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FinCEN proposes new rule for residential real estate held in trusts or LLCs

fincen.gov

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Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#41

Post by neilv »

instagib wrote: post #3

I tried to parse a little of this so, FinCEN wants to know who profits off of real estate if you are a 5% equity share holder or 10% if at a director level in an organization. Will FinCEN publish these records? It would defeat the purpose of putting a home in an llc for anonymity. Under the proposed rule, persons involved in real estate closings and settlements would continue to be exempt from the anti-money launderi…

> It would defeat the purpose of putting a home in an llc for anonymity.

That's a legitimate desire, and I think we should make privacy and the motives behind it available to everyone, not only those who can afford the expense and effort to set up and maintain an LLC.

(I'd expect the solution to be a combination of changes: outlaw most data-brokering and trading of personal data, hold organizations responsible for the data they hold so much that they treat unnecessary personal data like an existential-threat toxic liability, change practices to make SWAT-ing not be such a risk even if some psycho did get hold of someone's address, hold demagogues responsible for using conspiracy theories they know are false to incite mentally ill people, and more.)

Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#42

Post by wmf »

psychlops wrote: post #16
Fin_Code wrote: post #7

This is deeply needed, one of the big causes of housing inflation is using it to launder money. Higher housing costs are better because you can launder more. Its like when rich people can't have a money trail for some shady activity so they sell art to each other for a wild amount. This will require all owners to be named instead of a nameless llc. Should help curb the process.

> one of the big causes of housing inflation is using it to launder money I'd love a link backing this bold assertion.

You'll find plenty or none depending on your desired level of detail. After reading about this topic for years I still don't understand how to use real estate for money laundering.

Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#43

Post by whitej125 »

1024core wrote: post #26

How do these trusts, LLCs, etc. work for inheritance? Can I bypass inheritance issues by, say, putting my house in a trust and making my kid one of the "owners" of the trust? Then when I pass away, s/he gets control of the trust and thus own the house?

More specifically... "probate issues".

If you die with assets... you assets are going to be transferred to beneficiaries in accordance with a will if you have one. It's a lengthy legal process called probate. Because its going through the court system the filings are all public record too.

If you put your assets into a trust (generally a revocable or living trust)... when you die you aren't dying with any assets. The trust "lives on" and has the rules for distribution codified into it. No probate court. No public record of assets, etc. Tends to be a faster, more efficient for everyone process as I understand it.

Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#44

Post by bombcar »

wmf wrote: post #42
psychlops wrote: post #16

Earlier quoted context omitted.

> one of the big causes of housing inflation is using it to launder money I'd love a link backing this bold assertion.

You'll find plenty or none depending on your desired level of detail. After reading about this topic for years I still don't understand how to use real estate for money laundering.

In very specific cases it can be used to avoid certain countries' laws about exporting cash/value.

But that's not going to be a major source of real estate transactional volume.

Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#45

Post by phkahler »

neilv wrote: post #41
instagib wrote: post #3

I tried to parse a little of this so, FinCEN wants to know who profits off of real estate if you are a 5% equity share holder or 10% if at a director level in an organization. Will FinCEN publish these records? It would defeat the purpose of putting a home in an llc for anonymity. Under the proposed rule, persons involved in real estate closings and settlements would continue to be exempt from the anti-money launderi…

> It would defeat the purpose of putting a home in an llc for anonymity. That's a legitimate desire, and I think we should make privacy and the motives behind it available to everyone, not only those who can afford the expense and effort to set up and maintain an LLC. (I'd expect the solution to be a combination of changes: outlaw most data-brokering and trading of personal data, hold organizations responsible for th…

>> It would defeat the purpose of putting a home in an llc for anonymity.

> That's a legitimate desire, and I think we should make privacy and the motives behind it available to everyone, not only those who can afford the expense and effort to set up and maintain an LLC.

I'm on the fence about that. Why should someone not be able to determine who owns a particular piece of property?

Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#46

Post by phkahler »

bombcar wrote: post #44
wmf wrote: post #42

Earlier quoted context omitted.

You'll find plenty or none depending on your desired level of detail. After reading about this topic for years I still don't understand how to use real estate for money laundering.

In very specific cases it can be used to avoid certain countries' laws about exporting cash/value. But that's not going to be a major source of real estate transactional volume.

>> https://news.ycombinator.com/item?id=39277767

Except in parts of Canada. This just came across HN earlier this week:

https://news.ycombinator.com/item?id=39277767

Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#47

Post by singleshot_ »

tptacek wrote: post #40
singleshot_ wrote: post #39

Earlier quoted context omitted.

It’s also great for sending a swat team to your house, which might have a bit more sudden of an impact than the change you’re envisioning.

What does this have to do with SWAT teams?

If a person knows where another person lives, the first person can send a heavily armed SWAT detachment to the second person’s home. This is one reason my home is held in trust, so it’s a little more difficult for some idiot to try this.

I imagine if this route was banned, it would be a lot easier to figure out where a person lives, which would generally result in decreased privacy, safety, and security.

Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#48

Post by dikaio »

We have a business in Las Vegas incorporated as an LLC and incorporated in Wyoming to hold real estate that we purchase overtime and leave to our kids and just yesterday we were notified that FinCen is requesting names, contact information, IDs (passport, drivers license) and percentage owned in the corporation. I would have thought they would have had all that information prior from our filings. In my eyes there’s nothing wrong with any of this, it’s all standard procedure but my assumption is that it’s all rooted from an underlying issue, the US balance sheet keeps going up and the government is looking to cross all Ts and dot all I’s on where they can collect. The underlying issue never gets fixed, that’s that the government can’t stop spending. Fix government, fixes the issue.

Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#49

Post by Centigonal »

singleshot_ wrote: post #39
Centigonal wrote: post #9

I think this is great for AML, and also for making the activities of institutional buyers of real estate a little clearer. I'm reminded of this article specifically: https://www.sfchronicle.com/projects/2022/veritas-san-franci...

It’s also great for sending a swat team to your house, which might have a bit more sudden of an impact than the change you’re envisioning.

The proposed FinCEN rule is specific to non-financed (i.e. all-cash) transfers to companies or trusts. That in itself rules out the vast majority of private individuals. I'm sure they could also add carve-outs for primary residences or otherwise reduce the impact of this rule on private individuals.

That being said, I think the number of people who live in fear of being swatted in their homes is at least two orders of magnitude smaller than the number of people who rent a home owned by a mysterious and unaccountable corporate landlord.

Re: FinCEN proposes new rule for residential real estate held in trusts or LLCs

#50

Post by ragnot »

dikaio wrote: post #48

We have a business in Las Vegas incorporated as an LLC and incorporated in Wyoming to hold real estate that we purchase overtime and leave to our kids and just yesterday we were notified that FinCen is requesting names, contact information, IDs (passport, drivers license) and percentage owned in the corporation. I would have thought they would have had all that information prior from our filings. In my eyes there’s n…

So to clarify, you have an LLC in vegas owned by a holding LLC in Wyoming? Is that only for anonymity?
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