New requirement for all-cash luxury buyers

Spurred by discoveries that some all-cash buyers of luxury homes are using shell companies to hide stolen funds, the U.S. Treasury Department will now require all-cash buyers of luxury homes in Los Angeles and other California counties to reveal their identities.

Using a shell company to purchase real estate isn’t illegal. The approach is often used to define a separation between business and personal assets, or to make it more difficult for the public to learn celebrities’ addresses.

Title companies must now report to the Treasury Department the true owners behind shell companies that use currency, checks and money orders to purchase luxury homes. Legislation to include wire transfers is pending. Information provided will only be available to regulatory and law enforcement authorities, not the general public.

Concern about money laundering in the luxury market has been growing. In one recent Federal investigation, prosecutors alleged that four upscale LA homes were among the assets purchased by limited liability companies (LLCs) through multimillion-dollar wire transfers of funds stolen from a foreign public development fund.

Read more about this development here.
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