If you have been thinking about moving to the Miami area, check your bank account. Miami’s rentals are the most expensive in the country and the skyrocketing cost of real estate (especially luxury condos) knocks most people out of the market for buying a home, according to a story in the Miami Herald. The focus on pricey real estate in southern Florida comes courtesy of revelations from the Panama Papers.
News of the 11.5 million documents leaked from Mossack Fonseca, an international law firm headquartered in Panama, was announced simultaneously last Sunday by 100 publications, including the Miami Herald, that had been working with the paperwork trove since late 2014. Mossack Fonseca specializes in setting up shell companies for offshore accounts. The law firm claims all clients are carefully vetted and that everything it arranges for clients is legal. The disclosures, however, have already led to high-level resignations in Europe, denials by the British Prime Minister, and China’s censoring of all mentions of the leaked documents. Now it appears the shells may be cracking on multi-layered companies that paid cash for Miami high-rise condos.
All-cash real estate purchases in Miami aren’t a new thing. “Cocaine cowboys” with bags of 100 dollar bills were a common sight in the 1980s, before closer scrutiny of real estate transactions and cash deals. Cash has always been common with foreign buyers in Miami, who often invest in U.S. real estate because they view this country as a tax haven. Cash is still common in Miami transactions, accounting for 90 percent of all new construction purchases in 2015.
Miami’s history of money laundering puts in a short list with New York City and Los Angeles for the most suspicious financial activity reports to the U.S. Financial Crimes Enforcement Network (FinCen), a division of the U.S. Treasury.
Shell companies moving cash around raise suspicions but finding the true owners is often difficult. Or at least discerning ownership was much harder before the release of the Panama Papers. With its access to the leaked Mossack Fonseca documents, investigators from the Miami Herald have already begun to figure out who owns some of those multi-million dollar high-rise condos overlooking South Beach.
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