Sound Off: What effects might come from the federal government’s temporary regulations on all-cash purchases?
The Federal Crimes Enforcement Network (FinCEN) has reported success with the temporary regulation implemented in March 2016 that required title companies in Manhattan and Miami-Dade County to reveal the identities of cash purchasers of luxury real estate. Now the regulation is being expanded into in six metropolitan areas including San Francisco, San Mateo, and Santa Clara counties.
If the regulation is effective in revealing money laundering practices and thwarting foreign shell companies from hiding money in luxury real estate, then it’s a good idea.
But I believe this regulation will work only if it is applied consistently across the country. Otherwise the money launderers can just divert their assets to another market.
Furthermore, there are ways to get around one regulation that stands alone.
Perhaps the regulations might soften demand in the highest end of the luxury market, if it discourages foreign shell companies or people who are trying to avoid taxes or scrutiny. However, the new disclosure requirement should not dissuade legitimate LLCs.