Realty News: Federal Government Issues Money Laundering Rules for Luxury Real Estate Properties

New money laundering rules have been announced by federal authorities this week which aims to prevent criminals "from using luxury real estate to hide their illegal proceeds," a report from NBC News said.

According to the report, the new rule will require title insurance companies to expose the people living in some of the most expensive homes in Miami and New York, which are known to be the hotbeds of expensive real estate markets.

"FinCEN is concerned that all-cash purchases -- i.e., those without bank financing -- may be conducted by individuals attempting to hide their assets and identity," the  government agency said in a press release.

In a statement, Jennifer Shasky Calvery, who runs the U.S. Treasury Department's FInancial Crimes Enforcement Network said, in a statement, "We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money."

Calvery said that the new federal rule will "seek to plug a large gap in the agency's efforts to make the real estate market less susceptible to fraud and money laundering." It was said that all the information that will be gathered via the "Geographic Targeting Orders" and will be officially disclosed to the law enforcement officials.

The report state that the federal rule was triggered by The New York Times investigation that revealed the modus operandi of rich foreigners including high-profile politicians who alllegedly used several shell companies to purchase real estate properties in Manhattan.

"The series prompted calls for more regulations by groups that advocate for better transparency in the real estate industry, which has won exemptions from scrutiny imposed on other industries through the Patriot Act.The new regulations, however, are only temporary. They are due to expire in August," the report said.