The feds put corrupt foreign pols and overseas crooks on notice Wednesday: No more laundering your ill-gotten gains by purchasing pricey properties in Manhattan and Miami.
“Geographic targeting orders” announced by an arm of the Treasury Department will require title-insurance companies to identify buyers who hide behind shell companies and cut all-cash deals.
The directive covers sales of $3 million or more in Manhattan and $1 million or more in Miami-Dade County.
“We are seeking to understand the risk that corrupt foreign officials, or international criminals, may be using premium US real estate to secretly invest millions in dirty money,” said Jennifer Shasky Calvery, director of the Treasury Department’s Financial Crimes Enforcement Network.
The cost of luxury real estate has soared in Manhattan recently, with the median sales price for a luxury home hitting $6 million at the end of 2015, up 25 percent in just a year, according to the Douglas Elliman brokerage.
Nearly half of those purchases were paid for with cash.
In Florida, around $100 billion was spent on properties last year, with international buyers accounting for nearly a quarter of purchases and nearly three-quarters of them paid in cash, according to the national Association of Realtors.lx
The federal disclosure requirements go into effect March 1 and will remain in force through Aug. 27, but the program can be extended and may also be expanded to other parts of the country.
Information collected pursuant to the orders will be entered into a database accessible by the FBI, DEA and other law-enforcement agencies.
Manhattan real-estate lawyer Keith Pattiz, a partner at McDemott, Will & Emery, said the program was bound to cut into property sales.
“The impact on the high-end condominium market is inevitable,” he said.
“Any time you tell people, ‘Your transaction will be disclosed to the federal government,’ one would assume it has a chilling effect.”
Pam Liebman, CEO of the Corcoran real-estate brokerage, questioned the program, saying most buyers who shield their identities behind a corporate veil do so “to protect their privacy because they don’t want their personal affairs made public.”
“There are other ways to weed out the few bad seeds rather than disrupt a process that has worked so well for so many,” she said.
A top Manhattan broker who’s worked with foreign clients also predicted that lawbreakers would figure out ways to beat the new system.
“If they have to give names, they will give names, but that doesn’t mean they are necessarily the right names,” the broker said.