Feds seek to target shell companies buying luxury properties on Oahu

Updated: Aug. 23, 2017 at 1:42 PM HST
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HONOLULU (HawaiiNewsNow) - A federal agency has issued new rules aimed at scrutinizing shell companies buying luxury homes on Oahu.

The effort is part of a national push to crack down on money laundering through real estate transactions.

In an order issued this week, the Financial Crimes Enforcement Network said it will now require title insurance companies to identify the people behind shell companies being used to pay for high-end residential real estate on Oahu.

Oahu is one of seven major metropolitan areas where so-called "Geographic Targeting Orders" apply. Other areas previously subject to the same rule are New York City, Miami, Los Angeles, San Francisco, San Diego, and San Antonio.

On Oahu, transactions that will be scrutinized are those for homes with a purchase price of $3 million or more that were bought without a bank loan.

Also this week, the network issued an advisory warning financial institutions and the real estate industry about the money laundering risks associated with real estate transactions.

"Through this advisory and other outreach to the private sector, FinCEN, industry, and law enforcement will be better positioned to protect the real estate markets from serving as a vehicle to launder illicit proceeds," said FinCEN acting Director Jamal El-Hindi, in a news release.

From January 2016 to February 2017, the network said, about 30 percent of real estate transactions in the six metropolitan areas previously targeted involved an owner or purchaser representative that was also the subject of a previous "suspicious activity report."

The Financial Crimes Enforcement Network is under the U.S. Department of the Treasury.

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