Federal Investigations into Illicit Miami Property Deals

Miami is widely recognized for its high-priced housing markets and the feds are sending out a very strong message. The US Treasury Department recently stated that it would initiate a temporary sting to reveal criminals’ money laundering through real estate. Since the renewal of regulations concerning commercial and luxury home property buying in 2016, the U.S. federal agents have focused their next targets. In Miami, major corporations and even luxury home purchases do not require the specificity of property ownership.

The regulation previously only covered deals of a couple hundred. Today, the transactions made by major shell companies will be investigated.

While there is much speculation about whether the initiative pushed by former Obama officials would be supported by Trump (a former real estate mogul himself); the modified policy has revealed Trumps cabinet investigating major luxury real estate purchases.

The new federal law may have come at a less than favourable time for Miami properties. With over capitalization and a decrease in foreign purchasers, real estate sales in the region have slumped. The higher end condo purchases dropped by an astonishing 21% in 2017. The majority of these sales involving cash. This report was issued by broker, Douglas Elliman.

The New Regulation

For shell companies making cash purchases of high-end homes in the $1 million bracket, an investigation will be performed.

The purpose of such measures is to crack down on the criminal activity that has been ongoing in the luxury condo sector in Miami.

For property buyers who close a $10 million cash deal and earn a $1 million extra on the deal, there is no qualms about federal law because these regulations have not been put in place.

The Treasureys original Miami property investigations fell short of generating much results last year. This was owned to the focus on money orders and checks as the only means of reporting a cash payment. The new law delves deeper into the real estate transactions by incorporating electronic transfer of cash. Where properties are no purchased using mortgages, wire transfers between banks are used. This provides the opportunity for major laundering syndicates to take advantage of the system.

It is the first step towards allowing federal agents to investigate the movement of money in these electronic transactions. Sadly, the digital transfer of money was an easy opportunity for criminals and with no law in place, many transactions went unchecked.

Cash deals are more susceptible to money laundering because it does not involve vetting by a bank that occurs with a mortgage.

Brokers, lawyers and real estate agents are being encouraged to report any suspicious actions by their clients in a property transaction. Clients who push to pay in excess of a list price, lack of concern over financial loss or willingness to purchase unchecked in properties of any condition may signal alarm bells.

Real estate agents are now being encouraged to establish compliance laws when dealing with their clients. This includes confirmation of property owners’ names who have a 25% stake or more in a corporation or an LLC. This verification process will include legally acquired identity documents such as a driver’s license.

With the majority of money laundering and illegal transactions occurring over wire transfer, more people and syndicates are said to be uncovered.

 

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