Over 30% Of High End Real Estate Transactions In US Facilitate Money Laundering
The US government always likes to be seen as highly critical of other countries that are essentially kleptocracies unless, of course, they are an important ally or, in the case of Trump, Russia. But, as I have written, over the last decade, the US has become perhaps the biggest facilitator of criminal activity worldwide by becoming the “biggest tax haven in the world”.
One of the ways the US enables tax evasion around the world is by allowing criminals to park or launder ill-gotten monies through investments in high-end real estate here in the United States. By allowing properties to be purchased by shell companies and LLCs, it is almost impossible to know just exactly who the beneficial owner of the property will be, which is exactly the kind of anonymity money launderers are looking for. This is also exactly how Donald Trump was able to revive his flagging business career at the beginning of this century in the wake of his multiple casino bankruptcies.
A new US Treasury report indicates that potentially 30% of all the high-end real estate transactions in the US were actually facilitating some sort of money laundering activity, with at least one of the parties cited for “suspicious activity” by the government. Just to show how common this was, in the wake of Trump’s election, a unknown, probably foreign, buyer purchase 11 condominiums in a Trump tower in just three months. Because these units were purchased by a shell company as well as the restrictions of Nevada law, it proved impossible for reporters to determine just who the buyer or buyers were.
Just to show how easily this was done, it was not until 2016 that the government even required title companies to report the “real” buyers on all-cash deals in certain high-end real estate markets around the country. That restriction proved pretty easy to get around by actually using wire transfers, which were not covered by the rule, instead, I guess, of just dumping dollar bills on the desk at closing. Essentially the 2016 rules had no teeth whatsoever. The loophole allowing wire transfers has now finally been closed and a few more locations around the country have been added to the program.
It was expected that Trump would terminate this program as it was hurting the high-end real estate business that he is purportedly involved in. That hasn’t happened, possibly because Trump feels his new position will allow the Trump Organization to only work with “clean” clients going forward. But, just to show how reliant the high-end of the market is on illicit foreign money, real estate professionals expect this new rule “could have a chilling effect”.