May 17th, 2024 6:38 PM by Linda Holley
It's common knowledge in this business that our real estate transactions are targets for money laundering. Illicit actors seek to exploit system vulnerabilities. Since transactions involve multiple parties and we have international reach, real estate is a high-risk area.
South Florida faces unique challenges: There is substantial evidence of foreign corruption, fraud, money laundering and other illicit activities in Miami, since it plays a crucial role as the primary gateway to Latin America and the Caribbean. Corrupt foreign funds have also entered their local real estate market.
What's being done? In 2018, the Department of the Treasury's Financial Crimes Enforcement Network issued an extension to the Geographic Targeting Order initially introduced in January 2016. This order mandated title insurers to identify individuals with beneficial interests in shell companies involved in all cash real estate transactions exceeding $1 million in residential real estate in South Florida. The most recent extension reduced the purchase threshold to $300,000.
When a company is registered under the name of a shell company, it lacks transparency and conceals the identities of the true owners. While there can be valid reasons for non-transparency, shell companies can hide criminals' identities.
Individuals from Latin America facing corruption allegations in their own countries are establishing off-shore companies and channeling funds into Miami's luxury condominiums and homes.
Red flags for customers:
- Location of property in relation to buyer.
- Unusual involvement of third parties.
- Titling the name of a residential property in the name of a third party.
- Involvement of a high-ranking foreign political official.
Transaction risk:
- Under- or over-rated properties.
- Does Seller seem disinterested in negotiating a higher purchase price?
- Use of large sums of cash.
- Unusual source of funding.
- Purchases made without seeing the property.
- Transactions occurring in cryptocurrency where house is not listed in cryptocurrency.
- Transactions occurring with persons or entities involved in the marijuana sales or marijuana adjacent businesses.
- Any other activities that demonstrate suspicious behavior.
Sarasota isn't that far from Miami, so how long will it be before this infiltrates to our own market.
If you'd like more information about Florida real estate in Sarasota and Manatee Counties, contact Linda Holley, 941-914-4914
Linda Holley, Sarasota Realtor, GRI, SRES, CIPS
Fine Properties, 5220 Paylor Lane, Lakewood Ranch, FL 34240
This article was written by Natalia Gindler Corsini for the April 2024 Florida Realtor Magazine
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