Stop the billionaire corporate shell game in real estate deals


Photo of Manhattan. Credit: CityLab

It’s no surprise the United States is so attractive to foreign plutocrats, international criminals, and corrupt politicians looking to stash their loot: America’s corporate laws make it easy to hide their identities behind anonymous shell companies.

That secrecy helps shield their dirty profits and unethical, if not blatantly illegal, activities from law enforcement, tax collectors, and public regulators. As Global Witness and others warn, such anonymous company ownership makes it possible for a range of bad actors—from human traffickers to drug cartels and corporate tax cheats—to launder money and fester without basic public accountability.

When the corporate shell game is exploited in real estate transactions, regular homeowners and poor communities also lose out. As explained in this CityLab piece, anonymous corporate ownership allows wealthy financiers and foreign investors to facilitate foreclosures on struggling homeowners en masse and thwart laws designed to keep out criminal tax cheats from the local real estate market.

In response, the Treasury Department recently proposed the following:

The department currently requires mortgage lenders to know the identities of the true owners of shell companies in transactions that involve loans. Lenders also have to report suspicious activity to the department. Under the new policy, the department’s Financial Crimes Enforcement Network will require real estate title companies to report to it the true owners of limited liability companies that buy properties without loans. However, the order applies only to Manhattan and Miami-Dade County, and will be effective for only 180 days, starting in March.

While it’s a good step, why stop at just those two cities? The Obama Administration has the authority to go even further and cover the entire country. 

For more information, see “Shine a Light on Secret Real Estate Deals,” The New York Times; “‘Secret’ Real-Estate Investors Should Be Unmasked in Detroit, Too,” CityLab; and “56 Reasons Anonymous Company Ownership Is the Biggest Problem You’ve Never Heard Of,” Global Witness.