Feds’ Crackdown on Shell Companies Expands to California

Beginning this month, cash homebuyers in Los Angeles, San Diego, Santa Clara, San Francisco and San Mateo will be required to reveal their identities to prevent money laundering and other shady dealings by foreign criminals. The new rules were announced by the U.S. Treasury Department last week as part of a crackdown on a growing criminal phenomenon. The five counties now join Manhattan and Miami-Dade, which were subjected to the rules earlier this year.

Federal officials have expressed mounting concerns over the use of so-called shell companies to hide stolen funds. The problem is particularly striking in California, where luxury homes abound and people are free to set up LLCs without disclosing their identities. These shell companies are most often used to provide legal separation between a business and its investors, or by celebrities looking to maintain anonymity. But they have also increasingly become a tool of criminal organizations looking to hide ill-gotten assets.

The new requirements apply to all-cash purchases of at least $2 million. They’re temporary, running through late February of 2017, and are meant to serve as a guideline for possible permanent legislation.

Read more about the new rules here.

Image Credit: Flickr User giuseppemilo, https://flic.kr/p/pJ4S5r via (CC BY 2.0)


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