FinCEN proposes new rule for residential real estate held in trusts or LLCs
fincen.govI 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 laundering compliance program requirements of the Bank Secrecy Act. I.e. loans, banks.
The records aren't publicly available - they'll provide them to the Feds and to anyone who provides a valid court order;
https://www.fincen.gov/news/news-releases/fact-sheet-benefic....
> they'll provide them to the Feds
That's too bad; methinks the Feds should also need a court order. Though, I suppose with FISA courts rubber-stamping warrants, it wouldn't even be a nuisance.
Depends on your level of cynicism whether they'll follow the guardrails, but they do have some;
> Federal government agency access to BOI. Under the Access Rule and as authorized by the CTA, FinCEN may disclose BOI to Federal agencies engaged in national security, intelligence, or law enforcement activity if the requested BOI is for use in furtherance of such activity. “Law enforcement activity” includes both criminal and civil investigations and actions, such as actions to impose civil penalties, civil forfeiture actions, and civil enforcement through administrative proceedings. Prior to requesting BOI, Federal agency users will be required to certify that the agency is engaged in a national security, intelligence, or law enforcement activity and that the information requested is for use in furtherance of that activity. They will also be required to provide the specific reasons why the requested information is relevant to the activity.
> 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.)
>> 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?
SWATing. Security concerns for certain people.
It is common for liberty-oriented officials to put their own home into an LLC and have an appointed officer/manager as the public-facing contact.
I am quite sure that rich and powerful people will do some decent but firm pushback if FinCen goes too far in making records public.
Edited: replaced 'privacy-oriented' with 'liberty-oriented' in light of Bruce Schneier's blog.
First sentence in the article explains the actual purpose, it's not about liberty/privacy, it's about catching criminals.
> to combat and deter money laundering in the U.S. residential real estate sector by increasing transparency.
Exactly: Liberty vs. Control.
If they have nothing to hide they have nothing to fear. I would take the hypothetical fear and pushback by these "types" as a strong positive signal that this is an effort that is vitally worth doing for society.
The expression "If they have nothing to hide they have nothing to fear" is one of the most scary sentences.
I am sure the Dutch didn't think recording the religion/race was a problem. Until it was. Took some work to limit the damage [1]
[1] https://en.wikipedia.org/wiki/1943_bombing_of_the_Amsterdam_...
Perhaps it was both tongue-in-cheek and not. But if they're not doing anything "wrong" then what is there to fear? Nothing.
What will really happen is that we find out that there are millions of LLCs owned by a few corporate investment offices that are driving up the price of housing for my fellow citizens, actual human beings who I value far more than any legal fictions.
What have the Jews in the Netherlands done wrong?
Anyway, just to paint maybe some more realistic threat models: Swatting. People suing rich people to get "go-away" money. Targeted robberies or abductions.
Privacy is a right, also for rich people. For any information that is private, I can find a good reason for it to not be private.
Do you really think that society is so just that only those people who do wrong need fear things?
They have to fear swatting. If you’ve got the time and knowledge of where the individual likely lives, a hunting app for instance will show who owns each land plot in clear-text lol.
Ok but I have to fear that, what's the purpose for different privileges? My info is publicly available.
If you’ve got the time and effort, it doesn’t have to be. These “extreme privacy” measures are available to the laymen with some time/effort/money, or definitely for someone with a tech job.
One of the main steps is buying or renting under a LLC. Anyone can do that with planning.
You want to find out where someone lives? Head over to zabasearch.com and search away!
Quoting Joseph Goebbels?
Bruce Schneier said: "Too many wrongly characterize the debate as 'security versus privacy.' The real choice is liberty versus control."
https://www.schneier.com/essays/archives/2006/05/the_eternal...
Liberty is freedom with responsibilty, not free from responsibility. There's definitely a middle ground between "You can only license one house from Great Society, comrade" and letting America become a rent-extraction exercise rather than real value creation. Forgive me for looking dimly on the situation.
> If they have nothing to hide they have nothing to fear.
Ok then. Share with us your email and social media passwords -- and give us access to your Google Photos while you're at it. Otherwise -- what are you hiding?
You're comparing a democratic government's lawful actions to your silly demands on the internet?
Is nothing in our life private now? What about the need for privacy. Random ppl shouldn't know your financial holdings. We have a real lack of privacy now and easy access to the public records.
There is public benefit to knowing the beneficial owner of real estate. It is the physical assets of a community and the community benefits from knowing who ultimately owns those assets.
If you tax land properly, it doesn't matter who's the owner of the estate as long as the state can reach them or start a process to claw back the estate for nonpayment of taxes.
Ultimately, this appears to be yet another step in the direction of deep control of society over wealth and the people who have it.
Which, if you ever want to have anything of your own or be better than median in some way should concern you greatly.
Some people will not rest until you’re poorer and more miserable than them, no matter what. Even if it means hurting themselves (and everyone else) to do it.
Crabs in a bucket mentality is deeply destructive and dangerous.
Land is a scarce and valuable commodity that should be divided amongst the community to maximize its benefit for everyone, typically through taxation.
If you want the most valuable land, you should be operating enterprises that provide values high enough to pay for the land.
Ah, manipulative arguments here we come!
If property taxes don't vary based on who owns them, but rather by some standardized valuation, then why does it matter if it is owned by an LLC, a Corp, or some individual? The tax is the same and needs to be paid regardless. The land will need to be used effectively, or it's a cost on a balance sheet somewhere coming out of someone's pocket.
The 'utility based value' is always the same then, correct? And the incentive to use it effectively is the same too, correct?
The 'value' of these kinds of rule changes is because, eventually, the tax WILL be different based on who owns it. 'Good people' (based on the current political winds) of course being given good rates, and 'Bad people' getting punitive rates or having it outright seized.
Do you believe that wealth is an innate right no matter the societal cost -- that people should be able to own such things or amounts of things that it is to the detriment of those around them?
Wouldn't any detriment be related to the land/property itself, and hence that should be addressed?
For instance, if the owner is doing something obnoxious on a parcel in town, the town can put a lien on it, or condemn it. Then the problem is fixed and that parcel is taken away.
If someone is monopolizing hotels (say) in an area, the local county or state can pass a tax on hotels that make it less desirable to do that. Or start taking on anti monopoly action in the hotel industry in the area.
If that same person owns a parcel in another state, how do those two things relate? Or say one hotel in another state?
Unless someone also wants to go after that other parcel or property, anyway, as a prize.
I don't follow you. Wealth is ownership of resources. You are saying 'if the resources are a problem, take them away' which is saying 'remove the wealth'.
I'm saying if a specific resource is a problem due to how it is being used (per a general rule or principle that would be applied generally), then take it away after due process based on that rule or principle. Who owns it shouldn't matter, frankly. If it does, that is corruption - regardless if that person is rich or poor.
Not just because some specific person happens to own it that we don't like for whatever reason right now.
Also known as Article 1, Section 9, or a 'Bill of attainder'.
Aka penalize actual bad behavior equally, not people just because we think they have too much wealth.
That way, if people don't actually create problems, they can have wealth. If they do create problems, wealthy or not, they won't have tools to cause problems.
So the answer to this question: "Do you believe that wealth is an innate right no matter the societal cost -- that people should be able to own such things or amounts of things that it is to the detriment of those around them?"
Is 'no'? Couldn't you have just answered with that?
Because that is not the question I was answering at all. And I don’t appreciate you attempting to put words in my mouth.
You keep attempting to frame some sort of argument that the ‘sin’ is wealth or not, and the discussion is about if it is okay to take wealth or not.
I’m only interested in if someone is doing something identifiably harmful to others or not, and how to ensure someone is following the rules or not. And if the outcome works.
These are not the same thing, though there is overlap.
That you seem to think they are the same thing - with no evidence, and without addressing it - seems to actually be the crux of the problem, no?
If someone is ‘bad’ because they have wealth, the only available ‘good’ solution is to not have wealth. That is crabs in a bucket, and destructive.
If someone is ‘bad’ because they are breaking a rule or harming someone, the ‘good’ solution is for them to follow the rule or to stop harming someone.
That can actually make things better, assuming those rules or lack of harm actually works or produces wealth, because people can do that and be wealthy. There is incentive to produce and be more.
The big challenge right now is if you actually follow the rules, apparently you get screwed. Following the rules doesn't produce much wealth. Or at least that is the direction things are going.
And if you have wealth, especially if you follow the rules, you’ll be hounded and be at a significant disadvantage. Unless you don’t play by the rules.
Notably, this has always been the case to some degree.
The issue is the corruption, and the rules that are penalizing things either based on attributes someone cannot change, or encouraging things that destroy wealth, instead of encouraging people to change to be more successful by doing what society needs.
Now, perhaps the issue is that no one knows what 'the right thing' is, or what society actually needs in a sustainable way. In which case, actually talking about that might be helpful!
Or no one is willing or able to agree on some reasonable degree of potential harm. Everything has to be perfect (which is impossible).
We can only get to those discussions if we first face the actual argument we're even having though.
> And I don’t appreciate you attempting to put words in my mouth.
By having an answer which means one thing but you contend means another then you are having me guess at what the answer is. Answer the question or refuse to answer the question, or ask for a refinement of the question. Don't write an answer and then go off about how it doesn't mean what it obviously appears to mean.
> That you seem to think they are the same thing - with no evidence, and without addressing it - seems to actually be the crux of the problem, no?
Hmmm...who is putting words into which person's mouth?
You are writing a load of lecture material which is what you want to say but is not applicable to the question I asked:
'Do you believe that wealth is an inherent right even if the accumulation of that wealth or the holding of that wealth is a detriment to society?'
'Have you stopped beating your wife yet?' [https://en.wikipedia.org/wiki/Loaded_question]
I've been quite clear on my position (direct and implied). Why won't you be?
I'm interested in desired outcomes and expected behaviors and tradeoffs, not idealism. Sophistry is the enemy of realism and truth. A type of 'crabs in the bucket' mentality, actually, as it's about 'winning the debate' instead of 'coming to the truth'.
For example, your question is presupposing that there is ANY course of action that won't produce an outcome with some 'detriment to society', or at least some part of it. Or that a course of action could not have both positives AND negatives for the same people in society. Or that a right is ever actually inherent/inalienable, or not. Or that folks in a society may have the right to determine (independently) what they consider to be to their detriment or not.
Among other things.
What desired outcome are YOU advocating for?
Will you actually address the real questions?
"Does one have the right to have wealth (control enough resources) that one can impede society by act of controlling things and making them not-useful or exploiting them in a way that is a detriment to society?"
This is an easy question to answer, and you answered it and then un-answered your answer. Probably because when I clarified your answer to mean what it meant (by taking control of things away from people who are using them in a way society deems not useful or harmful, you are removing their wealth and thus they do not have a right to it) you violated some kind of principle you thought you held and had to backtrack.
Instead of engaging with this thought process you just proceeded to deliver a few unwanted lectures on things that you felt necessary. I must assume you lack the self-awareness and/or are regarding the question as loaded because it uses a word: wealth, which has a very distinct meaning (but you feel is being used ideologically).
Ho boy. I wish you luck with your future adventures, because you're going to need it.
Ciao!
Something like this argument applies to a lot of privately-created wealth, but not to land. Private ownership of land (and the profits generated by it) is completely philosophically incoherent if you spend a little time thinking about it, starting with the fact that private property rights require that stolen assets be returned and not able to be profited from, but all land is stolen when you trace back far enough, and all land ownership claims are the fruit of the poisoned tree.
The best approach would be one where the government issues long-term leases to parcels of land, but property taxes are an okay-ish alternative if that (or LVTs) aren't feasible. Note that this is already what we do for things like the EM spectrum: the government owns it in the public trust, then leases it with an open bidding process.
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.
So to clarify, you have an LLC in vegas owned by a holding LLC in Wyoming? Is that only for anonymity?
No the LLC in Las Vegas has nothing to do with the corporation in Wyoming, i provided it as reference to show that one may have a business in one state but be incorporated in another to protect personal assets, it’s quit common. We could have accomplished the same by placing each property in an a Nevada LLC but Wyoming corporations are cheaper, arguably easier to manage with better protection. Both states have no State taxes.
good.
wealth transfer is obscene.
You are either sorely misinformed or highly inept on the subject.
[edit] to provide clarity. Holding assets in trusts or LLCs has nothing to do with doing anything illegal, and you will find politicians, people working in 3 letter agencies etc all do the same, we all pay taxes just like you. So attempting to leaving a comment with a critical view particularly in contexts where it might be seen as unfair, unjust, or disproportionately benefiting the already wealthy at the expense of others just shows a lack of understanding of the subject. Even though my initial comment has nothing to do with taxes I will leave you with this.
"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
This quote captures the essence of tax planning and the legal right of individuals and businesses to minimize their tax liabilities within the bounds of the law. - Judge Learned Hand
If it wasn't obscene, why hide it?
Oh.
sigh. It has nothing to do with hiding and everything to do with protecting ones assets. My guess is you either have no children or little in assets; if you happen to have either and mean what you've written above I would suggest educating yourself on the matter before writing comments like you have. Good luck.
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?
There is nuance, but yes. It doesn't avoid taxes except in certain edge cases; it is a more efficient form of probate. The target of the assets is the "beneficiary."
https://smartasset.com/estate-planning/how-to-avoid-estate-t...
https://www.nerdwallet.com/article/investing/estate-planning...
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.
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.
This is actually quite easy. Lookup how to purchase a home with cash (its easy). The house is then assigned to an owning entity to become part of a portfolio. Then after a given time based on risk you can sell to generate revenue. Then disburse to other entities that lead back to the person that dropped in the cash. The wash is completed.
Where else could you drop large quantities of cash then translate that to clean money?
Pretty sure this fails at step one.
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.
This is actually quite easy. Lookup how to purchase a home with cash (its easy). The house is then assigned to an owning entity to become part of a portfolio. Then after a given time based on risk you can sell to generate revenue. Then disburse to other entities that lead back to the person that dropped in the cash. The wash is completed. Where else could you drop large quantities of cash then translate that to clean money?
It's not suspicious to sell property that you could not afford to buy in the first place? What do you report as the cost basis? Zero?
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:
That's just liar-loans, not money laundering.
Housing inflation everywhere is mostly due to the stock of housing growing a lot slower (or not at all) compared to the growth of broad money supply.
If there’s more of the thing that you use to account for stuff, but stuff doesn’t become more, the number in your units of account goes up.
Edit: Apart from that, there’s monetary premium put on real estate, as people effectively use it to short the currency by buying it with debt.
Can't some lawyer just be used as a proxy for holding the real estate?
This is what a trust is, more or less. Legal title, beneficial ownership, and control can all be vested in different entities.
I wonder if this is inspired at least in part by the Russian invasion of Ukraine. Their oligarchs are known to use this method quite a bit.
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.
That’s really nice to know. I’m not sure whether my situation would qualify under that rule, thought. I do appreciate you sharing that detail. Carve-out for a primary residence would be nice but in that circumstance, it still seems like someone over at the government knows where I live, which is suboptimal.
That being left aside, I am concerned about home intrusions much more than I am with economic equity for all _and_ I don’t think this measure will be a particularly effective control on the latter.
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.