Failed B.C. money-laundering case shows ‘snow-washing’ is thriving in Canada

By Barrie McKenna

When RCMP raided the offices of Silver International Investments Inc. in Richmond, B.C., they found a $2-million stash of $20 bills, along with records pointing to a much bigger operation. Law-enforcement officials would eventually conclude that the company was part of an alleged scheme to launder hundreds of millions of dollars a year in dirty money from China through various casinos in the province, including the nearby River Rock Casino.

Three years later – just as the case was set to go to trial – the Mounties and federal prosecutors abruptly stayed criminal charges against the company and its two principal operators, Caixuan Qin and Jain Jun Zhu. Officials acknowledged there was no “reasonable prospect” of getting a conviction.

Just like that, one of the largest money-laundering investigations in Canadian history, dubbed E-Pirate, hit a brick wall.

The case’s collapse suggests something went “terribly wrong,” B.C. Attorney-General David Eby lamented this week. “To have it fail is … very devastating for all of us who are trying to get dirty money out of our economy.”

Canada already enjoys an international reputation as a nice, peaceful country where it’s far too easy to hide and launder ill-gotten wealth. And this case’s demise is likely to enhance our allure in the murky world of dirty money.

“Canada has been famously named as the place where people come to ‘snow-wash’ their dirty money,” said Kevin Comeau, a Toronto lawyer and anti-money-laundering expert.

That’s unfortunate because authorities are only belatedly taking the problem seriously in Canada. Earlier this month, the House of Commons finance committee issued a long-awaited report, highlighted by a key recommendation to deal with the problem of beneficial ownership.

Unlike a legal owner, who typically holds the title to an asset, a beneficial owner may exercise influence through voting rights or other unseen forms of control. While the name of a legal owner is public, the beneficial owner’s name is often not.

Knowing who owns a property or a company is the missing link between the crime of laundering money and the illegal activities where that cash is generated, ranging from tax evasion to terrorism and drug smuggling. The ability of people to hide behind proxies and numbered companies – as they can now do in Canada – is the main obstacle to rooting out money laundering.

And so it was welcome news that the committee’s main recommendation is to “create a pan-Canadian beneficial ownership registry for all legal persons and entities” who have “significant control” over assets, such as real estate, stocks or companies.

The problem, experts say, is that other countries are moving much faster to create the legislative and regulatory structures to track, expose and prosecute money launderers. Putting the recommendations into law could take a year or more, given next year’s looming federal election.

“We are updating our laws, but not bringing them up to the standard of what other nations are doing,” Mr. Comeau explains. “We are very much the laggards now.”

And dirty money inevitably exploits weak links in the global financial system, especially in rich developed countries such as Canada where corruption is rare.

Unfortunately missing from the committee report is a nod to creating a new charge, punishable with prison time, for those who falsely claim to own laundered assets. Such false claims, Mr. Comeau says, is often the “rabbit hole” that thwarts law enforcement from linking cleansed assets to criminals.

Also lacking is a requirement that the new beneficial-ownership registry be publicly accessible, depriving officials of help from individual citizens and whistle-blowers.

Now maybe you think money laundering doesn’t affect you – that it’s an invisible and victimless crime. Well, consider the volume of illegal money that is likely flowing into Canada to be washed, and where it all ends up. Low-ball estimates put the figure at $40-billion to $100-billion a year.

Some might argue that foreign direct investment, dirty or not, is better than none at all. It drives real estate and construction activity, generates millions of dollars in revenues for government-run casinos, and no doubt creates hundreds of thousands of jobs.

But at what cost? Assume that much of this illicit money goes into real estate. It may explain why so many middle-class Canadians may never be able to afford a home in some of Canada’s largest cities, driving deep wedges between haves and have-nots.

That is a very steep price for the sale of a country.

Feds tie another alleged $1B money laundering scheme to Porsche Design Tower, along with NY properties

By Keith Larsen

Federal authorities charged a Venezuelan TV magnate for his role in a billion-dollar money laundering and currency exchange scheme involving real estate around the world, including two dozen properties in Miami and New York.

The indictment follows a separate billion-dollar money laundering scheme in July that included real estate in South Florida. In that case, federal prosecutors say top Venezuelan officials siphoned funds out of the state oil company, and into assets throughout the world.

In both cases, some of the money is alleged to have been poured into two units at Dezer Development’s luxury Porsche Design Tower in Sunny Isles Beach.

In the most recent case, authorities are now seeking to seize 24 properties allegedly tied to billionaire Raúl Gorrín. Those residences also include luxury homes in Miami’s Cocoplum neighborhood and six in Manhattan.

One of the New York homes is a four-bedroom, five-and-half bathroom penthouse at 60 Riverside Boulevard; another is a unit in the Baccarat Hotel and Residences at 20 West 53rd Street, which last sold for $18.8 million.

The government alleges Gorrín, president of the news channel Globovision, bribed top Venezuelan officials to gain access to the country’s special fixed-currency exchange rate. Gorrin allegedly tapped into this special rate by bribing the officials with at least $161 million in contracts with Venezuela’s treasury department.

He also allegedly paid his co-conspirators with three jets, a yacht, multiple champion horses, and numerous high-end watches, according to the indictment, unsealed in U.S. District Court in West Palm Beach. He was charged with multiple counts of conspiracy and money laundering.

The indictment was filed in August 2017, but only unsealed Monday. As part of it, prosecutors unsealed cases against Alejandro Andrade, a former Venezuelan national treasurer who pleaded guilty in December 2017 to his role in the scheme; along with Gabriel Arturo Jimenez, a Venezuelan living in Chicago, and former owner of Banco Peravia bank. He pleaded guilty in March.

The condo in the Porsche Design Tower, unit 4406, was purchased in 2016 under pre-construction through a Delaware LLC called POSH 8 DYNAMIC for $12.8 million, according to Miami-Dade property records. The 6,121-square-foot condo has four bedrooms and four-and-half bathrooms and is a two-story penthouse, according to

It is on the market for $9 million, or $950 per square foot, accordant to Zillow, and is being listed by Jill Eber of Coldwell Banker. The condo was previously listed for $13.9 million or $1,467 per square foot, in January. Eber did not immediately respond to a request to comment through a spokesperson.

In July, federal prosecutors sought to seize a different condo in the Porsche Design Tower, alleging a money laundering scheme that involved Venezuela’s state oil company, PDVSA. That larger alleged scheme also included assets spread throughout the world. In that case, prosecutors allege Porsche Design Tower unit 2205  was one of the assets bought by the former general counsel to Venezuela’s oil ministry for $5.3 million, and used as a fee to pay an alleged money launderer.

About that case, Dezer Development’s Gil Dezer has said he never met the buyer of unit 2205 and has cited the Fair Housing Act as a requirement to sell when a buyer signs a contract and sends over a deposit. Housing authority and anti-money laundering experts have disputed this interpretation of the Fair Housing Act.

In November, Matthias Krull, a wealth manager with the Swiss bank Julius Baer Group, was sentenced to 10 years in prison for his role in that scheme, after pleading guilty in August.

Gorrín was not a defendant in that case, but the Miami Herald — which first reported on the most recent indictment — reported that he is suspected of moving $600 million from PDVSA, to a European bank for his own benefit as well as other members of Venezuela’s elite class.

Gorrín’s attorney, Howard Srebnick, did not immediately return a request for comment. Dezer Development also did not immediately return a request for comment.

U.S. Expands Coverage of Real Estate Anti-Money Laundering Program

By Samuel Rubenfield

The U.S. Treasury Department said Thursday it has expanded an anti-money-laundering data program that requires title insurance companies to reveal the owners of shell companies buying luxury real estate.

The changes lower the value threshold of potential acquisitions subject to the requirement and expands the coverage to five new cities.

Leaders looking to hide money stolen from their countries, human traffickers and other criminals have bought property in the U.S. using these types of companies to legitimize their ill-gotten gains, analysts say. Law enforcement has seized property ranging from Manhattan apartments to California mansions in their pursuit of laundered money through real estate.

The program, called a geographic targeting order, was launched in January 2016 and is subject to renewal every six months. As of Thursday, the order requires title-insurance companies to file reports to the federal government on “all-cash purchases” through limited liability companies of $300,000 or more of residential property in 12 metropolitan areas. Previously, the value threshold had varied by city and the program covered seven cities, as well as some surrounding counties.

“Reissuing the [geographic targeting orders] will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform [Treasury’s] future regulatory efforts in this sector,” the Treasury said in a statement.

The new order covers purchases made, at least in part, using cash or a cashier’s check, certified check, traveler’s check, personal check, business check, money order, funds transfer or virtual currency. It involves deals made in the metropolitan areas of Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York, San Antonio, San Diego, San Francisco and Seattle.

After the program first went into effect, all-cash purchases by companies dropped nationally by about 70%, even in areas not subject to the requirements, according to a paper from economists at the Federal Reserve Bank of New York and the University of Miami.

An effort to nationalize the program was included in a bill in Congress that imposed sanctions on Russia. But lawmakers said this week the clock is running out and the legislation may not pass in time.

Feds indict Parkites on money laundering, drug charges

By Bubba Brown

Federal prosecutors indicted two Parkites on drug and money laundering charges, accusing them of using money from marijuana sales to operate a popular Salt Lake City concert venue and purchase property in Park City.

The 13-count indictment, announced Monday, names Gabriel Seth Elstein, 33, and his wife Angela Christina Elstein, 32, both of Park City, as well as St. George resident Scott Dale Gordon, 48. Prosecutors say they used multiple suppliers and drivers over a period of several years to transport more than 2,000 pounds of marijuana from California to Salt Lake City, Minnesota, Illinois and Wisconsin. Dumbles Holdings, LLC was also listed in the indictment.

Prosecutors accuse the trio of using $1.3 million from marijuana sales to build The Complex music venue, describing regular payments of $50,000 of cash in shrink-wrapped bags to the foreman of the construction project. The Elsteins and Gordon laundered at least $5 million through the venue and a music promotion business Bondad Productions, the indictment states.

The indictment also alleges that the defendants used laundered money to help purchase two properties in the Snyderville Basin, one on the 7000 block of Tall Oaks Circle in Pinebrook and the other on the 4000 block of Hilltop Drive in Jeremy Ranch.

In March, more than 600 grams of marijuana, packaged in five vacuum-sealed bags, as well as a digital scale and packaging material, were found in the Elsteins’ home on the 4000 block of Hilltop Drive, prosecutors say.

Prosecutors are seeking the forfeiture of both Snyderville Basin properties, as well as The Complex. A press release from the U.S. Attorney for Utah, John Huber, noted that the music venue will remain open.

The defendants on Friday were arraigned in federal court, where they pleaded not guilty to the charges, according to the release. They face a sentence of 10 years to life in prison if convicted on a count of conspiracy to distribute marijuana.

Gabriel Seth Elstein and Gordon were charged in February and released on pre-trial conditions. Angela Christina Elstein was added to the indictment last month and released Friday. A trial has been set for Dec. 14.

Attorneys for the defendants did not immediately respond to requests for comment.

Two Senate Dems call for investigation into money laundering in luxury real estate

By Francis Monofort

Senators Chris Van Hollen (D-Md.) and Sheldon Whitehouse (D-R.I.) have called on the Government Accountability Office to study whether vulnerabilities in anti-money laundering laws applicable to the real estate sector present increased risk of criminal activity.

The senators’ announcement noted that there has been widespread reporting on potential criminal activity in the real estate market, including between the Trump Organization and Russia.

In a letter to Comptroller General Gene Dodaro, the senators expressed concerns that transnational criminal organizations and other corrupt actors may be exploiting the gaps in US regulatory and law enforcement processes related to the laundering of money through the US real estate market.

“The luxury real estate market attracts money launderers because all-cash deals through shell corporations allow criminals to mask their ownership information. Cash-only real estate transactions are subject to fewer reporting requirements than financial institutions have to comply with. Addressing this problem is even more urgent when you consider the widespread reporting on the potential of criminal activity in the real estate market with regards to the Trump Organization and Russia,” according to the senators’ press release.

Van Hollen and Whitehouse requested the GAO to assess the results of the real estate Geographic Targeting Orders issued by FinCEN. GTOs temporarily require certain US title insurance companies to identify the persons behind shell companies used to purchase high-end residential real estate, among other requirements.

North America’s most unaffordable city cracks down on dirty money

Vancouver’s red hot housing market has prompted authorities to introduce a series of transparency measures aimed at uncovering the owners of homes in Canada’s most expensive real estate market.

One new probe will scrutinize dirty money in the province of British Columbia’s real estate, horse-racing and luxury car sales industries, according to Attorney General David Eby who announced the investigation in late September, Bloomberg reported. Finance Minister Carole James also appointed an expert panel to examine money laundering in the housing sector.

These probes, which are expected to be complete by March, follow a similar review of the province’s casinos.

“There is good reason to believe the bulk of the cash we saw in casinos is a fraction of the cash generated through illicit activities that may be circulating in British Columbia’s economy,” Attorney General David Eby told reporters late last month. “We cannot ignore red flags that came out of the casino reviews of connections between individuals bringing bulk cash to casinos, and our real estate market.”

Similar calls to action have been made south of the border. Earlier this month, two U.S. senators — Chris Van Hollen of Maryland and Sheldon Whitehouse of Rhode Island — sent a letter to the Government Accountability Office, calling for an investigation into the potential vulnerabilities of existing U.S. money-laundering provisionsas they pertain to real estate.

Last month, The Real Deal‘s quarterly magazine in South Florida dove into a $1.2 billion Venezuelan money laundering case in which federal authorities are looking to seize 16 high-end properties. [Bloomberg]—Kathryn Brenzel

Senate Democrats call for federal investigation into money laundering in luxury real estate

By Ben lane

The Treasury Department’s Financial Crimes Enforcement Network has been looking into whether foreign buyers are using shell companies to buy luxury U.S. real estate in order to launder money for almost three years, but two Democratic senators want the government to do more to figure out how much criminal activity is prevalent in these deals.

The initial FinCEN investigation delved into unknown buyers using shell companies to buy high-end real estate in Manhattan and Miami-Dade County, because the government was “concerned about illicit money” being used in the deals.

The results of that initial investigation showed more than 25% of transactions covered in the initial inquiry involved a “beneficial owner” who is also the subject of a “suspicious activity report,” which is an indication of possible criminal activity.

The initial investigation also led FinCEN to expand the probe to include all of New York City, Los Angeles, San Francisco and several other areas. The investigation was later expanded again to include wire transfers.

The expanded investigation required title insurance companies in the designated areas to identify the actual person behind shell companies used to pay all cash for high-end residential real estate.

But that investigation isn’t enough for two Senate Democrats.

This week, Sens. Chris Van Hollen, D-Maryland, and Sheldon Whitehouse, D-Rhode Island, asked the Government Accountability Office, to also look into whether money laundering is taking place in U.S. real estate.

In a letter sent to the independent watchdog agency, Van Hollen and Whitehouse say that they are concerned that “transnational criminal organizations and other illicit actors” may be taking advantage of “gaps” in the government’s regulatory and law enforcement process surrounding real estate dealings.

“The widespread money laundering risks posed by real estate transactions conducted without any financing (i.e.,“all-cash”) through the use of shell companies creates challenges for law enforcement and federal regulators seeking to safeguard the financial system from illicit use,” the senators write in their letter to the GAO.

The senators write that they are hopeful that a GAO investigation will help determine whether violations of the Bank Secrecy Act or federal anti-money laundering laws are taking place.

“FinCEN has indicated that these GTOs (geographic targeting orders, the measures FinCEN has taken to this point), which have been renewed and extended several times, are temporary measures intended to help the agency, ‘better understand the vulnerabilities presented by the use of shell companies to engage in all-cash residential real estate transactions,’” the senators write.

“To better ensure effective and consistent AML safeguards, we are requesting an assessment of the results of the real estate GTOs, including the information provided to FinCEN and any actions taken, and how it has helped FinCEN achieve its defined objectives,” they add.

Van Hollen and Whitehouse also lay out a series of questions they’d like the GAO to answer about the issue, including:

Has the information gathered by the GTOs provided useful insight about any of the above mentioned regulatory gaps or exemptions that exist regarding the BSA and the real estate industry?

Has the information gathered by the GTOs produced other tangible benefits, and in what ways will closing the above mentioned regulatory gaps or exemptions enhance financial market integrity in the United States?

How has FinCEN used the information collected from the real estate GTOs to inform its ongoing efforts to address money laundering vulnerabilities?

Has the information gathered by the GTOs improved the ability of FinCen, DOJ, the FBI and other law enforcement agencies to prevent money laundering in the real estate industry?

Based on the information it has collected from these GTOs, is FinCEN considering any regulatory changes?

Are there ways to improve upon the information gathered by the GTOs to make FinCEN more effective in the fight against money laundering?

Are there any gaps or loopholes that exist in the design of the GTO program that could be exploited by illicit actors, such as the beneficial ownership thresholds  or limiting the GTO to title insurance companies?

Are there any unintended consequences from targeting specific geographic regions while leaving other areas uncovered? The adaptive nature of illicit actors raises concerns they may shift their real estate activities from GTO areas to other regions of the United States.

Lastly, we ask that GAO identify any additional vulnerabilities and gaps in the current BSA framework, specifically as they pertain to the real estate sector, and how they might be addressed through regulatory or legislative action.

Real estate agent sentenced to 6+ years for wire fraud, money laundering

By Alcynna Loyd

A California real estate agent was recently sentenced to more than six years in prison and three years of supervised release after pleading guilty to one count of wire fraud and one count of money laundering.

According to the Department of Justice, from October 2012 through October 2013, Robert Jacobsen sold homes with unpaid mortgages on them to unsuspecting homebuyers but eventually, authorities caught wind of the scheme.

According to the DOJ, Jacobsen’s scheme involved him creating a fictitious company called “American Brokers’ Conduit Corporation,” which was not related to an already-existing mortgage originator known as “American Brokers’ Conduit,” which originated loans in the Bay Area.

The DOJ explained that Jacobsen used intermediaries to gain control of homes with mortgage liens that secured loans originated by the real “American Brokers’ Conduit,” and then Jacobsen would use intermediaries to sue the phony “American Brokers’ Conduit Corporation” in court, claiming that the legitimate mortgage liens were invalid.

From the DOJ’s announcement:

As he controlled both the plaintiff and the defendant in these lawsuits, Jacobsen then instructed the attorneys for both sides to enter into stipulated judgments, signed by the courts, resolving the lawsuits by purporting to declare the mortgage liens invalid. In so doing, he omitted to tell the courts that neither he nor any other person involved in the lawsuits was a legitimate representative of either the real “American Brokers’ Conduit” or the then-current owners of the liens. Jacobsen filed those agreements with the relevant county recorder’s offices, to give the appearance to anyone conducting a title search that the liens had been declared invalid by a court, and then sold the homes to unsuspecting buyers without paying off the original loans on the homes. 

Jacobsen was initially charged with 13 counts of wire fraud and money laundering but the remaining charges will be dropped if he maintains his part of the plea agreement, the DOJ said. As a result of his plea, Jacobsen was also ordered to forfeit a yacht he purchased with the sale proceeds and pay an undetermined restitution fee.

Former Ecuadorian oil exec forfeits six SoFla properties tied to money laundering

By Keith Larsen

A former top executive with Ecuador’s national oil company has been sentenced to more than four years in prison for allegedly laundering money through six South Florida properties.

Marcelo Reyes Lopez, a former executive with PetroEcuador, was sentenced in July to four years and five months in prison for his role in an alleged money laundering scheme involving several PetroEcuador officials and other Ecuadorian government officials.

He had pleaded guilty to one count of money laundering in October in U.S. District Court of the Southern District of Florida and agreed to forfeit six properties tied to the scheme.

The complaint for the case has remained sealed. A motion filed by the U.S. Attorney’s Office in November, however, said the U.S. “anticipates that its evidence will show the defendant participated in an extensive bribery scheme that existed to provide illicit payments to officials from Ecuador’s state-run and state-controlled oil company in order to secure and profit from contracts with that company.”

On May 8, the court entered a preliminary order of forfeiture for the six properties:

  • 11316 Northwest 79th Lane, Doral; a four-bedroom, three-bathroom house
  • 14340 Southwest 156th Avenue, Miami; a three-bedroom, two-bathroom house
  • 16711 Collins Avenue, Unit 1902, Sunny lsles Beach; a two-bedroom, two-bathroom condo
  • 605 South Ocean Drive, Hollywood; a three-bedroom, two-bathroom house
  • 609 South Ocean Drive, Hollywood; a multifamily complex
  • 345 Monroe Street, Unit 1-4, Hollywood; a multifamily complex

According to court documents, the six properties were purchased between 2013 and 2014, for a total of $3.5 million.

On Wednesday, Lopez’s sentencing documents were filed with the court, which showed he would be sentenced to a correctional facility in Georgia.

The news comes on the heels of another major money laundering case where federal officials allege top executives of Venezuela siphoned $1.2 billion from its state oil fund, PDVSA, to purchase South Florida real estate. The U.S. Attorney’s office claims at least 16 pieces of South Florida property are tied to the defendants of the scheme, one of which was a condo in the Porsche Design Tower in Sunny Isles.

Crackdown on dirty money shook Miami real estate. Now, Rubio wants to take it national


In a move with significant implications for the U.S. housing market, Florida Republican Sen. Marco Rubio is seeking to take a Treasury Department crackdown on dirty money in luxury real estate and expand it from a few high-priced enclaves to the entire nation.

Rubio says his proposal is an attempt to root out criminals who use illicit funds and anonymous shell companies to buy homes — a form of money laundering that hides the cash’s tainted origin from law enforcement and banks. The widespread practice enables terrorism, sex trafficking, corruption, and drug dealing by providing an outlet for dirty cash, according to transparency advocates.

Through an amendment to an unrelated major spending bill, Rubio will ask Treasury to study whether government regulators should force shell companies that buy homes priced at $300,000 or more in cash nationwide to disclose their owners. That could be a figure as as high as 10 percent of the nation’s real-estate deals.

A similar reporting requirement affecting transactions priced at $1 million or more has already had a chilling effect on all-cash corporate sales in Miami-Dade County, which has been under Treasury’s microscope since 2016.

“Shell companies involved in shady activities are a big problem, especially throughout South Florida,” Rubio said in a statement to McClatchy and the Miami Herald. “With this provision, a study would be conducted to look at requiring all shell companies that make cash transactions, regardless of their area, to disclose their identities.”

The amendment builds on a previous Treasury disclosure order that applied only to certain markets, including South Florida.

That order — which forced shell companies buying homes with cash to reveal their true owners to the government — has been in place in some areas since March 2016 at various price points. Its effects were immediate and stunning. As soon as the order took hold, shell companies buying homes with cash dropped off the map, a recent study by academic economists found. In Miami-Dade, the number of corporate cash sales plummeted 95 percent, although a strong overall market suggests creative buyers found ways to circumvent the rules, researchers said.

Before the crackdown, corporate cash sales accounted for roughly a third of home-sale volume in Miami-Dade, which is popular with foreign investors.

The amendment has the support of the top Democrat on the Senate Finance Committee, Oregon’s Ron Wyden, as well as Rhode Island Democratic Sen. Sheldon Whitehouse. Both have tried to widen disclosure of true owners of shell companies, which can be listed in the names of lawyers, accountants, and other fronts. The lack of corporate transparency frustrates law-enforcement officials, who say it stymies their investigations.

A vote is expected on the overall bill as soon as this week, Rubio’s office said.

The powerful real-estate industry has fought attempts from the government to have it act as a watchdog against money laundering, as banks, precious-metals dealers, money-service businesses, and other financial institutions are required to do. Many Realtors and developers say their clients are simply wealthy buyers seeking privacy, not criminals.

But over the past two years, Treasury has moved with force into what had been a largely unregulated sector of the U.S. financial system. Starting in Miami-Dade County and Manhattan two years ago, Treasury’s Financial Crimes Enforcement Network (FinCEN) began requiring anonymous shell companies to disclose their true owners when they bought pricey homes with cash.

The temporary directives — called “geographic targeting orders” or GTOs — were later expanded to other housing markets in Florida, New York, Texas, California, and Hawaii where foreign and anonymous investors are gobbling up real estate and driving up prices. The rules require title agents to identify the owners of shell companies buying homes with cash and disclose their names to the federal government.

“The GTOs are working, and it’s time they were expanded. Laundering money through real estate isn’t new, but [what is new is] an effective approach to combat dirty money,” said Clark Gascoigne, deputy director of the Financial Accountability and Corporate Transparency (FACT) Coalition, a watchdog nonprofit.

Rubio’s proposal to take the project national, Gascoigne added, “sends a strong message that we’re serious about protecting the U.S. financial system, the real-estate market, and communities across the country.”

Stephen Hudak, a spokesman for FinCEN, declined to comment.

Cracking down

The Rubio amendment asks Treasury to consider expanding the FinCEN directive to include all cash real-estate transactions over $300,000 anywhere in the United States.

It would give Treasury 180 days to submit a study to Congress providing details about the data that has been collected by FinCEN since 2016 and how it is being used. The agency is also being asked to determine if it needs more authority to combat money laundering and whether expanding the targeting order would be of use. In addition, FinCEN is asked if a registry of company owners — something supported by a bipartisan cast of federal legislators — would help authorities fight money laundering, tax evasion, election fraud, and other illegal activities.

Previously, the FinCEN disclosure requirement kicked in for corporate cash sales that were priced at $3 million or higher in New York City, $1 million or higher in Miami-Dade, Broward, and Palm Beach, and at different price points in other states. In May, FinCEN enacted a new directive that secretly lowered the number to $300,000 in all GTO areas. Sources familiar with the agency’s thinking say the new order was kept confidential because regulators don’t want to give money launderers a road map for structuring their transactions to avoid reporting.

Rubio’s amendment would start at that lower price point, covering a major chunk of home sales nationwide. Last year, the median U.S. home sold for a price of $247,200, according to the National Association of Realtors.

A cash transaction is one in which there is no mortgage and the property is purchased outright. Cash doesn’t just mean stacks of greenbacks; it also includes such financial instruments as wire transfers, checks, and money orders. Unlike mortgages, cash deals don’t involve heavy scrutiny from banks, which can identify potential money laundering and file suspicious-activity reports to the feds.

The 2016 publication of the Panama Papers spotlighted how anonymous shell companies in faraway tax havens were used to camouflage property purchases in the United States by politicians, drug traffickers, and financial fraudsters. Housing analysts argue that the flow of anonymous money is driving up prices.

“There’s hardly a metropolitan area in the country that is not experiencing a real public-policy issue regarding affordable housing,” said Ned Murray, a housing expert and associate director of Florida International University’s Metropolitan Center. “The whole focus of the real-estate industry is on … supplying homes for wealthy investors that we don’t know much about. It really is a factor for prices and supply.”

Much of the world has responded to the threat of corruption in real estate by requiring greater ownership disclosure. The United States has done relatively less, although Rubio’s amendment could help close the gap.

Those operating in the shadows of the real-estate market certainly seem aware of the Treasury disclosure requirements — and are working to get around them.

Take Carmelo Urdaneta Aqui, who is the former legal counsel to the Venezuelan Ministry of Oil and Mining. He was recently among those charged in a federal $1.2 billion money-laundering case involving funds stolen from Venezuela’s state oil company.

When Urdaneta prepared to close on a brand-new, $5.3 million condo at the Porsche Design Tower in Sunny Isles Beach, he was informed by paperwork from the developer that “taking title [to the unit] under a company or trust may trigger FinCEN reporting requirements,” according to a federal indictment filed last week. He was worried enough about the disclosure that he discussed how to avoid it with a government informant.

Ultimately, Urdaneta set up a company in his wife’s name to do the deal, prosecutors allege.

Dezer Development did not say why it alerts potential buyers that they might end up on Treasury’s radar.

“All language relating to legal requirements associated with closings was prepared by Dezer Development’s outside legal counsel,” a spokeswoman wrote in an email to the Herald on Monday.

The 60-story Porsche Design Tower is famous for a car elevator that allows owners to park in “sky garages” within their units. On Friday, federal prosecutors indicated that they would move to seize the unit.

Bad for brokers?

While overall home sales held steady even after the FinCEN rule went into place, the real-estate study found, luxury home prices were slightly softer in markets affected by the GTO.

That suggests that expanding the GTO could have a dampening effect on the nation’s real-estate market, said Jeff Morr, a luxury real-estate broker at Douglas Elliman and chairman of the Miami Master Brokers Forum, an industry group.

“Does it stop money laundering? Probably, yes,” Morr said. “Is it good for the real-estate market? Probably, no.”

But at least making the rule nationwide might take some of the heat off Miami, he said.

“It may make Florida less unattractive now that it’s everywhere,” Morr said. “We shouldn’t be treated differently than other areas.”

That was exactly the sentiment of the Miami-Dade County Commission when the rule was first enacted in 2016. At the time, commissioners passed a symbolic resolution asking regulators to stop singling out Miami for special scrutiny. The industry still feels the same way.

Legitimate buyers need privacy, too, said Ron Shuffield, president and CEO of EWM Realty International.

“There are wealthy people who don’t want everyone to know that they live at the end of the block,” Shuffield said. “If someone is determined to launder money, they can pick anywhere in the country to do it, from the smallest city in the Midwest to Miami or New York City. It’s only fair that every area have to report. Otherwise, the rules could be scaring people away from certain markets.”