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US set to unveil long-awaited crackdown on real estate money laundering
- sylware 3y agowaiting for the steam one...
- hammock 3y agoThis crackdown is targeted at the Middle Kingdom. With the pandemic behind us and Russia at war, the political environment is finally right to turn this on. It can be considered an escalation in the cold war/trade wars
- whinenot 3y agoDon't forget the drug war. Miami wasn't built up just for local Floridians.
- bilbo0s 3y agoYeah. If they get serious about this, real estate in Miami, and in Florida in general, is going to be seeing some troubled times ahead.
- ibejoeb 3y agoThere is (recently) already significant restriction on real estate ownership in Florida. Decent breakdown here: https://www.bipc.com/new-florida-real-estate-law-restricts-certain-foreign-interests https://www.bipc.com/new-florida-real-estate-law-restricts-c...
- bonestamp2 3y agoWhat do you mean by Middle Kingdom? I googled it and everything I could find was about a period in Egypt's history.
- deleted 3y ago[deleted]
- mminer237 3y ago中国 (Zhōngguó) literally means "middle kingdom" and is China's endonym.
- bonestamp2 3y agoThank you for the helpful reply!
- martinko 3y agoThey mean China: https://en.wikipedia.org/wiki/Names_of_China https://en.wikipedia.org/wiki/Names_of_China
- bonestamp2 3y agoThank you for the helpful reply!
- baybal2 3y agoIt is not, or, if it is, it's completely not serious. As I said in the other comment, the majority of global money laundering happens in banks, and investment funds completely legally. And it's also happening primarily in US because US financial markets are world's largest. Why to go after money laundry clients, when they should really go after the bank laundry owners? Western governments never needed KYC AML for that, because they already knew perfectly well who is laundering money and where. Chinese and Russian mafia members lived openly in the West in tens of thousands for decades, and its absolutely impossible that no Western counterintelligence agency ever checked them. The ill famed Andrei Guriev literally lived in Vauxhall. If US government was serious about Chinese/Russian infiltration of American financial system, Blackrock would've been sent to Guantanamo years ago. I find it absolutely implausible that the White House don't know it.
- slater 3y agoSurely there won't be any loopholes that politicians will promise to close in about ten years' time...?
- JohnClark1337 3y ago[dead]
- bhouston 3y agoApparently there is a lot of this in the Vancouver market in BC, Canada: > In their review of the sector, the Expert Panel estimated that more than $7 billion in dirty money was laundered in B.C. in 2018, and between $800 million and $5.3 billion was laundered through the real estate market, raising housing prices by an estimated 5%. https://www2.gov.bc.ca/gov/content/housing-tenancy/real-estate-bc/consultations/money-laundering https://www2.gov.bc.ca/gov/content/housing-tenancy/real-esta...
- glonq 3y agoAt least 5%. Even though the laundering has "supposedly" (cough cough) stopped here in Vancouver, the momentum it created likely still carries on.
- tenpies 3y agoCanada's utopian conditions for most types of crime are something of an open secret. Most of these crimes then rely on Canada's national industry - money laundering - to clean the money or move it out of the country. Anyone interested in the tip of the iceberg should read Wilful Blindness by Sam Cooper. And that's relatively old. And mostly just the CCP's part. You still have a rich diaspora of organized crime operating in virtually every corner and geography of Canada, including First Nations, some of which are conveniently located in just the right places to facilitate smuggling of all things between the US and Canada. And the absoltue best part? It's almost guaranteed that this involves even the Prime Minister's Office. Or at least it seems very clear Trudeau has something to hide due to his absolutely willingness to sacrifice all things in order to avoid a public inquiry into CCP election interference.
- icantbebothered 3y ago> read Wilful Blindness by Sam Cooper All Canadians should read it. It should be part of the high school curriculum.
- petre 3y agoMaybe it's no coincidence that Tse Chi Lop, the alledged leader of the Sam Gor crime syndicate is Canadian Chinese.
- zer8k 3y ago> The U.S. Treasury Department will soon propose a rule that would effectively end anonymous luxury-home purchases, closing a loophole that the agency says allows corrupt oligarchs, terrorists and other criminals to hide ill-gotten gains. Almost good enough. How about we make it harder for non-citizens to buy any homes too? Citizens should get first pick of any dwelling. Many countries do this, even in the west, and it would go a long way in stopping the crazy house prices in the west/southwest. It could even be extended to give preference to people who have established residency in a region. My original low COL hometown was overrun during the California exodus and housing jumped 3x in 5 years. The average house is now well over 6x average income. No resident could dream of affording even the shittiest starter home in this double-whammy environment.
- grecy 3y agoEven better would be stopping any entity other than a real person from owning residential property. Companies can invest in and profit from commercial real estate. Leave houses for people.
- tenebrisalietum 3y agoThis would likely over time make apartment complexes the number one thing built in residential zones, since there's probably no way to not have companies/businesses owning apartment complexes.
- bonestamp2 3y agoThat might be fine because that's probably what the market needs most right now. The law can be changed later if it's having a negative effect.
- brailsafe 3y agoYa I'd be perfectly fine with this, though it's a pretty superficial suggestion with all kinds of externalities to consider.
- jareklupinski 3y agoi'm currently wandering the nyc streets around evenings, making notes about the buildings with the largest concentrations of dark windows in areas i want to live in someone realizing they cant sell a 'hot' property is probably my best bet at getting an affordable 'starter apartment'...
- deleted 3y ago[deleted]
- baybal2 3y agoReal estate is not that big of a money laundering channel. It's mostly the most unsophisticated mobs. The absolute majority of laundry is happening in 100% legal banks, and investment funds. Any baddie who can launder few billion dollars, can buy a bank completely legally.
- jazzyjackson 3y ago> Real estate is not that big of a money laundering channel. I don't have numbers but I'll suggest that even if real estate is a small fraction of all money laundering (and I agree with you about banks), if even a percent or two of manhattan real estate supply is held up in schemes that could make a big impact on price. I know AirBnB always catches blame for skyrocketing rent, while in any city they represent a vanishly small portion of housing stock, for sure outnumbered by vacant units. [actually it occurs to me that renting units for exorbitant prices on airbnb to ghost clientele would be a decent money laundering scheme, no?] (For example, in San Francisco there are ~5000 listings on AirBnB [0], while ~40,000 homes sit vacant [1], for a population of what, 800,000 ?) So a small change in housing supply can have a big effect on cost of housing, which is why I expect people are clamoring for a crack down. [0] https://web.archive.org/web/20210720175121/https://www.magnifymoney.com/blog/news/short-term-rentals-airbnb-study/ https://web.archive.org/web/20210720175121/https://www.magni... [1] https://www.sfgate.com/bayarea/article/how-many-vacant-homes-are-there-in-San-Francisco-16822916.php https://www.sfgate.com/bayarea/article/how-many-vacant-homes...
- morkalork 3y agoWhy make notes when you can automate the task ;) https://www.movesmartly.com/articles/condo-units-sitting-empty-in-toronto https://www.movesmartly.com/articles/condo-units-sitting-emp...
- wombatpm 3y agoDoesn’t solve the problem of LLCs owning property. I buy a property with an LLC. I then sell the LLC to another individual. Property remains owned by the LLC. No title transfer tax, no fees, etc.
- duncan-donuts 3y agoWhat's the problem with this exactly?
- 88913527 3y agoIn some areas, properties get a tax reassessment after a sale. The LLC abstraction avoids the reassessment.
- wahern 3y agoCalifornia, at least, treats as a change in property ownership when a more than 50% interest in the legal owner (i.e. corporation, LLC, trust, etc) changes. The rules don't completely address the problem. For example, I think some buildings are owned by consortiums so that nobody has more than a 50% stake. But that limits their ability to easily make management decisions; there's a cost to that structure. You definitely still see buildings sold out-right, so it's not like every building in California is owned by an LLC just to avoid reassessment.
- hedora 3y agoThe last time I checked, the 50% change in ownership had to be within one year in order to trigger the prop 13 revaluation (at least for commercial real estate). So, you transfer your corporate campus to an LLC, then sell 33% of it to a buyer this year, and agree to let them "run" the LLC, effective immediately. Next year, you sell another 33% of the LLC, and the year after, the last 33%. What I don't understand is why this isn't standard practice for residential properties owned by individuals. I assume you could use a combination of escrow accounts and collateralized loans to make the transaction mostly indistinguishable from wiring 100% of the money on the day of the sale. (I am not a lawyer or an accountant.)
- bob1029 3y agoThere are an unbelievable number of homes in my area that are "investor"-owned empty shells. Walking down the street on a quiet night, I can hear smoke detectors beeping low battery alarm every 3 seconds or so. I'd say about 25% of the properties are this way. These aren't massively-expensive things either. 300-500k range in TX market.
- neogodless 3y agoThat's more than I would spend on a smoke detector battery.
- stusmall 3y agoI'd be nervous owning property in a market like that. When times get tough markets like that will get hit hard as investors pull out. I'm going to take a wild guess, are you in the suburban Houston area? I've got friends and family there and they've mentioned the same thing. I thought they might be exaggerating but I keep hearing it from different sources. I never hear the same thing about DFW or Austin.
- bob1029 3y ago> I'd be nervous owning property in a market like that. A major reason for living in the HTX suburbs is to make the cost of the home so irrelevant that you don't worry much about the surrounding market conditions. If you are 100% WFH tech employee and your employer isn't a raging asshole, this is tantamount to turning on economic cheat codes. When a home is so cheap to start with, you can start saving for the next step much sooner. Even if I lost half the value in this home, I would be fine. I'd be pissed, but it wouldn't dramatically alter the strategic path I have planned on.
- ke88y 3y agoI grew up in a community like this, in a family operating on your set of assumptions. The problem isn't losing half the value of your property. The problem is that after 20 years, moving on isn't as easy as it sounds. More importantly, selling at any price is way more difficult that it sounds. If you don't GTFO early enough, the muni has lost a ton of revenue without right-sizing so the remaining owners on are on the hook for huge property taxes just to service the debt (further suppressing demand at literally any price). And there are all sorts of reasons you might not GTFO in time. Just two more years until the first kid is done with HS. And now just two more years for the next kid; still seems unfair to move them. And so on. And then just 2 more years until you've saved up enough for that dream place in the mountains. And then it's too late. So you are stuck with this albatross that you literally cannot sell. Property values, even at $1, are totally hypothetical. There is no buy side of the market. At all. Enjoy your property taxes, or figuring out how to abandon the property. It's the suburban muni equivalent of a condo unit that is attractively priced but won't ever move because a contingent of geriatric owners have managed to run up $2k/mo HOA fees by unwittingly turning the condo association into an assisted living facility (but not making it far enough to actually be an assisted living facility).
- from 3y ago> 7% of GTO reports identified individuals or entities connected to ongoing FBI cases So... 93% of people had their privacy violated for no reason. And that was with the current highly targeted measure. When it is applied to all real estate purchases it'll be more like 99.9%. But sure, we should be willing to give anything to satisfy a handful of "transparency activists" who don't do anything besides complain all day (read about the scandals at Transparency International and you'll find that perhaps these people are not the saintly do-gooders they are reported to be).
- ke88y 3y agoNo, >99.9% of people will never have their privacy violated because they aren't afforded the ability to hide their ownership. Check out your county's plat maps -- if you own property, you're probably in there. TBH? I don't think anonymously owning land should be allowed, full stop. If you want police and courts to recognize your arbitrary stat-granted right over a piece of dirt, then own up to what you own.
- from 3y agoThere is a difference between there being a record of it in some county's database and a team of Treasury department and federal law enforcement members scrutinizing the sale (and being given additional records on it from the intermediaries involved).
- ke88y 3y agoRight. The difference is that you don't NEED a whole damn team to do financial forensics on the sale if the actual owner is recorded on the fucking plat map. For normal people docs with equivalent or more info are definitely provided to tons of intermediaries and available to the gov.
- mrbadger 3y agoThis will be a significant boost to London, already home to vast amounts of money laundering via real estate, all facilitated by well established networks involving thousands of middle class professionals and the UK's crown dependencies with convenient secrecy laws, nominee directors etc. to conceal beneficial ownership. 70% of the apartments in most premium developments are owned offshore, many with concealed ownership -- 11% of all of the properties in Westminster alone. I recommend the following books by Oliver Bullough: Moneyland https://www.amazon.co.uk/Moneyland-Thieves-Crooks-Rule-World-ebook/dp/B01NBWDPW8 https://www.amazon.co.uk/Moneyland-Thieves-Crooks-Rule-World... Butler to the World https://www.amazon.co.uk/Butler-World-Britain-Empire-Found-ebook/dp/B08TB43BCL/ref=sr_1_1?crid=33ZFAG00NEF12&keywords=butler+to+the+world&qid=1691702068&s=digital-text&sprefix=butler+to+the+world%2Cdigital-text%2C64&sr=1-1 https://www.amazon.co.uk/Butler-World-Britain-Empire-Found-e... and, by Tom Burgis Kleptopia https://www.amazon.co.uk/Kleptopia-Dirty-Money-Conquering-World/dp/0008308349 https://www.amazon.co.uk/Kleptopia-Dirty-Money-Conquering-Wo... and this YouTube video https://www.youtube.com/watch?v=4n3txSCoKn0 https://www.youtube.com/watch?v=4n3txSCoKn0
- klipklop 3y agoOnly took them almost a full generation of potential home buyers getting screwed to start to do something about it. Anybody with a brain has known this for 20 years. Will it take another 20 years for them to do something about large investment groups buying up 20% of the housing stock in some cities?