Transparency International-USA statement on New York rules for shell companies and real estate deals

As a follow up to the New York Times series “Towers of Secrecy,” which revealed how billions of dollars’ worth of luxury real estate in New York City has been purchased using shell companies, New York City imposed new disclosure requirements in May 2015 on shell companies buying and selling property in the city. The new rules will require the names of all members of a shell company buying or selling property to be disclosed to the city. These disclosures will not be made public and are intended to help identify real estate owners who may be avoiding taxes.

“These New York City disclosure requirements should not be confused with beneficial ownership transparency of shell companies which would shed a light on true owners and beneficiaries of vehicles used to enable corrupt transactions,” said Claudia J. Dumas, President and CEO of TI-USA.

Transparency International- USA has long been advocating for the U.S. Department of Treasury to close loopholes in the current legal framework that allow corrupt individuals to launder money in the United States through anonymous real estate transactions. Millions of dollars are spent in the United States on luxury property by persons who disguise their identity using anonymous companies. They are able to do so because U.S. law does not otsts as a result of a temporary exemption granted in 2002 which require the real estate industry to carry out background checks on the source of purchase funds and determine who is the ultimate (“beneficial”) owner.

“The use of real estate to hide corruptly acquired funds by wealthy individuals from outside the United States by using anonymous shell companies is well known. The best way to address this issue would be to require public registers of beneficial owners of companies and to require intermediaries in the real estate transactions to conduct due diligence on the source of money for these purchases,” said Shruti Shah, Vice President for Programs and Operations at TI-USA.

Under its recent initiative, UnmasktheCorrupt, Transparency International is calling on governments around the world to deny the corrupt the ability to enjoy luxury lifestyles and to take actions to support the return of funds to the countries from which funds have been stolen. Transparency International-USA is the U.S. chapter of the global Transparency International movement, which is present in more than 100 countries around the world. TI-USA is committed to combatting corruption both in the United States and internationally.

Notes to Editors:

• TI-USA previous letters to the Financial Crimes Enforcement Network (FinCEN) can be found here and here.

For any press enquiries please contact

Claudia Dumas
Telephone: 202-589-1616
Email: [email protected]

Shruti Shah
Telephone: 202-589-1616
Email: [email protected]