Wealthy or high profile purchasers of real estate often want to keep their transactions private to stay out of the media or for other reasons. In New York real estate, this is typically accomplished by purchasing in the name of a corporation or a Limited Liability Company. The entity and the transaction can be structured so that the individual behind the purchase is completely anonymous.
Allegations of money laundering by suspected criminals, foreign oligarchs and corrupt politicians have prompted reforms making anonymous real estate transactions more difficult to achieve.
Obtaining an EIN or employer identification number for an LLC has become more difficult for foreign buyers of real estate. Prior to 2014, an LLC would be able to obtain an EIN without revealing the name or any information of the owners. Beginning in 2014, however, the IRS now requires at least one individual of an LLC who exercises financial control of the company to submit their name and ITIN or International Tax Identification Number. If the individual owner does not have an ITIN, then they must apply for one and submit identification to the IRS.
The Financial Crimes Enforcement Network (FINCEN) of the US Treasury Department recently announced an initiative that will require Title Insurance Companies to identify the natural persons behind companies used to buy high end real estate in Manhattan and Miami Dade County in "all cash" deals. The will also require the title company to identify the "beneficial owner" or seller in high end real estate transactions. This information will kept in FINCEN's database and made available to law enforcement agencies.
In Manhattan, the initiative will include real estate transactions of more than $3 million in "all cash" deals. In the last six months of 2015 there were over 1,000 sales ofcoops, condominiums, and townhouses in that price range. The reporting requirements will take effect on March 1, 2016 and will expire on August 27, 2016.