Federal authorities on Wednesday announced new rules aimed at preventing criminals from using luxury real estate to hide their illegal proceeds.
The move requires title insurance companies to expose the people behind shell companies that use cash to buy the most expensive homes in New York and Miami, home to America's most pricey real estate markets.
"We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money," Jennifer Shasky Calvery, who runs the U.S. Treasury Department's FInancial Crimes Enforcement Network and will oversee the initiative, said in a statement.
The new rules seek to plug a large gap in the agency's efforts to make the real estate market less susceptible to fraud and money laundering, she said.
The information collected through the "Geographic Targeting Orders" will be shared with law enforcement officials, she added.
The orders were inspired in large part by an investigation by the New York Times that detailed how wealthy foreigners — including politicians and suspected criminals — have used shell companies to buy luxury real estate in Manhattan.
The series prompted calls for more regulations by groups that advocate for better transparency in the real estate industry, which has won exemptions from scrutiny imposed on other industries through the Patriot Act.
The new regulations, however, are only temporary. They are due to expire in August.