Lighting Up the Towers of Secrecy Through Anti-Money Laundering Requirements

Money Laundering: Hiding ownership and profits in offshore jurisdictions using  myriad mechanisms in Switzeland, money laundering capital of the world, & other islands and nations. Favorite tool of mega-rich arch-criminal banking & corporate investors

A group of nonprofit organizations urged the Treasury Department’s Financial Crimes Enforcement Network to repeal the 2002 temporary exemption from provisions of the Patriot Act that had been granted to the real estate industry. The letter was a reaction to the Towers of Secrecy story in the New York Times.

Behind the dark glass towers of the Time Warner Center looming over Central Park, a majority of owners have taken steps to keep their identities hidden, registering condos in trusts, limited liability companies or other entities that shield their names. By piercing the secrecy of more than 200 shell companies, The New York Times documented a decade of ownership in this iconic Manhattan way station for global money transforming the city’s real estate market.

The issue with imposing anti-money laundering requirements on real estate transactions is deciding who is responsible for doing so. Is it the real estate broker? the buyer? the buyer’s attorney (if there is one)? If there is a mortgage loan, the lender is running a KYC program. But if there is no loan, there is no AML check.

You can also understand privacy concerns of many wealthy buyers. Tom Brady and Giselle Bundchen don’t need crazed fans outside their door. Besides the nuisance, there are legitimate personal safety concerns.

When it comes to anti-money laundering requirements in real estate there are really several different sectors. The Towers of Secrecy story focuses only on ultra-expensive residential real estate. When the purchase price is in the tens or hundreds of millions of dollars it is easier to impose some transaction costs and paperwork associated with anti-money laundering. It’s hard when the scale comes down to regular priced real estate that you and I could afford.

Commercial real estate already operates under the concern of anti-money laundering. There may not be any specific proscribed steps, but its still illegal to conduct business with sanctioned individuals.

These are the groups that signed the letter:

Center for Effective Government
Citizens for Responsibility and Ethics in Washington (CREW)
EG Justice
Financial Accountability and Corporate Transparency (FACT) Coalition
Global Financial Integrity
Global Integrity
Global Witness
Government Accountability Project
Jubilee USA Network
Missionary Oblates USA
New Rules for Global Finance Coalition
Open The
Oxfam America
Tax Justice Network USA
Transparency International
Transparency International – USA
U.S. Public Interest Research Group (PIRG)