WASHINGTON—The Treasury Department said that 30% of high-end real estate deals that fall under a new watchdog program involved people who had been targeted by the government for "suspicious activity" and potential money laundering.
Treasury recently expanded and extended a program targeting luxury real estate deals in New York, Miami, Los Angeles and other big markets to prevent the use of real estate for money-laundering by overseas buyers. The program was designed to prevent buyers from using shell company's or LLC's to hide the identities of the real buyers, CNBC reported.
“Many expected the program to be killed under the Trump administration, given President Donald Trump's ties to the real estate business. Yet the program was extended in February and is now being expanded to close loopholes. It also added the city and county of Honolulu,” CNBC said.
CNBC further quoted real estate experts as saying the expanded program could put pressure on high-end real estate markets that are already under some pressure from slower overseas buying and uncertainty in Washington over taxes.
“Analysts say the biggest impact could be in Miami and southern Florida, which has been suffering from a glut of new high-end condos and has relied heavily on buyers from Latin America — some of whom have come under scrutiny for corruption or money laundering,” CNBC said.
"This could have a chilling effect," Nela Richardson, chief economist for Redfin, told the news outlet. "That very high end of the market is the most vulnerable to these issues. If a lot of foreign buyers were parking their money in high-end real estate and that much of it is tainted, this rule will have an impact."