Real Estate, Money Laundering, Anonymity, FinCEN, Data Verification
It is estimated that $800 billion to $2 trillion are laundered globally every year, funding the schemes of bad actors and terrorists alike. These astronomical sums are moved around the world without detection; this is in large part due to the ease with which anonymous shell companies, typically limited liability companies (LLCs), can be created, particularly in the United States. America is one of the most egregious enablers of this practice because most states require little to no information about the person ultimately controlling the entity, known as the “beneficial owner.” Working through an LLC, bad actors often turn to America’s luxury real estate market that enables the cleansing of millions of dollars of dirty money quickly and without a trace. Considering this vulnerability, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) began to track the beneficial owners behind certain all-cash real estate purchases made by entities and found that a third of buyers had also been subjects of a previous suspicious activity report.
S. Alexandra Bieler, Peeking into the House of Cards: Money Laundering, Luxury Real Estate, and the Necessity of Data Verification for the Corporate Transparency Act’s Beneficial Ownership Registry, 27 Fordham J. Corp. & Fin. L. 193 (2022).