Real Estate Article

http://investing.bryanellis.com/12688/should-the-feds-target-these-real-estate-investors/

Reprint Below:

should the feds TARGET THESE REAL ESTATE INVESTORS?

Certain nonprofit organizations are taking aim at foreign real estate investors, and they’re hoping that the federal government will add its firepower to the scrutiny. The organizations drafted a public letter to the U.S. Treasury Department requesting that the real estate industry “verify identities of buyers and screen them for potential money-laundering risks” before allowing foreign investors to purchase land in the U.S. This screening was originally required under 2001’s Patriot Act, but the real estate industry was ultimately excluded from the requirement thank to heavy lobbying against it.

The letter is the most recent act in a campaign against international buyers by groups like Transparency International, Global Financial Integrity (GFI), and Global Witness against wealthy international buyers. The group recently sponsored an investigation and New York Times series intended to discredit wealthy real estate owners at home and abroad by showing how those owners could use shell companies to purchase luxury condos in New York City[1].

Steve Hudak, a spokesman for the Treasury Department Financial Crimes Enforcement Network (FinCEN), responded to the letter via email. He said that his agency agrees with the concerns expressed in the letter and assured the authors that “potential criminal abuse of the real estate sector [is] a fundamental priority.” GFI legal counsel Heather Lowe warned that if the Treasury fails to act, there could be serious ramifications for the entire real estate industry and the American financial system in the future. “There is no reason to grant these entities and the dirty money they’re moving open access to the American financial system,” she said[2]. She added that her group believes that requiring real estate professionals and banks to know their customers is the first and most straightforward way to prevent abuse of the system.

While this might seem like a cut-and-dried issue at first, the move could be interpreted as government intervention and targeting of all wealthy individuals inside and outside of the country. What do you think about these groups’ request?