover, will the lack of title insurance block the transaction? The seller won't care. Will the buyer care? Would it spoil a future sale? That would be the only reason a buyer would care--if they thought it would impair them from selling when they need to.
Title insurance is kind of a racket anyway. Maybe this just creates a private market for real estate where the wealthy don't have to pay the title insurance fee like the rest of us do (our lenders require it).
Title insurance is kind of a racket anyway. Maybe this just creates a private market for real estate where the wealthy don't have to pay the title insurance fee like the rest of us do (our lenders require it).
1
Kind of crazy. I feel like there are more pressing issues our government could be focusing on. The purchase of ultra-high-end real estate is a pretty laborious process, particularly in New York and I highly doubt these buyers are less than qualified or borderline criminal. Using it as a safe haven for assets, yes, money laundering? There are easier ways to do that.
2
Actually when foreign buyer X purchases a $50 million condo under LLC XY then the same buyer resells that condo for $100 million to LLC XYZ (which he owns as well), laundering all this money in the process, so not really that complicated. The U.S. can't go after Switzerland, Luxembourg, or other tax havens and not go after this type of "scam". They need to do the same with Los Angeles and San Francisco as well.
5
It's criminal. Anytime the Gov't goes after the ultra-wealthy criminal I am pleased. Plus it'll mean tax revenue that would otherwise be lost. Who knows, this may be an Isis $ laundering operation?
2
Lol Deb, no ISIS is not laundering their money this way. They are looking for politicians from countries where corruption is endemic, those are the types that launder money this way. They steal from their home country billions, then buy real estate, then sell the real estate. Laundering the money in the process. ISIS doesn't have to launder money.
Maybe it should just be a crime to be rich! That would certainly simplify matters and complainers would be in the minority. A real democratic win-win.
2
@Iver Thompson,
Not to worry there people in this country who are working to make sure that being successful will either brand you as a criminal or a pariah!
Not to worry there people in this country who are working to make sure that being successful will either brand you as a criminal or a pariah!
1
Name them. Don't keep us in suspense.
2
No it's not a crime to be rich but it is a crime to abscond with money stolen from the treasuries of countries or with antiquities traded on illegal art market or with black money from major drug deals.
4
Sounds strange to me. Isn't the banking system supposed to ferret out money launderers? If the payments to purchase a property or other asset are made from an account with an institution which must comply with anti-money laundering regulations, purchases paid for from these accounts should not be subject to further scrutiny. It is not just property in Manhattan and Miami, there are lots of other places where expensive properties can be found, and there are lots of other multi-million dollar assets other than property: yachts, art and other collectables to name a few. The better solution is to require any payments to purchase these types of assets to come from an account which has been vetted under the existing regulations.
10
Well this is a good start, but a 6 month trial period? That's way too short. People will just put a pause on making transactions and wait it out. -
"In addition to starting in only two markets, the requirement runs from March through August. "
Also, somebody might want to send a memo to the high-end builders.
"In addition to starting in only two markets, the requirement runs from March through August. "
Also, somebody might want to send a memo to the high-end builders.
8
"If Treasury officials find that many sales involved suspicious money, Ms. Calvery said, they would develop permanent reporting requirements across the country."
Why is the treasury basing further action on something that can be so easily skirted? Knowing they will be reported between March and August, why would they not buy before rule and after rule? Treasury Dept. should investigate the sales that take place 6 months before and 6 months after March through August. That's when laundering will take place.
Why is the treasury basing further action on something that can be so easily skirted? Knowing they will be reported between March and August, why would they not buy before rule and after rule? Treasury Dept. should investigate the sales that take place 6 months before and 6 months after March through August. That's when laundering will take place.
5
I fear this is going to be like the hunt for off shore funds by the IRS. Many innocent people will get trapped in the nets of this fishing expedition. Some people put their assets in LLC's to protect themselves being sued by people who use the legal system to their advantage.
2
Just like these folks right? http://www.nytimes.com/2015/12/15/us/shell-company-bel-air-mansion.html
4
God, how can you be so worried--this is only for real estate deals--you go to buy a 6 million dollar Manhattan condo, you bring six mill in cash to the real estate paragon, she says, "Look buddy. Your LLC won't do for the purchase. Who is the primary owner of this LLC?" You're the primary owner-- then give her your name. Show her your well gotten gains and voila you've got a plush apt in Manhattan replete with bed bugs and roaches. You hem and you haw and you show you've got a shell game going then your deal falls through and you get a case of affluenza, call your lawyer and banish yourself off shore until the brouhaha dies down. Sounds quite easy to me.
Let's deconstruct this:
"Use the legal system to their advantage"? You mean, to achieve a lawful verdict and then try to collect lawful damages? And that is somehow wrong?
"Use the legal system to their advantage"? You mean, to achieve a lawful verdict and then try to collect lawful damages? And that is somehow wrong?
So the Treasury announces in advance they'll be checking from March to August and if they don't find anything they'll stop checking? Why wouldn't anyone with money to launder just wait until after August?
13
Please note that our government is not tracking our west coast cities. Los Angeles, San Francisco and San Jose are awash in multi-million dollar cash real estate deals. Those cities make NYC and Florida look tame by comparison.
Tech-giants, big media tycoons and Chinese buyers are competing to see who can grab the most. It's a feeding frenzy that's creating the biggest bubble our real estate markets have ever seen and the wage earner has been kicked to the curb. Where are the feds, when we need them the most?
Enough is enough.
Tech-giants, big media tycoons and Chinese buyers are competing to see who can grab the most. It's a feeding frenzy that's creating the biggest bubble our real estate markets have ever seen and the wage earner has been kicked to the curb. Where are the feds, when we need them the most?
Enough is enough.
18
They aren't announcing that they are. Surely there is some secrecy involved in this investigation. No?
1
It's about time! This shows one how incompetent the National Security Agency is. If articles had not been written by the New York Times this ridiculous situation would still be in effect. Congratulations New York Times for bring this to the Public's attention.
12
Very exciting news and long overdue. I live in the heart of Brickell in downtown Miami, which is like living in a surrealistic, dystopian future. Glass towers with luxury rooftop pools surrounded by palm trees are everywhere, and the sound of a jackhammer is ever present as new glass monoliths are constructed as fast as they can be approved. Yet the streets are far from bustling, and when you look out your window, 3/4 of condos have completely empty balconies and dark windows.
This should be just the start. It is time to finally do something to help our middle class. A big reason our middle class feels pinched is the skyrocketing cost of housing. In Miami, it is not uncommon for people to spend 2/3 of their income on rent. We are creating an entire generation of transient, paycheck to paycheck millennials. In NYC, the situation is even worse, with an average condo price in ALL of New York city (not Manhattan) approaching $1 million ($1.9 million in Manhattan), completely unaffordable for average households and even for high income professionals. It is time to take concrete steps to allow the middle class to thrive in these cities. Obviously price ceilings are a disaster, but creative market based solutions can be found. One possibility: ownership of condos in hot markets like NYC, LA, and SF could be restricted mostly to primary residents, with a lottery system or a restricted number of units available to investors and multiple home owners.
This should be just the start. It is time to finally do something to help our middle class. A big reason our middle class feels pinched is the skyrocketing cost of housing. In Miami, it is not uncommon for people to spend 2/3 of their income on rent. We are creating an entire generation of transient, paycheck to paycheck millennials. In NYC, the situation is even worse, with an average condo price in ALL of New York city (not Manhattan) approaching $1 million ($1.9 million in Manhattan), completely unaffordable for average households and even for high income professionals. It is time to take concrete steps to allow the middle class to thrive in these cities. Obviously price ceilings are a disaster, but creative market based solutions can be found. One possibility: ownership of condos in hot markets like NYC, LA, and SF could be restricted mostly to primary residents, with a lottery system or a restricted number of units available to investors and multiple home owners.
8
Thank you for this, Michael Bloomberg.
2
It is about time.
7
Overdue, to little, way too late, and bound to be ineffective.
The miscreants will buy property in London, instead. With cash.
The US has forced small countries, such as Switzerland, into compliance, but has never dared that with the UK, which where the City has lived very well sheltering ill gotten gains from taxes.
Unless the US gets firm, the effect will be zero.
The Guardian discussed this shenanigan 5 years before the Time woke up:
The Guardian 4/13/2010:
" Estate agents report flood of Greeks paying cash for £1m-plus houses in UK as Athens desperately tries to raise revenue"
Took a long time for this to filter to the NY Times.
The miscreants will buy property in London, instead. With cash.
The US has forced small countries, such as Switzerland, into compliance, but has never dared that with the UK, which where the City has lived very well sheltering ill gotten gains from taxes.
Unless the US gets firm, the effect will be zero.
The Guardian discussed this shenanigan 5 years before the Time woke up:
The Guardian 4/13/2010:
" Estate agents report flood of Greeks paying cash for £1m-plus houses in UK as Athens desperately tries to raise revenue"
Took a long time for this to filter to the NY Times.
15
No problem with me if the scrutiny drives oligarchs to buy in other countries. We don't want their kind anyway. They don't actually live here (so they don't spend here, unless they are on vacation and they would do that anyway), but they drive prices up for everyone else. Good riddance.
2
Just a sad joke all around; how about tracking the illegal aliens in our midst? Oh, tried that and failed, so now lets track the buyers of new penthouses, a much easier proposition.
6
Very good point,.
1
We could recover a lot more of what is legitimately owed to us from the high-end offenders. We can use that money to help rebuild the society that _they_ helped to deteriorate by avoiding paying their fair share for decades.
We can't afford to repair and enhance our infrastructure? We can't afford a social safety net or to educate our kids? My ...
We can't afford to repair and enhance our infrastructure? We can't afford a social safety net or to educate our kids? My ...
1
In my town, Palo Alto, there are quite a number of "ghost houses" where sprinklers run, automatic lights go on, but no one is ever seen in residence. It's common knowledge that these are Chinese buyers investing in what they consider a sure thing. One of the houses on my street even had a lit-up reindeer on the lawn. No one has ever seen a person there nor the garbage and recycling bins put out for collection.
I personally have been affected by the fact that our city seems to have no interest in curtailing the widespread practices of digging basements in an area where there never was such a thing. Having a full basement allows these "investors" to maximize the floor-area-ratio permitted by the city on the piece of land in question. So, they hook up a pumping device and you see a hose running from the property to the storm drain. We are experiencing the worst drought in a generation, and the trees for which Palo Alto is famous are being robbed of water for their roots. How am I affected personally? Well I've lived in my house for 34 years. For 32 or 33 of those my doors worked fine. I have three doors that exit to an interior patio and a garage door that does the same. Most of these doors no longer close properly. Other neighbors have complained. The pumping of ground water causes the earth to settle and move more rapidly than normal.
I personally have been affected by the fact that our city seems to have no interest in curtailing the widespread practices of digging basements in an area where there never was such a thing. Having a full basement allows these "investors" to maximize the floor-area-ratio permitted by the city on the piece of land in question. So, they hook up a pumping device and you see a hose running from the property to the storm drain. We are experiencing the worst drought in a generation, and the trees for which Palo Alto is famous are being robbed of water for their roots. How am I affected personally? Well I've lived in my house for 34 years. For 32 or 33 of those my doors worked fine. I have three doors that exit to an interior patio and a garage door that does the same. Most of these doors no longer close properly. Other neighbors have complained. The pumping of ground water causes the earth to settle and move more rapidly than normal.
34
Trump and his plans to build a wall to keep out working people, but not a word from him about keeping out all the ill-gotten money that is smuggled and hidden in these pieces of real estate.
24
Working people ? More like job stealing theives.
3
You've got a job to do. Go out and fight for it. Take the lower wages and climb. But don't get the illegal poor mixed up with the illegal rich. And if we have the will we can prosecute both.
1
To: dr3yec from "Use to be the USA" (sic.)
Does that mean that you are willing to come over and mow my lawn each week? Are you among the hordes of citizens competing for that job?
Does that mean that you are willing to come over and mow my lawn each week? Are you among the hordes of citizens competing for that job?
1
How doing an end to all "shell corporations" force the owner to put their name on the all property they own.
Stop offering foreigner an end-around the immigrant laws, just because you have a million or so to purchase a place, should not give you instant access to citizenship
Stop all these major development deals since the end buyer are foreigner who do nothing put drive the cost for people who live here full time,
If you don't reside in a place for at least 90 days during a calendar year, then you can't own the place.
Stop offering foreigner an end-around the immigrant laws, just because you have a million or so to purchase a place, should not give you instant access to citizenship
Stop all these major development deals since the end buyer are foreigner who do nothing put drive the cost for people who live here full time,
If you don't reside in a place for at least 90 days during a calendar year, then you can't own the place.
15
In Monaco the law is that you must reside in your home six months out of every year. But we're not Monaco, we do not rent property from Prince Rainier, this is America and we do not regulate OUR citizens that way. I agree that if it is a Foreign property owner, which has become ever more common, then perhaps we should look at some new Legislation requiring actually residing in the home and having a Visa that allows one to do so.
Great article & thx to the NYT for reporting on this & keeping with the story - appreciated.
IMO, the govt would solve alot of their financial problems if they just focused on the 1% - you could throw a dart at the top earner list & find illegal businesses and/or illegal purchases - probably 99% hit rate.
IMO, the govt would solve alot of their financial problems if they just focused on the 1% - you could throw a dart at the top earner list & find illegal businesses and/or illegal purchases - probably 99% hit rate.
7
It's good to see how the Fourth Estate shines a light on the murkier aspects of the luxury real estate market, and that it has made the government start moving in the right direction.
The reporting by the NYT has been impressive!
The reporting by the NYT has been impressive!
11
Amen to that!! I love it when the 4th estate actually creates action. What this country needs is more investigative journalism because OBVIOUSLY, the citizenry thirsts for it and the Government needs to be accountable.
It took awhile, but at last I think I'm catching on. Are these are the rapists and criminals Trump keeps talking about that slip into the country? Or are these just his business associates?
18
He keeps acquires in Scotland and Ireland while they acquire in the US.
Vanity Fair has covered similar issues in the London property market. It seems to be a common situation wherever you have high-end real estate.
1
The many of you on this board who are cheering this development you need to think more deeply. I see this as a major blow to NY city and its citizens.
With this reporting requirement, an oligarch from Belarus is going to buy in London instead. A Chinese national may favor London or Singapore. The 6.5 billion yearly and all the property taxes and common charges benefit New Yorkers. These superrich are not displacing high school teachers and social workers. What they pay to maintain these properties helps middle class union members (32BJ). In addition the super-rich foreigners do not use resources like public schools, public libraries, medicare/medicaid.
If I were a Chinese national and needed to keep my privacy, I would buy in San Francisco, send my kids to private school there and hope they get into Stanford. Either way, New Yorkers (and possibly all Americans) are the big losers.
With this reporting requirement, an oligarch from Belarus is going to buy in London instead. A Chinese national may favor London or Singapore. The 6.5 billion yearly and all the property taxes and common charges benefit New Yorkers. These superrich are not displacing high school teachers and social workers. What they pay to maintain these properties helps middle class union members (32BJ). In addition the super-rich foreigners do not use resources like public schools, public libraries, medicare/medicaid.
If I were a Chinese national and needed to keep my privacy, I would buy in San Francisco, send my kids to private school there and hope they get into Stanford. Either way, New Yorkers (and possibly all Americans) are the big losers.
1
Ordinary people who want to preserve their community and its price levels *for each other* and stop this meddling by wealthy foreigners are not "big losers." I bet one of these oligarchs and playboys paid you for your post.
4
Preserve their community and its price levels "for each other." Sounds like Jim Crow or a gated community. What delusion leads you to believe that anyone has the right or ability to preserve price levels.
Sean, since you are from Fresno, not too far from Silicon Valley, why don't your preserve price levels in California and protect "each other"
Oligarchs don't pay me to spread disinformation. You have confused me with the Clintons.
Sean, since you are from Fresno, not too far from Silicon Valley, why don't your preserve price levels in California and protect "each other"
Oligarchs don't pay me to spread disinformation. You have confused me with the Clintons.
1
Which is why the feds needs to crack down in San Francisco and the bay area as well. Look, I'm Chinese-American (so this isn't about ethnicity) and among my family and friends, we are concerned that while some of these Chinese nationals immigrating over are regular people, the ones with a lot of money might have gotten it through illegal activities and are not the type of people you want here in the US. Similarly, my Eastern European friends have said similar things about some wealthy folks from their countries coming here.
The Times's series on this shady real estate scheme was positively sobering. My feelings were, if people like Trump and Cruz and their Republican extremists want to spend billions of dollars sealing our border with Mexico, they can't let wealthy interests get away with hiding their questionable real estate transactions.
Nor can they let big money have a field day. This is one example of how the 1% does so much better than the rest of us; the ability to form LLCs to hide their real estate transactions produces another financial advantage for them.
We talk a good line on homeland security, yet when push comes to shove, the wealthy get to avoid scrutiny. To the wealthy who try to avoid disclosure, you can still buy and enjoy these places during the few weeks a year that you are there; all we ask is a reasonable measure of transparency. You'll still be wealthy and powerful.
I'm glad that the Times reporting on this resulted in government action.
Nor can they let big money have a field day. This is one example of how the 1% does so much better than the rest of us; the ability to form LLCs to hide their real estate transactions produces another financial advantage for them.
We talk a good line on homeland security, yet when push comes to shove, the wealthy get to avoid scrutiny. To the wealthy who try to avoid disclosure, you can still buy and enjoy these places during the few weeks a year that you are there; all we ask is a reasonable measure of transparency. You'll still be wealthy and powerful.
I'm glad that the Times reporting on this resulted in government action.
83
Democrats are the party of the 1%, assisted by RINOs. Conservatives are opposed to crony socialism.
Funny you mentioned Trump - most certainly many of his real estate business and personal wealth has been bolstered by this shady practice.
And once the secret shell-company buyers of mega-luxury condos in New York City, Miami, Florida and the California coast are discovered, brought to light - then what? Will these forign owners have to go directly to jail and not pass GO? Will they have "get out of jail free" cards? Safe havens in America for foreign buyers of ill-gotten gains and filthy lucre in their home countries? Meanwhile the prices of apartments, condos, private homes, one-room apartments in New York, Florida and California have risen to the skies and priced "normal people" out of the market. And if the Treasury officials discover that these very huge expensive condos were bought with "suspicious money", then what? What does "permanent reporting requirements" in this imaginary rich Emerald City of Oz world mean? The US Treasury reporting what to whom?
Something smells rotten and it's not in Denmark.The whiff of real estate corruption around the most expensive and exclusive enclaves in our country is as thick as the miasma of bad air in Beijing.
Something smells rotten and it's not in Denmark.The whiff of real estate corruption around the most expensive and exclusive enclaves in our country is as thick as the miasma of bad air in Beijing.
29
Well said and spot on. You can tell Treasury all they want, but they do ZERO. You could not have said it better.
It is very rotten and it starts at the very top and who is going to stop them, any more than they stopped Madoff, even when everyone knew but looked the other way?
Thank you for writing a perfect "outline" - succinct and frankly, scary. Bad air.
It is very rotten and it starts at the very top and who is going to stop them, any more than they stopped Madoff, even when everyone knew but looked the other way?
Thank you for writing a perfect "outline" - succinct and frankly, scary. Bad air.
What would be the reason someone would want to hide their money?
It's about time we started cracking down on this. Manhattan real estate is not a bank to park and hide your foreign, ill-gotten money.
18
President Obama has never been remotely in charge of the federal bureaucracy for a single day since he got elected. We’ve had the Obamacare messups, the VA disasters, the IRS scandals and boondoggles virtually everywhere else.
In a matchup between our guys at the Treasury Department and lawyers and accountants representing the Sheiks of Araby, the drug lords of Latin America, Putin’s oil barons and China’s
rulers, what makes anyone think that Treasury will prevail over guys who don’t take extended lunch breaks?
In a matchup between our guys at the Treasury Department and lawyers and accountants representing the Sheiks of Araby, the drug lords of Latin America, Putin’s oil barons and China’s
rulers, what makes anyone think that Treasury will prevail over guys who don’t take extended lunch breaks?
5
Well, let's think about it. Is any president actually in charge of the federal bureaucracy? After all the folks are protected by civil service--- fortunately and keep things going regardless of who is president. I recall that under W, the human disaster perpetuated on the soldiers at Walter Reed took place. And this was under a president who purported to fully support the military. Hillybilly homemade armor due to the military not fully understand what they were getting into with the IEDs. And Rummie telling them pretty much just deal with it, tough sh/t.T hen there was the VA disaster that started under his admin. Oh yeah, the war we had looking for the WMDs. Haven't found them yet. My point is that stuff like this happens under any president. It is not specific to politicians that you don't like or political parties you despise. I'm sure some people wish it were that way, but it isn't.
5
Frankly, while your statement is true, we've been toeing this line for so long that even if weren't true before, it is now. When we attack government as being incompetent and stupid, then the best, most capable people don't enter civil service, and yes, the lawyers will eat their lunch.
2
I imagine the Donald's head will be exploding about now. Although bankruptcy from falling real estate prices would be nothing new for him.
10
What took them so long? It's been going on for years! The real estate prices in Manhattan are stratospheric and even those with high incomes can't afford to buy an apartment. The developers and city turn a blind eye because it generates huge revenues.
9
I think even after these people are booted, you will find plenty of legitimate rich people legally buying houses and that prices will be high. You'll want to change the zoning laws, too, but be prepared to fight against the landlords.
Get ready for another Times investigation: Prevent foreigners from purchasing when they intend to keep their main residence elsewhere.
3
A good start. LA and San Francisco, among others, are also markets that should be targeted. In addition, it's not solely a "high-end" problem. Multiple cash purchases of more modest homes/apts are also rife with laundered money.
26
i believe that most of the purchases by the rulers of third world countries
Dear Russian oligarchs, African despots, Chinese skimmers and S. American drug lords,
During the March thru August "hiatus" please consider parking your ill-gotten booty in Chicago real estate.
Thank you!
During the March thru August "hiatus" please consider parking your ill-gotten booty in Chicago real estate.
Thank you!
9
RIght!! or San Diego or Seattle, or how about a few properties under the top $ limit but still in NY or Miami? Limiting this rule by location and time, and then broadcasting it is completely ridiculous. Did the attorneys and real estate agents convince them to do it this way?
I lived in San Diego for 10 years and saw some of this. Its causing a bubble that is never good and will need to be reckoned with. The sooner the better.
I lived in San Diego for 10 years and saw some of this. Its causing a bubble that is never good and will need to be reckoned with. The sooner the better.
If your real estate appreciates over a certain $ amount in a certain amount of time the government collects taxes on that gain. Could it be that the rich are being advised by their tax attorneys to buy via shell companies to avoid any and all tax liability? If so, they should all be exposed for tax evasion. Why is it always the little guy who pays the taxes and the wealthy just pay their lawyers?
9
"If your real estate appreciates over a certain $ amount in a certain amount of time the government collects taxes on that gain."
This is not correct. Taxes are only due if gain is "realized," i.e., the property is sold. Appreciation by itself does not trigger any tax liability.
This is not correct. Taxes are only due if gain is "realized," i.e., the property is sold. Appreciation by itself does not trigger any tax liability.
To prove money laundering, the government is required to establish that the cash at issue is the proceeds of a crime. Identifying the real buyers in these cases and proving their underlying crime generally is not possible without foreign cooperation. Purchases by corrupt foreign officials are particularly difficult to investigate if they have leverage over law enforcement. In short, the prospects of U.S. prosecution of money laundering in these cases is remote. But there are obvious non-criminal alternatives. A steep tax on cash purchases of real estate by LLC's is just one example. The biggest problem with this sort of solution, I suspect, would be posed by the real estate lobby. There is nothing criminal about handling a cash transaction. And real estate companies that profit from these transactions are sure to remind us of that. Of course, they know better than any of us that when the lowly head of an LLC hands over $5 million in rubles, it's far more likely to be from the sale of Kalashnikovs than nesting dolls.
10
Only fools and real estate agents don't see these huge cash purchases for what they are - the laundering of ill gotten gains. Look at these trophy apartment buildings at night surrounding Central Park. There are hardly any lights on, nobody lives in these things.
Thank you NYTimes for making it untenable for Treasury to continue to look the other way.
Thank you NYTimes for making it untenable for Treasury to continue to look the other way.
318
That is not true. The spending habits are different in other countries, and some are notable to get financing/mortgages from US banks. Therefore all cash-buys are only way to get a property, collateralized in their home country using other assets. If they can afford central park properties, rest ensure the buyers are not poor.
No, it is none of the government's business to know everything about everyone. Just another witch hunt by an overbearing government.
Everything about everyone? How about simply finding out who's paying cash for $5 million properties. Try taking $10K cash out of the US on a plane and see how much reporting you have to do. You would have to be the world's most stupid launderer to NOT try this strategy. Too bad it took the NYTs initiative to get this off the ground - those muckrakers at it again.
8
Hmm...That explains all those mysterious men wearing Rayban sunglasses on Worth Avenue in Palm Beach last month! They found the motherload of secret luxury real estate! Scaring the beejeebers out of Bernie's old friends! It really is going to be the "Season Of The Devil" this year!
1
Obvious as economies in emerging markets crumble, as they face debt denominated in US dollars, one would expect a lot of Chinese investment as well as Brazil etc. I would imagine the IRS wants to determine how they will tax non residents. Big issue is Banks love this money flowing thru their banks. I would also imagine they understand how to first get a deposit off shore then move it to the US when some or all is needed.
1
While I am all for the tracking and convicting of criminals, I really wish the government at all levels would stop using anti-terrorism laws to pursue crimes other than terrorism.
Post 9/11, we decided that terrorism was threatening enough to give our government broad and substantial new powers to combat it, with both actual combat and the legal system. Using those powers on other matters is an abuse of our trust. If "FINCEN" and other agencies would like the powers to use in non-terrorism cases, they should apply to Congress for them.
Post 9/11, we decided that terrorism was threatening enough to give our government broad and substantial new powers to combat it, with both actual combat and the legal system. Using those powers on other matters is an abuse of our trust. If "FINCEN" and other agencies would like the powers to use in non-terrorism cases, they should apply to Congress for them.
The US government is clueless; why would you announce a specific end date to the program in August? The drug dealers, criminals and illegitimate pols will simply wait a few months and purchase their properties after August.
RE isn't the only place the wealthy of foreign countries are stashing their money; the Treasury should look into fat life insurance policies purchased by trusts incorporated domestically by foreigners, that's how you see some unscrupulous agents getting hundreds of thousands or millions of commissions each year.
RE isn't the only place the wealthy of foreign countries are stashing their money; the Treasury should look into fat life insurance policies purchased by trusts incorporated domestically by foreigners, that's how you see some unscrupulous agents getting hundreds of thousands or millions of commissions each year.
5
Too little, too late.
3
Ahhhh, no wonder that in the state of Montana real estate sales prices are kept 'private', as the realtors like to say, or SECRET as the rest of us call it.
When left to the states (i.e. real estate lobbyists), it seems like a great way to create a safe haven for money laundering - no suspicions get raised and realtors are all too happy to take their fat cut, no matter how dirty the money.
This country needs a thorough housecleaning.
When left to the states (i.e. real estate lobbyists), it seems like a great way to create a safe haven for money laundering - no suspicions get raised and realtors are all too happy to take their fat cut, no matter how dirty the money.
This country needs a thorough housecleaning.
18
The buyers will find a loophole around this requirement as well, only that they will have to pay an additional fee for this service. Also what about enforcing these rules in other parts of the country.
Well if they want to catch tax cheats in this country how about investigating luxury car purchases/leases/financing and making car buyers provide soc sec #'s or tax id's at the point of purchase.
Well if they want to catch tax cheats in this country how about investigating luxury car purchases/leases/financing and making car buyers provide soc sec #'s or tax id's at the point of purchase.
Hunting taxes will kill these markets.
Isn't it time we acknowledged that taxes are a relic of commodity based money, now an anachronism in the age of electronic money?
Why destroy the economy to feed bureaucracies living in the dark ages
Isn't it time we acknowledged that taxes are a relic of commodity based money, now an anachronism in the age of electronic money?
Why destroy the economy to feed bureaucracies living in the dark ages
1
Please, tell us, how do we pay for a defence force without taxes?
1
"Defence force"? Yeah, ok. Without government stealing everyone's money I guess they could not afford to kill so many people all around the world. Sounds like a good thing to me.
There goes Sean Penn's dream of selling his New York apartment to El Chapo. (Unless they close the deal by February 29th, or after August 31st.)
3
Well, done, once again,NYT!
It certainly is about time. It should go far beyond just in cash purchases. At the very least, it should involved full homeland security check, especially examining if clients are involved in human trafficking, human rights violations, nefarious militaries, arms trade, slavery work conditions. Now, it's basically nearly automatic US residency if the $$ is sufficient.
So great is the hunger of the real estate industry for foreign loot, there is little in the way of surveillance by the US Government or here by NYS or NYC. As a result, Manhattan/Brooklyn has now become a mini-London except the the spending spree is not just confined chiefly to the kleptocrats of the former Soviet Union. It's truly global as the NYT investigations disclose.
It's unfortunate that Mayor de Blasion hasn't acted on this immediately on assuming office. The NYPD certainly has some capabilities as well to investigate these foreign real estate speculators.
It certainly is about time. It should go far beyond just in cash purchases. At the very least, it should involved full homeland security check, especially examining if clients are involved in human trafficking, human rights violations, nefarious militaries, arms trade, slavery work conditions. Now, it's basically nearly automatic US residency if the $$ is sufficient.
So great is the hunger of the real estate industry for foreign loot, there is little in the way of surveillance by the US Government or here by NYS or NYC. As a result, Manhattan/Brooklyn has now become a mini-London except the the spending spree is not just confined chiefly to the kleptocrats of the former Soviet Union. It's truly global as the NYT investigations disclose.
It's unfortunate that Mayor de Blasion hasn't acted on this immediately on assuming office. The NYPD certainly has some capabilities as well to investigate these foreign real estate speculators.
5
perhaps someone should ask Donald Trump how he feels about this...
4
Anything to take down the high-flying Realtors and their fabulous commissions. I'm sure they are all horrified to hear that much of their income is likely dirty money. Please come out to Silicon Valley next.
13
Never knew that drug lords, corrupt government officials, etc., had such an easy way to launder their ill-gotten gains. Should have cracked down on this years ago.
5
Treasury won't necessarily learn who the real property owners are by simply asking for the names of the LLC members or investors. The owner of the LLC could be an offshore company whose owner could be another offshore company or trust, and there will be no record of the actual beneficial owner because the only individual identified will be an offshore lawyer required by foreign law not to discuss anything about her clients.
6
Precisely! An LLC could be comprised of dozens of members who are all foreign corporations or other entities. Same goes for partnerships. This is such a negative article, it might as well have been written by the government. Partnerships, LLC's, etc are legitimate business entities, calling them "shell companies" is just ridiculous. The US invented the money laundering laws just to control people, the real criminals are rarely ever caught. Just another scam by your uncle Sam.
Fine. No name, no sale.
3
"But a top Treasury official, Jennifer Shasky Calvery, said her agency had seen instances in which multimillion-dollar homes were being used as safe deposit boxes for ill-gotten gains."
So, in a typical federal government fashion, because a few break a law, ALL must pay the price.
Perhaps, Uncle Sam, if you'd concentrate more on actually catching criminals than painting all with a broad brush, you might be more effective.
I know; "more effective" is a word combination unknown in government.
So, in a typical federal government fashion, because a few break a law, ALL must pay the price.
Perhaps, Uncle Sam, if you'd concentrate more on actually catching criminals than painting all with a broad brush, you might be more effective.
I know; "more effective" is a word combination unknown in government.
2
It's about time. Come and investigate Los Angeles, San Francisco and Honolulu pronto. The public deserves to know what's been going on right under their noses.
19
Who are my neighbors
A fair question for buyers
to ask a seller
A fair question for buyers
to ask a seller
3
They are seedy gamblers driving the ante up and playing with mattress cash.
They make the market and block the sunlight in the Park.
It is likely many will never set foot in their prize property.
They make the market and block the sunlight in the Park.
It is likely many will never set foot in their prize property.
That sound you just heard is the NYC real estate bubble popping.
19
This is long overdo. The ability of the rich to distort real estate markets and make housing unaffordable needs to be stopped.
15
Why are shell companies allowed to buy real-estate at all? Anywhere in the United States? These small gestures in Miami and New York are a good step in the right direction, but the whole secretive buyer thing is clearly a money laundering boon for highly unsavory people: drug dealers, corrupt officials from corrupt regimes, terrorists etc...Let the US government put an end to it. It's a matter of national security.
215
As long as we're at it, we could clean house as well. That would be the House and Senate too. Perhaps there is or isn't much there, but a search for real-estate and other asset-owning LLCs and the like plus offshore accounts beneficially owned by members of Congress would eliminate doubts as to the integrity of our nation's finest.
1
There are many legitimate reasons to buy through an LLC's or other such entity. There are tax advantages for good reason -- in a down real estate market, vacant high value property generates no property taxes for the local government and, in places like Detroit, vacant real estate leads to urban blight. So incentives to purchase are beneficial. Limited liability serves the same purpose. Individual buyers have a legitimate right to privacy as well. A wealthy real estate investor may want to buy up a block, and if that is a university that is planning an expansion , disclosure of its identity could result in its being held hostage by the owner of the last property on that block . Such "extortion" is never fair. There are plenty of legitimate reasons to allow nominee purchases. In isolation, such purchases are common and often constructive. It's when you combine nominees with huge cash outlays that criminal conduct is pretty much universal.
1
Because people have a right to privacy? I am amazed that you would disregard such a fact. It's naive and ignorant to assume that secretive buyers are somehow drug dealers or corrupt officials. That's so short sighted.
real estate agents everywhere but ny and florida are drooling
Perhaps the Bolsheviks were on to something when they confiscated the luxury real estate in Russia and moved in the working people.
5
If the czarist government had implemented needed reforms and regulations in a timely manner, there would not have been a Bolshevik Revolution.
"In addition to starting in only two markets, the requirement runs from March through August. If Treasury officials find that many sales involved suspicious money, Ms. Calvery said, they would develop permanent reporting requirements across the country."
Why in the world of good law enforcement pactice is this being announced? It tells those wishing to not be discovered exactly how to accomplish that: Just wait.
Indeed, why is this being announced at all? That has as much sense as tell a suspect, "We're going to stake out your residence, so be careful!"
Treasury should have been doing this, in secret, for years -- and should have kept their starting to do so secret!
Dumb dumb dumb.
Why in the world of good law enforcement pactice is this being announced? It tells those wishing to not be discovered exactly how to accomplish that: Just wait.
Indeed, why is this being announced at all? That has as much sense as tell a suspect, "We're going to stake out your residence, so be careful!"
Treasury should have been doing this, in secret, for years -- and should have kept their starting to do so secret!
Dumb dumb dumb.
8
The police state is growing. Wake up America before it's too late.
1
Great job - NYT!
2
Why wasn't this happening years earlier? The price of real estate in Manhattan is ridiculous and has pushed middle income and the merely wealthy from the ability to purchase homes there. Crack down on these tax cheats and make them pay, and then do this across the entire country. I'm sure this is a problem in San Francisco and Seattle, to name but a few.
4
There will be some mighty powerful interests resisting this on many levels. Hats off to the New York Times for helping to expose the truth.
I for one would like to see the NY Times do some in depth reporting on 421-a tax breaks. Why are developers and the uber-wealthy subsidized on property taxes at the expense of everyone else? When will the billions in new taxes come online when the subsidies from 2000 - 2008 boom era expire?
Keep up the heat!
I for one would like to see the NY Times do some in depth reporting on 421-a tax breaks. Why are developers and the uber-wealthy subsidized on property taxes at the expense of everyone else? When will the billions in new taxes come online when the subsidies from 2000 - 2008 boom era expire?
Keep up the heat!
8
What happens when they find one of these buyers? Does the government confiscate the apartment and sell it at an auction? Will this cause the real estate bubble to collapse and will the price of lower level real estate deflate?
Great news indeed -- but it shouldnt be hard to skirt this by using someone else in the LLC (with that someone else getting some bucks on the side), or a nephew or etc. These new rules clearly need to be there but there is still room for ownership of the LLC to be murky as needed.
Please come to Seattle, Treasury!
23
San Francisco too!
4
Perhaps they might consider checking the income and primary-residential status of rent-controlled tenants, while they are at it.
6
After all this time and all the red flags that have been raised about the cash deals and the lack of transparency in luxury housing market investigators have finally decided to investigate. What took them so long?
I can understand that real estate sales people of luxury properties would not like what they would consider an intrusion into their cozy market. By looking away and not asking hard questions, real estate sales people of these luxury properties have provided money laundering services and the means for hiding illicitly-obtained wealth. Strong incentives to do this ... the income sales people receive is enormous. Plus, illicit sales push up the prices of luxury housing generally. A lucrative situation for all.
Targeting these two markets won’t eliminate purchases of property for illicit purchases. Buyers will likely go elsewhere to launder money and hide their ill-gotten gains. If we don’t shut down real estate purchases for those using dark money, then every market in the US will need to begin to report dark money purchases of real estate … particularly million dollar plus cash purchases. This will end a “good thing” for the real estate sales people of luxury properties and it could cause a significant price drop in luxury housing and maybe curtail the building of luxury property buildings in several real estate markets. And interestingly, it could reveal the degree to which the luxury property market has been propped-up by dark money transactions.
I can understand that real estate sales people of luxury properties would not like what they would consider an intrusion into their cozy market. By looking away and not asking hard questions, real estate sales people of these luxury properties have provided money laundering services and the means for hiding illicitly-obtained wealth. Strong incentives to do this ... the income sales people receive is enormous. Plus, illicit sales push up the prices of luxury housing generally. A lucrative situation for all.
Targeting these two markets won’t eliminate purchases of property for illicit purchases. Buyers will likely go elsewhere to launder money and hide their ill-gotten gains. If we don’t shut down real estate purchases for those using dark money, then every market in the US will need to begin to report dark money purchases of real estate … particularly million dollar plus cash purchases. This will end a “good thing” for the real estate sales people of luxury properties and it could cause a significant price drop in luxury housing and maybe curtail the building of luxury property buildings in several real estate markets. And interestingly, it could reveal the degree to which the luxury property market has been propped-up by dark money transactions.
5
Another act of desperation from a government that is way beyond bankrupt
2
The ultimate reward in journalism: when an investigation of systemic wrongdoing leads to meaningful change. Bravo, Times.
Just as technology and shell companies can be used to mask identity, they also leave traces for intrepid reporters and bloggers to pursue and expose. Once discovered, the electronic evidence is harder to refute. It seems like this new federal system will ensure that there are even more dots to connect.
I think this pattern will continue to build, both on the sophisticated concealment and news-digging ends of the spectrum. The X factor will be the rise of block-chain technology (the same technology that makes bitcoin possible) and its use of universal, publicly-visible registries for properties. The Economist magazine recently devoted a special feature about how this technology promises to upend the traditional real estate title industry around the world. My hope is that these new registries add new clarity and better protect ownership rights and make good governance easier than ever.
Just as technology and shell companies can be used to mask identity, they also leave traces for intrepid reporters and bloggers to pursue and expose. Once discovered, the electronic evidence is harder to refute. It seems like this new federal system will ensure that there are even more dots to connect.
I think this pattern will continue to build, both on the sophisticated concealment and news-digging ends of the spectrum. The X factor will be the rise of block-chain technology (the same technology that makes bitcoin possible) and its use of universal, publicly-visible registries for properties. The Economist magazine recently devoted a special feature about how this technology promises to upend the traditional real estate title industry around the world. My hope is that these new registries add new clarity and better protect ownership rights and make good governance easier than ever.
2
A good first step. Now just stop purchases over $1M by non-residents. Lots of countries limit purchases by non-citizens. This situation is beyond despicable. It is total banana republic and the current administration fostered it with Chinese buyers in particular.
26
Exactly. Many other countries restrict purchases by foreign buyers--for good reasons.
Virtually no high-level Wall Street executives were prosecuted for what they did to cause the 2008 financial crash. Do we really think that those hidden buyers in positions of power will fare differently? I'm not holding my breath.
30
In addition to being a method of laundering money or enabling a citizen of another country to "park" some money in the US as a form of insurance in the event of political unrest in his/her home country, the use of an LLC with undisclosed members to purchase high-end real estate also is a good way for the wealthy to avoid inheritance taxes.
All the wealth parents have to do is create an LLC in which their children also are members with a provision in the LLC operating agreement that in the event of the death of any member his/her interest shall be divided among the other members, and in effect the property will be transferred to the children without any taxable event upon the death of the parent.
All the wealth parents have to do is create an LLC in which their children also are members with a provision in the LLC operating agreement that in the event of the death of any member his/her interest shall be divided among the other members, and in effect the property will be transferred to the children without any taxable event upon the death of the parent.
16
Finally we are exposing the .01%. Way to go NYT.
16
This is why investigative journalism matters. And why a free press matters. The press must be free of political, state and corporate controls and undue influence. (Nice job, NYTimes!)
114
The New York Times is a national treasure. They have proved over and over again, that the leg work and heavy lifting by journalists and researchers can lead to significant policy changes at the local, state and federal level. Calling The NYT a newspaper or source of information is reductive. In a new "post-paper" era, it's apparent their organization is so much more.
25
Nothing has happened as of yet. Nothing to get excited about until some real change occurs.
So, will my daughter, husband, and two kids be able to move out of their tiny, overpriced Brooklyn apartment?
7
They are allegedly going to track them not stop them from buying. Heck, DeBlasio will probably figure out a way to give them a tax break!
2
Cheer all you want, there is nothing new here and you are dreaming if you believe special privileges for the super wealthy will be curtailed. And sad to say if the Times or any other news media really wanted to rock the boat of the super rich it would not have to look very far to do it. If you think about it for a moment you will know that they do not live in the world you and I do.
10
Yes. I would think they would simply delay their purchase until after the requirement run - March through August - or buy in a different market. It's not rocket science to do a end run around this one.
The government already has this information, of course, it is just secret and not usable in court. That is, with the NSA monitoring all e-mails, cell phones, and network traffic (and able to decrypt all but the strongest encryption), they doubtless have databases with this information. Maybe they can use them as a cross-check on compliance with disclosure laws, i.e., sending tip to law enforcement on whom to investigate?
3
I wonder how many have bought into Trump-owned buildings? Someone should ask the Donald and also what he thinks of the regulation. Perhaps he can build a wall to keep out illegal money too?
80
Probably not many- Trump builds ugly structures and markets them using his name, quality is questionable.
2
soros ain't gonna approve.............
4
Now how will they sell those tacky condominium units on West 57th Street?
Those are money laundering instruments. No one actually wants to live there.
Those are money laundering instruments. No one actually wants to live there.
6
The authorities have just figured this out? Money laundering and tax evasion are two of the major reasons for most offshore money being spent on high end housing and luxury boats.
It's not investment, it's moving it away from the scene of the crime.
It's not investment, it's moving it away from the scene of the crime.
237
You forgot: art, antiquities, collectible cars, jewelry, watches, historical items, guns, just to mention a few.
2
More intrusion and snooping by the government. I don't want them in my affairs, and feel that they or anyone else has a right to know what houses I own or other assets I have. Enough with big brother.
19
Unless you're laundering your illicit millions in high-end real estate, I don't see why you should be concerned. And if you are, then I'm sure you have other means to express your distaste besides the NYT comment section. Take it up with your lawyer, perhaps?
7
Then don't ask for their protection either!!!! Seriously?
7
To DRS:
What if the source of the laundered money was from a drug king pin? What if came from oil transactions by ISIS? What if came from the theft of some of your assets? Just curious.
What if the source of the laundered money was from a drug king pin? What if came from oil transactions by ISIS? What if came from the theft of some of your assets? Just curious.
10
Many of these luxury properties were developed using 421a tax abatement. This naked abuse of a tax law meant to encourage residential development has short changed NYC government and NYC true residents of legitimate market property taxes. The poster child for this sham is a $100,000,000 apartment with an effective rate of 0.017 percent of its sale price, even without the 421a exemption the bill would only be $376,472, for an effective rate of just 0.376 percent.
Per the NY Post: "By contrast, the owner of a nearby condo at 224 E. 52nd St. that recently sold for $1.02 million is paying an effective rate of 2.38 percent, or $24,279"
Per the NY Post: "By contrast, the owner of a nearby condo at 224 E. 52nd St. that recently sold for $1.02 million is paying an effective rate of 2.38 percent, or $24,279"
9
Not to be too specific but as China and Saudi Arabia's economies are tanking what better haven than US real-estate to flow the billions as they have been and are doing now. Nothing wrong with this I guess as allegiance swings toward the almighty dollar and let's the country be damned .
1
People here are bemoaning that IRS has acted so late. Not really. Where warranted IRS can always slap a tax lien on the property and grab it. Do them something. Can't move that property offshore.
4
Tiny Bornholm in the Baltic Sea has a rule that you can't buy property if you do not plan to live there (not sure for how much of the year you have to live there). Wouldn't that be a good idea here?
9
The key requirements, in my estimation, is providing who are the individuals behind all these high-end purchases are. Either by showing how they managed to buy the unit in cash, where the cash is kept, ID (passport, driver's license, certificate of birth), and how they earn (or "unearn") their wealth.
Nothing should be kept secret. If my individual name can be splattered on tax records because I don't have the means to keep it secret because I don't have a LLC to hide behind, then they shouldn't be able to either.
And I have no sympathy for those real estate professionals who have enjoyed those commission sales without the scrutiny us mere mortals do.
Nothing should be kept secret. If my individual name can be splattered on tax records because I don't have the means to keep it secret because I don't have a LLC to hide behind, then they shouldn't be able to either.
And I have no sympathy for those real estate professionals who have enjoyed those commission sales without the scrutiny us mere mortals do.
10
This news will no doubt be affront to the sensibilities of the working class Republican rank and file...because these luxury properties are surely being bought by the tide of Central American "Illegals" crossing our southern border. Don't let their appearance as day labors fool you!
5
Only around 35% of the "extreme" luxury market of NYC is from the USA. The remaining 65% is from overseas with around 40% from China. How do the overseas buyers fall into the plan?
2
Duh! This has been going on in plain sight for 25 + years ...........
5
And this is illegal?
1
This is also a common problem in Vancouver, Canada, and has driven the price of real estate beyond reach for most local buyers and families.
25
Yet again Mayor DeBlasio came up short--pretending to do something about this problem yet kowtowing to Developers!
Great work NYT--my subscription is money well spent. But keep an eye on Treasury to make sure this program doesn't melt away somehow, somewhere....
Great work NYT--my subscription is money well spent. But keep an eye on Treasury to make sure this program doesn't melt away somehow, somewhere....
9
Yayyy! Glad to see the NYT stepping up and looking into the matter. This is good.
5
Claude Rains did the original research and established that what was going on in Casablanca a half century ago is what is occurring here now:
Rick: How can you close me up? On what grounds?
Captain Renault: I'm shocked, shocked to find that gambling is going on in here!
[a croupier hands Renault a pile of money]
Croupier: Your winnings, sir.
Captain Renault: [sotto voce] Oh, thank you very much.
Rick: How can you close me up? On what grounds?
Captain Renault: I'm shocked, shocked to find that gambling is going on in here!
[a croupier hands Renault a pile of money]
Croupier: Your winnings, sir.
Captain Renault: [sotto voce] Oh, thank you very much.
4
Great reporting!
9
any cash movement > 2900 is tracked by th govt
but a guy can buy a multi-million dollar condo w satchels full of cash and no problema
see, folks, this is why crooks love america
you make it soooo easy for them
but a guy can buy a multi-million dollar condo w satchels full of cash and no problema
see, folks, this is why crooks love america
you make it soooo easy for them
7
There are many legitimate reasons for choosing to buy a house through an LLC. While property records have always been public, the increased availability of those records over the internet has created a privacy issue. Do you want everyone you know, plus marketers, to know your exact address and how much you paid for your house? If you don't, the only way to keep those details private is to buy through an LLC. Sure there may be a few foreign criminals who also take advantage of this process, but I would be shocked if those were a significant portion of all LLC purchases, and I don't think this NYT series has done a fair job of discussing the legitimate privacy interests at stake.
1
It's about time! One only hopes that this program has some teeth in it, and will have sufficient longevity to do some good.
4
It's about time. I'm tired of these luxury high-rises taking up our skies, driving up real estate prices across the city, even while they sit empty year-round. They turn neighborhoods into shells of their former selves. Worse is knowing that many of these units are used to launder ill-gotten gains of corrupt foreign politicians, tycoons, and thugs.
Something has to be done about it. I'm glad the Treasury Department is making an attempt, finally.
Something has to be done about it. I'm glad the Treasury Department is making an attempt, finally.
344
I like to refer to these mega-scrapers for the rich as "Pigs in Space!"
3
No, this is a massive overstep of the role of the federal government. Typical of the Obama regime.
You should interview Mr. Trump, the Greatest real estate manager of all times (his opinion). Ask him what he would do about this problem if elected President.
Even a hick in Dogpatch KNOWS about the dark, seedy underbelly of these shell companies. I know nothing about real estate, but have known about laundering dirty money via uber expensive real estate. Pablo Escobar owned real estate in the U.S., he's a boy scout compared to some of these buyers, to be sure.
9
2 markets and "the requirement runs from March through August."
Might be instructive to look for an up-tick in shell purchases in the two markets before and after, as well as a diminution during the requirement run.
Might be instructive to look for an up-tick in shell purchases in the two markets before and after, as well as a diminution during the requirement run.
2
This operation is long past due.
Not only are many buyers laundering money by purchasing multi-million dollar properties, they are getting a significant break in taxes which then has to be made up by the middle and lower class taxpayers!
That's an outrage!
Not only are many buyers laundering money by purchasing multi-million dollar properties, they are getting a significant break in taxes which then has to be made up by the middle and lower class taxpayers!
That's an outrage!
10
This does not just speak for itself, it screams for itself: The Fix is in. All around you, in ways big and small, the fix is in. In ways seen and unseen, the fix is in.
3
The first question..what took the government so long to implement this regulation. It should of been done decades ago.
That said, if the title companies must name the true owners of the properties, the regulation should include incarceration time for those who submit false or otherwise mis-leading information..either by intend or other.
That said, if the title companies must name the true owners of the properties, the regulation should include incarceration time for those who submit false or otherwise mis-leading information..either by intend or other.
4
Another smokescreen used for those who questioin in a cursory manner rather than in depth to be satisfied. As an earlier commenter remarkeed "nothing to see here"........ time to move on.
About time. The US should not be a repository for blood money stolen from people by corrupt governments abroad, or laundered by drug lords.
And real estate developers should not be encouraged to build massive luxury complexes that few people actually live in, cluttering our cityscapes and diverting resources and space from affordable residential housing.
Bravo, New York Times, for exposing this and bringing it to the government's attention. Let's hope the Treasury can root out this dirty-money haven before the wealthy's paid-for politicians pass laws to protect the corrupt and put a stop to these investigations.
And real estate developers should not be encouraged to build massive luxury complexes that few people actually live in, cluttering our cityscapes and diverting resources and space from affordable residential housing.
Bravo, New York Times, for exposing this and bringing it to the government's attention. Let's hope the Treasury can root out this dirty-money haven before the wealthy's paid-for politicians pass laws to protect the corrupt and put a stop to these investigations.
308
Understand, none of this happens in a vacuum.
Every transaction has to be approved, any cash transfer of over $10K is allegedly scrutinized by federal banking authorities.
If dirty deals are going down, they are going down with the full knowledge and consent of many, many public officials.
Every transaction has to be approved, any cash transfer of over $10K is allegedly scrutinized by federal banking authorities.
If dirty deals are going down, they are going down with the full knowledge and consent of many, many public officials.
Another example of Dark Money, like Jane Mayer describes in her book about the Koch Brothers.
Trump thinks women using the toilet are disgusting. What I consider disgusting is people who have so much money they can pay huge sums of cash for real estate while others can barely pay the monthly rent for a small apartment.
Trump thinks women using the toilet are disgusting. What I consider disgusting is people who have so much money they can pay huge sums of cash for real estate while others can barely pay the monthly rent for a small apartment.
17
About time, long past time, money laundering to buy real estate is a terrible economic drain on all of us and needs to be stopped rather than having real estate folks brag about the practice.
16
... and how many all-cash sales of luxury Manhattan properties has one of the largest New York real estate magnates, Donald Trump, been involved with ??
17
This could be why the current government has suddenly decided to do this.
They want to hurt real estate developers who haven't done anything illegal but are making a lot of money off this market. It's partly political!
They want to hurt real estate developers who haven't done anything illegal but are making a lot of money off this market. It's partly political!
1
Well I guess NYC needs to be investigated since they have made a killing on real estate taxes. Let's open the government's books and records and see what has been going on. Oh no, you can't do that as only non-government entities can do evil, why the government is as pure as snow!
Starting now they should have been doing it for years. We have been letting the Chinese do it left and right and we have done nothing to stop them either. We are essentially putting up our country for sale and we the people just sit here and allow it to happen. What makes you think our govt will stop it either they are bought and paid for.
53
Cannot anyone keep his hands to himself and mind his own business!
1
But how else would all of the parasitic, self serving bureaucrats that infest all levels of government ever justify their useless existence?
2
Uh, not if illegal gains are being hidden this way, or legal gains are avoiding taxes, etc. Illegalities should be found and prosecuted.
What is your logic here?
What is your logic here?
The criminals should, of course, be a priority. But also investigate how these LLCs are used as tax dodges. Indeed, I suspect that the real crooks are those pin-stripped individuals who help put these deals together.
105
A little bit late. About 20 years late. Don´t you think?
68
It's never too late, Charlie. Never too late to do the right thing. Public outrage is driving it and reliable media like the New York Times and Politico are putting light on it. Great News!
4
True. I hope they start acting as soon as possible and let us know who these people are.
1
Good idea.
3
Good, because something fishy has been going on. Some of the most desirable properties are selling for multiples of what they did just a few years ago according to Zillow.com That's either a sign of the Mother of all Real Estate Bubbles, or shady buyers not really caring what it costs so long as they offshore their cash. Probably both. I randomly picked property (http://u.zillow.com/p28JFf/) and it has tripled in price since its last sale in 2010. Please look at any other marquee property in the city and tell me you can't see this trend. With a flood of new supply on the market in just the last few years--it felt like construction cranes were the largest demographic group in the city--this pricing trend defies all market logic.
109
..... . . and then the city uses all those higher sale value to jack up everyone's property tax--right down to the small property owner who keeps watching taxes go higher. Any wonder the city is sitting pretty with so much cash?
1
Same thing is happening in Boston.
I already foresee several loopholes to allow hidden buyers to avoid scrutiny:
To avoid an "all in cash" transaction that would trigger the reporting requirement, have the LLC pay 99.9% of the price in cash and .1% some other way, such as financing by the seller.
Instead of having beneficial owners who each own at least 25 percent of the purchasing entity, simply divide ownership of the entity among five family members, each owning 20%. If you don't have enough trustworthy family members, use good friends or lawyers to come up with five people.
Give the money to a friend or lawyer to purchase the residence so that their name is reported to the feds. Then have them transfer the title to you.
Give the money to a friend or lawyer to purchase the residence so that their name is reported to the feds. Then sign an agreement stipulating that you are allowed to live there (i.e., a lease). The agreement can also require that when you're ready to move out, the residence must be sold, with the proceeds reverting back to you.
Of course, the Treasury Dept.'s rule might include details that close off some of these loopholes. However, the description in this article makes it seem like something that would be easy for crafty buyers to circumvent.
To avoid an "all in cash" transaction that would trigger the reporting requirement, have the LLC pay 99.9% of the price in cash and .1% some other way, such as financing by the seller.
Instead of having beneficial owners who each own at least 25 percent of the purchasing entity, simply divide ownership of the entity among five family members, each owning 20%. If you don't have enough trustworthy family members, use good friends or lawyers to come up with five people.
Give the money to a friend or lawyer to purchase the residence so that their name is reported to the feds. Then have them transfer the title to you.
Give the money to a friend or lawyer to purchase the residence so that their name is reported to the feds. Then sign an agreement stipulating that you are allowed to live there (i.e., a lease). The agreement can also require that when you're ready to move out, the residence must be sold, with the proceeds reverting back to you.
Of course, the Treasury Dept.'s rule might include details that close off some of these loopholes. However, the description in this article makes it seem like something that would be easy for crafty buyers to circumvent.
61
Your comments are sadly accurate. But I worry about the commenters who pretend to be outraged and offended by those of us who aren't willing to give an automatic free pass to anyone who can buy a 5-mil+ piece of real estate. The robber barons' attitude - "how dare you peasants criticize ME?" seems to be alive and well among spokesmen for the rich and pseudo-rich.
1
I see a whole bunch of apartments being divided and selling for 299,999,999....then being recombined.
32
With what end in mind? It's one thing to track transactions and another altogether to do something about them.
6
Many of the owners are foreigners who through cronyism or other dubious or illegal means have have amassed their fortunes at the expense of their fellow citizens. Exposing their ownership of real estate in other countries would benefit those in their home countries.
9
@Blair: Identifying real estate bought with the proceeds of criminal activity could also help criminal investigations, legal proceedings, and asset seizures in this country. I imagine that that is the end that the feds have in mind.
A huge THANKS to the New York Times for their investigation of this scandalous tax-evasion behavior. Right now "The use of shell companies in real estate is legal," WE must DEMAND that they be subject to the same rules as as sub-chapter S corporation. I know a number of average Americans who are trying to evade taxes by using LLCs and when I started my tiny little sole-owner business a few years ago the "mentors" at the local Small Business Administration suggested I evade personal responsibility by forming an LLC. It's unamerican and not acceptable. Who, again, are the takers? Not supposed food stamp welfare queens. It's the wealthiest corporate taker welfare queens.
208
Several years ago, I advised a friend to choose an attorney who was involved in a city council and on a committee that dealt with inner city real estate. I thought this would benefit her in her purchase of a single family home to turn into a care home for the elderly in a neighborhood which had balked at such plans before. At that time, LLC's were fairly new and that attorney placed her home purchase into a sub-chapter S partnership. I thought that incredibly unsophisticated of that attorney at the time, as what if one of the elderly residents with dementia stepped out of the home un-noticed and something happened to cause my friend to be sued and lose her business? Years later, I have become more cynical and wonder if the sub-chapter S rather than LLC was a deliberate, rather than naïve, unsophisticated choice.
just because it looks like and smells like money laundering...doesn't make it so! too little, too late.
1
IRS claims to have personnel shortages. The fact is that tax auditors bring in many times what they are paid. IRS needs to hire more auditors and employ them to go after higher-bracket taxpayers. Better to audit 38% taxpayers than 8%'er. IRS recovers more.
The reason they don't is because taxpayers squawk to their Congresspeople and IRS doesn't want to hear from Congresspeople.
The reason they don't is because taxpayers squawk to their Congresspeople and IRS doesn't want to hear from Congresspeople.
13
You do realize that the IRS can't just "..hire more auditors..." The IRS is a government agency and the budget has been cut which has lowered the numbers of auditors.That said even if they had more auditors they would still continue to fish in small ponds for tax violators who may owe hundreds or a few thousand dollars rather than go deep sea fishing for the big bucks.
3
It costs more to go after wealthy people because they have lawyers the IRS has to fight.
4
Never fear. The Republican Congress cut the IRS budget for fraud investigations, after they turned up shell 501(c) organizations that were used to fraudulently fund election campaigns, under names with variations on "Tea Party."
Now is the best time to commit tax fraud, according to IRS Taxpayer Advocate Nina Olson, since the IRS doesn't have the resources to check your filings.
https://www.irs.gov/uac/Newsroom/National-Taxpayer-Advocate-Delivers-Ann...
And tax fraud is easiest for the rich. Crime does not pay at your level.
Now is the best time to commit tax fraud, according to IRS Taxpayer Advocate Nina Olson, since the IRS doesn't have the resources to check your filings.
https://www.irs.gov/uac/Newsroom/National-Taxpayer-Advocate-Delivers-Ann...
And tax fraud is easiest for the rich. Crime does not pay at your level.
3
Why is the U.S. Government always a day late and a dollar short? It's sad that with a budget in excess of 1 trillion dollars per year we have to rely on the New York Times to uncover the criminal cesspool under practically every business enterprise in this country.
146
Ask ted cruz and Donald trump. I'm confident they can provide the right answer.
3
Lockheed Martin and your granny don't do these investigations. Seriously, most of our budget is wasted on defense or spent on the old and sick.
1
Hey, wait a minute. Blaming government is way too easy and not terribly productive. A government can only do what its elected representatives want to do. We the American people elected a bunch of venal, self-interested idiots into Congress, and they, unsurprisingly, act like idiots. If a government is small enough to drown in a bathtub, well, it can't do everything. In a democracy, the people hold the ultimate responsibility. If we don't like the way we're being governed, we need to get involved with the political process, run for office, or at least vote. Every state, local, "off-year" election, I'm shocked at how few people vote.
5
The Treasury Dept's decision, if overdue, is welcome and clearly in the nation's interest!
Why should anonymous individuals or shell corporations, whose sole purpose is to conceal ownership, be allowed to buy and control large amounts of anything in the nation? This is a potential threat, as well as an absurd haven for money-launderers and international criminals of all sorts.
I hope the Times, which detailed this situation with its long investigative series, will keep "shining light" on these "darkest corner of the real estate market" until the truth is revealed.
Why should anonymous individuals or shell corporations, whose sole purpose is to conceal ownership, be allowed to buy and control large amounts of anything in the nation? This is a potential threat, as well as an absurd haven for money-launderers and international criminals of all sorts.
I hope the Times, which detailed this situation with its long investigative series, will keep "shining light" on these "darkest corner of the real estate market" until the truth is revealed.
66
Great news. If only the UK government would also apply its own AML laws to track secret real estate purchases of third world despots who loot their nations treasuries and then live the high life in London, that would be great.
25
Excellent idea. There's no justification for deals of this sort to be completely secret. People have a right, I think, to know who's living next door to them. And if we're truly worried about nuclear terrorism from ISIS and North Korea and such, might be a good idea to make sure that their representatives are not being given easy and secret access to some of our major cities.
7
Many thanks to the Times for exposing this activity. This series has undoubtedly put pressure on the government to address the problem. Whatever the Treasury finds for law enforcement shouldn't remain hidden, either - it should be available to anyone willing to file a Freedom of Information request.
While the issue is on the table, perhaps the time is ripe to ask whether or not this practice should, indeed, remain legal. Furthermore, it's time to study what effects this has had on property prices more generally in the city - and what that potentially has done to affordable housing now and in the future.
Finally, companies that are involved with dirty money flowing from illegal sources, such as narcotics and human trafficking, should be held liable, accountable, and responsible for what they've done. If criminal liability is found, the state Attorney General should turn his gaze here and file charges against individuals, and not just corporate persons.
These are the steps necessary to beat back the tide of money drowning the city and the country. It's in everyone's long-term interest to fight on. For every victory here, it's one less battle - or riot, or uprising - on our collective horizon.
While the issue is on the table, perhaps the time is ripe to ask whether or not this practice should, indeed, remain legal. Furthermore, it's time to study what effects this has had on property prices more generally in the city - and what that potentially has done to affordable housing now and in the future.
Finally, companies that are involved with dirty money flowing from illegal sources, such as narcotics and human trafficking, should be held liable, accountable, and responsible for what they've done. If criminal liability is found, the state Attorney General should turn his gaze here and file charges against individuals, and not just corporate persons.
These are the steps necessary to beat back the tide of money drowning the city and the country. It's in everyone's long-term interest to fight on. For every victory here, it's one less battle - or riot, or uprising - on our collective horizon.
28
This is a global problem. In Australia, dodgy Chinese officials among other foreigners park their ill-gotten gains in the relative safe haven of Australian real estate, hiding behind company structures that reveal only the names of local lawyers or agents. Such purchases inflate market values and put some iconic properties with heritage significance into unknown hands. I'm glad the U.S. is also making an effort to crack down on this shady practice.
168
CA real estate over the last few years is increasingly being snapped up in all-cash by Chinese nationals who are seeking to get ill-gotten gains offshore as their corruption crackdown continues and their own economy deflates.
At least Australia actually has laws in place to limit what non-citizens can buy. We roll out the red carpet for anyone looking to launder money, while citizens are shut out of their own market.
At least Australia actually has laws in place to limit what non-citizens can buy. We roll out the red carpet for anyone looking to launder money, while citizens are shut out of their own market.
15
Our Foreign Investment Review Board in Australia has recently forced some illegal foreign purchasers to sell up but it is largely a toothless tiger given the massive scale of the problem. The Chinese are buying up everything here, including farms and other agricultural assets.
While those on lower incomes struggle to find affordable housing, our city skylines are also full of new high-rise developments which sit unoccupied as checks on water usage reveal. Who wins from this dubious investment? Real estate agents, developers and the wealthy owners of prestige properties sold to unscrupulous overseas buyers. Meanwhile, the locals struggle with inflated prices and our cities become concrete jungles of these largely uninhabited "ghost" towers.
While those on lower incomes struggle to find affordable housing, our city skylines are also full of new high-rise developments which sit unoccupied as checks on water usage reveal. Who wins from this dubious investment? Real estate agents, developers and the wealthy owners of prestige properties sold to unscrupulous overseas buyers. Meanwhile, the locals struggle with inflated prices and our cities become concrete jungles of these largely uninhabited "ghost" towers.
3
Hmm, given real estate prices, isn't it a bit late?
7
Good news for the taxpaying, hardworking middle class. Long overdue but a very good development.
68
The article states that if the reporting finds illegal fund sources for the transactions, then the regulations will be implemented across the country. I have a feeling that not many will be found just BECAUSE of this test program. But who knows, perhaps criminals are stupid too.
9
This is great news; I'm tired of shell companies and the 1% (illegal or not) driving up rent and housing prices to totally unrealistic levels in my city. Perhaps this is a first step towards curtailing that.
While the architect in me gives pause to the idea that my work may possibly be affected by this decision; the patriot in me is proud that the NYT feature was able to contribute to this change of course.
While the architect in me gives pause to the idea that my work may possibly be affected by this decision; the patriot in me is proud that the NYT feature was able to contribute to this change of course.
125
People love to blame rent stabilized tenants, shame on them. Stable rents are the only safe haven for so many hard working people, it's the shell companies and the 1% who are responsible and they've done a great job of brainwashing market rate tenants into going after and blaming the wrong people.
2
I don’t know if it’s possible to make a law that only people (not companies) can purchase residential real estate but it certainly sounds like a good idea.
23
Companies ARE people! LOL
Companies, not individuals, develop and own the vast majority of all multi-family residential real estate. Thus, a law that prevents ownership of residential property by companies would bring about an immediate halt to the construction of new multi-family residential housing units.
2
It's probably possible. I'm not sure it'd be a good idea. You'd basically eliminate all apartments (rentals) from existence since they're typically owned by companies.
2
I'm glad we're finally pushing on the barn door, but what about all the cows that have already escaped?
19
Why did this take so long? It was an obvious loophole for dirty money, yet nothing was done for years?
75
As mentioned in the report, it was delayed by "fierce lobbying."
very welcome and overdue news regarding the ever increasing dirty money
laundering in real estate, Wall Street and corporate ownership.
The same logic the treasury were using against secretive Swiss accounts
applies to some US real estate transactions. Late but not too late they are realizing with their inaction, they just benefiting criminal activities inside and outside of the US. Hopefully, other nations such as UK, with their London boom market, Spain and so on, will take similar actions.
laundering in real estate, Wall Street and corporate ownership.
The same logic the treasury were using against secretive Swiss accounts
applies to some US real estate transactions. Late but not too late they are realizing with their inaction, they just benefiting criminal activities inside and outside of the US. Hopefully, other nations such as UK, with their London boom market, Spain and so on, will take similar actions.
18
What on earth took them so long!? I have to show identification at my bank when I pay a credit card bill. If I withdraw over a certain amount in cash I virtually have to swear under oath that I'm not a terrorist financing my network. Cash transactions are becoming more difficult and are actively discouraged. And yet, a foreigner can waltz into a realtor's office and fork over a multi-million dollar check and this deal is not required to be traced or investigated! Do the words bribery or corruption spring to anyone else's mind?
310
Thank you to the New York Times for influencing policy on a serious issue.
8
I've been wondering for a while now when our government would finally unearth these secret buyers, all people wealthy beyond belief but reluctant to pay taxes and instead, hiding their profits in these hidden companies. Long time coming, but thanks to NYT, maybe finally these people can start paying taxes like the rest of us.
99
OR maybe they (some of the owners) can stop raping and pillaging their home countries and then plop the proceeds into American properties, skewing the market all while agents sing "I dunno...I dunno..."
6
Dream on!
Real estate has long been a swell route for money laundering in NY. Back in the late 70s thru the 80s, some all-cash deals in Park Slope, for example, were quite literally all-cash. The suitcase full of bills method disappeared thanks to reporting restrictions placed on banks. NY luxury developers & their political patrons (looking at you, Mike Bloomberg) should, one hopes, find life a bit more trying if these new Fed efforts continue. And then watch luxury residential prices slide. One can hope.
40
Foreign buyers should not be able to shield purchases ... But ... I'm a bit worried about an entity of the US government monitoring US citizens's real estate purchases. New York state should be in the forefront --- this has been a problem in the city for years ... but not the federal government. The problems with the 10k deposit law should be enough of a scare to anyone wanting this action.
1
It's about time! And thank you, New York Times, for the excellent investigative work that I am sure was a major impetus for our government to finally take action to shine a light into this dark corner.
122
One deposits more than $10K in cash at a bank and they fill out IRS papers - or you cash a check for several thousands of dollars - and they make you jump through hoops. Buy a condo for $40Million cash and no questions are asked.
Honestly....they're just figuring this all out now?
Honestly....they're just figuring this all out now?
503
The super wealthy have always had their ways of circumventing rules particularly when it comes to preventing the exposure of ill gotten funds, or simply avoiding the taxes.
This is age old custom, it is like being a member of a club, there is an entire strata of society that lives by catering to the very rich, lawyers, accountants and other facilitators.
This is age old custom, it is like being a member of a club, there is an entire strata of society that lives by catering to the very rich, lawyers, accountants and other facilitators.
6
Exactly. And they wouldn't even be figuring it out now if not for the NYT investigation and the numerous "anecdotal information" (ie, real information from people involved in the process) reports of shady characters with wads of cash.
Treasury Department officials need to get out more...
Treasury Department officials need to get out more...
2
I was thinking the same thing. If former Rep. Hastert had just bought the person blackmailing him about his past -- a million dollar condo (for cash) he could have avoided indictment altogether.
2
Congratulations to the NY Times for this result from an excellent series. However, if the reporting requirements only run from March through August, the obvious concern is that anyone with something to hide will time their purchases to fall outside this window. Thus, it's very likely that Treasury will find few transactions involving "suspicious money," during this period. Then, will they simply say, "nothing to see here," drop the requirements, and move on? Who was responsible for deciding that the reporting requirements would be limited to this brief window? Structuring it in this way almost seems like an act of laundering in itself.
356
Thought the same thing while reading this. Also, I would look for these types of sales to amp up now and after August of this year. A no-brainer.
12
Could be that is what they are saying but actually covering a much bigger period of time. Disinformation? I'm glad to see this as they have caught many criminals and terrorists by following the money trail. Who knows El Chapo is repatriating the US dollars that he obtained from drug sales to Americans .
Did you not read the next sentence? Treasury says that it is reserving the option to extend the program beyond August (and even make it "permanent" and extend it "across the country").
2
What would be wrong with tracking absolutely all buyers of any real-estate property at all, and paying special attention to all who pay cash?
Seems to me all ownership of land and/or structures on land should be a matter of public record.
Seems to me all ownership of land and/or structures on land should be a matter of public record.
179
Paying all cash is not that unusual these days, particularly as folks downsize their current housing and want to avoid some of the outrageous insurance requirements when trying to obtain a mortgage, particularly in the NY metro market. I'm not sure about Miami-Dade, but suspect the same issues exist to a degree in that market.
It does really bother me that these often empty high end residences exist in areas where there once was reasonably affordable housing for the working stiff. The same folks who can't get a mortgage because of the add-ons and lack of affordable homes in these areas.
Ownership of land is a matter of public record. Transparency of the owning entity is another story. You know, much like the PACs and SuperPACs who now run American politics...
It does really bother me that these often empty high end residences exist in areas where there once was reasonably affordable housing for the working stiff. The same folks who can't get a mortgage because of the add-ons and lack of affordable homes in these areas.
Ownership of land is a matter of public record. Transparency of the owning entity is another story. You know, much like the PACs and SuperPACs who now run American politics...
3
All real estate transactions in the US are a matter of public record, as deeds are recorded with public registries, typically in the county in which the real estate is located, many of which are accessible online. Furthermore, IRS regulations require that every real estate sale is reported to the IRS. The reason this has become an issue, however, is because people are not taking title in their own names, but using nominee trusts or LLCs to hide their identities. There are legitimate reasons for doing this. LLCs provide protections against liability for injuries that occur on the property, which can be important if the real estate is rented. However, there should be a way to ensure that money from corruption or illegal activity is not tucked away in multi-million dollar properties. This initial move by the Treasury is a step in the right direction.
4
This is good news. If their initiative is fruitful, will the Feds be able to look at past transactions?
16
I'm skeptical about whether this will change anything. I imagine that new methods will be devised for concealing the identity of the actual owners. In many cases, with large fortunes, the identity of "the owner" is not something that can be straightforwardly answered, when you have layers of trusts and other structures devised for holding wealth.
9