Feds Crack Down on Anonymous Buyers in Miami and New York

4395 Pine Tree Drive

4395 Pine Tree Drive, with interiors by Artefacto

On January 7 we posted a blog about the property located at 4395 Pine Tree Drive that sold for $19.48 million to an anonymous buyer.  We discussed the benefits of using a land trust to buy real estate.  Among the benefits is that the buyer’s identity remains private.  Since the title is held by the trust and only the Deed in Trust and not the Trust Agreement gets recorded the name of the beneficiary never becomes public record.

While there are many legitimate reasons to keep your name out of the public record, the Federal Government apparently has reason to believe that there many illicit reasons as well.  So much so that yesterday federal authorities announced a temporary anti-money-laundering crackdown on homes worth more than a million dollars that are purchased with cash and using trusts or shell companies.  The crackdown will focus on homes worth more than $1 million dollar in Miami and more then $3 million in New York in what the U.S. Financial Crimes Enforcement Network (FinCEN) has a called a “geographic targeting order”.  The policy will be in effect from March 1 to August 27.  If money laundering is uncovered the policy could be extended to other parts of the country.

So, does this mean you can no longer purchase real estate using a trust or shell company?  No.  As I said earlier there are many legitimate reasons to purchase real estate using a trust or shell company.  This policy simply requires title insurance companies to identify the true owners of shell companies or trusts.  Won’t this defeat the purpose of creating the trust or shell company?  We don’t know for sure.  The title companies will be  required to identify the true owners to the U.S. Treasury Department.  How the U.S. Treasury Department will use this information remains to be seen.