The surprisingly effective pilot program stopping real estate money laundering in the US

Criminals love US real estate. It’s been well documented.

Thanks to a loophole in the PATRIOT act, which forces banks to do considerable due diligence on any client but was never extended to the real estate sector, any ne’er-do-well can set up a shell company to buy properties in cash without ever revealing their identity.

Iran exploited the flaw to use a $500 billion Manhattan skyscraper as a slush-fund for 22 years. Potential money-launderers have used it to anonymously snap up $1.5 billion worth of apartments either owned or branded by the Trump Organization. And the criminals who stole billions from Malaysia’s state development bank employed it to buy swaths of properties in New York and Los Angeles.

The Treasury set up a pilot program to tackle this in 2016, with a rather modest measure: It forced title insurance companies to find out who actually owned LLCs buying luxury real estate in a handful of US cities, and to give that information to the Treasury.

Source: Quartz

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