Feds combat money laundering

Aim is to halt money laundering

Treasury Dept. requiring insurance companies to reveal owners of holding companies.

High-end homebuyers paying cash in Palm Beach and Broward counties soon will have to reveal their identities as part of a federal program targeting money laundering in real estate.

In January, the Treasury Department said it was requiring title insurance companies to reveal the names of owners behind holding companies for sales priced at $1 million or more in Miami-Dade County and $3 million or more inManhattan.

Beginning Aug. 28 and continuing for six months, that requirement will extend to cash buyers paying $1 million or more for homes in Palm Beach and Broward counties. It also applies to other parts of New York, California and Texas.

Buyers’ names are entered into a law enforcement database and not revealed to the public, according to federal officials.

Buyers of luxury homes often remain anonymous by structuring deals through LLCentities. Butmany people use LLCs for legitimate reasons, such as asset protection and tax considerations, analysts say.

“The information we have obtained from our initial [investigation] suggests that we are on the right track,” Jamal El-Hindi, acting director of the Treasury’s Financial Crimes Enforcement Network, said Wednesday in a statement.

By expanding the program to other major metro areas, “we will learn even more about the money laundering risks in the national real estate markets, helping us determine our future regulatory course,” he said.

In Miami-Dade and Manhattan, “a significant portion of covered transactions have indicated possible criminal activity associated with the individuals reported to be the beneficial owners behind shell company purchasers,” the agency said.

Earlier this year, a group of reporters worldwide, using leaked documents from a Panamanian law firm, published stories connecting money-laundering to real estate. The series is known as the Panama Papers.

Ken Thomas, an economistandbanking analyst in Miami, said thePanama Papers and the Treasury’s initial focus on Miami-Dade have played a role in the recent sales slowdown of high-end homes. The extension north to Palm Beach and Broward counties could further dampen sales, he said.

“We’re probably on the downside of the peak of the local luxury real estate market,” Thomas said.