One can only say, it is about time after asking the question why on earth did it take so long? Recently, the US Treasury Department said it would begin demanding to know the names of folks behind the shell companies, which ultra-wealthy foreigners use to hide behind multimillion-dollar real estate purchases, specifically in Manhattan and Miami-Dade County. It appears the reality of 21st century money laundering has finally caught up with the age-old business of real estate transactions.
If you have tried to purchase a home since the financial crisis of 2008, you know how encompassing the inquiry is for the source of your funds. In addition to making certain you have the ability to pay, banks and financial institutions want to make sure none of the money you will use to purchase a property financed by them came from illicit sources.
While this is a good first step, the federal government now needs to move to shine some light on state jurisdictions which still allow people to set up shell companies without identifying the owners or beneficiaries. Several states, most notably Delaware, Wyoming and Nevada make it easy to incorporate or form a LLC without providing such basic information. Each time legislation is introduced in Congress to address this abuse, it is beaten back. This too needs to change as several FCPA enforcement actions involved shell companies incorporated in the US, which bribes payments were shoveled through to get the money overseas.
This step by the Treasury Department is limited to 180 days after which time, the Department will analyze the trends and activities and make a determination on whether to extend the program both in length of time and scope of other geographic locations around the US. One can only hope it will be extended across the US, for tax evasion reasons alone.
After the attacks in Paris in November, I think one of the most significant responses will be to increase the anti-money laundering rules and regulations to non-financial industry businesses. This step by the Treasury Department, requiring identification of the owners and beneficiaries of large real estate transactions is a good first step. But it is only a first step.