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Why U.S. luxury property deals are attracting regulators

Manafort under scrutiny

Luxury real estate deals may hide some unsavory details.

Federal regulators are on the hunt for money laundering schemes and are digging deeper into who is behind luxury real estate purchases in certain parts of the U.S.

The U.S. Treasury's Financial Crimes Enforcement Network, or FinCEN, said Tuesday it's adding wire transfers to the list of all-cash buys it monitors during certain types of high-end deals. Previous orders on such monitoring covered property purchased using methods such as cashier's checks or money orders.

Luxury real estate has become a favorite of criminals who want to launder money. Illicit funds can be made to seem legitimate through real estate by by tapping limited liability companies that then purchase expensive real estate, according to FinCEN. Criminals also rely on shell companies to buy real estate in all-cash transactions, often for luxury real estate in New York City and Miami, according to the agency.  

As much as $2 trillion in assets are estimated to be money-laundered annually through methods that include real-estate deals, according to the United Nations Office on Drugs and Crime, although the inter-governmental Financial Action Task Force (FATF) says it's difficult to accurately assess the scope of the problem given its illicit nature.

Regulators want to unmask the true owners behind shell companies often created to buy luxury properties with cash.

The monitoring will be done on real estate deals in New York City; three Florida counties including Miami; Honolulu; the Texas county that includes San Antonio; and five counties in California, including Los Angeles.