Anonymous Foreign Buyers and the Housing Market in South Florida

 

Audience: Senior Executives/Manager Level
Duration: 2 hours
Location: Miami Business School, University of Miami

Overview

Foreign buyers play a significant role in the high-end housing market in South Florida. It has been suspected that many foreign buyers may choose to invest in real estate, because real estate investments can be made anonymously through a shell company. Shell company buyers are not normally required to report the true owner to any local or federal authorities. The desire for anonymity may stem from various reasons, ranging from identity and asset protection to money laundering and other illegal purposes.

The Treasury Department has been worried about money laundering in the real estate market. In 2016, FinCEN, a bureau of the Treasury Department, issued a Geographic Targeting Order requiring title insurance companies to identify the true owners of shell companies that pay over $1 million for homes in Miami-Dade. Similar orders were later issued for Broward County, Palm Beach County, and several counties in California, New York, and Texas. This means that shell company buyers above the threshold are no longer able to remain anonymous.

In this module, we will provide an understanding of where the demand of anonymous buyers comes from, and what impact the new regulation has had on the housing market. We will cover original research results showing what impact the GTOs have had on transaction volumes and high-end house prices in the affected counties. We will also discuss what may be expected to happen if the regulation is extended further. Congress may look to reform illicit financing and money laundering regulations in 2018. The House Financial Services Committee has raised the issue of anti-money laundering regulations and created a new subcommittee devoted to illicit finance.

Specifically, we will discuss:

The module is designed for executives who follow trends in the real estate markets either from the investment, real estate industry, or financial institution perspective.

Faculty


Ville Rantala

Professor Ville Rantala is a faculty member in the finance department at Miami Business School. Several of his papers have focused on social interaction effects among individual financial decision-makers and he has also conducted research on financial crime. His research has been presented in many top academic conferences, such as the American Finance Association, American Economic Association, and American Accounting Association meetings.


 


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