Police crack down on empty New York and Miami apartments that are used to hide 'dirty money'

So-called shell companies will have to report the buyer’s identity if they make a large, all-cash purchase for clients in Manhattan and Miami

Anyone paying over $3 million for a New York apartment will have to reveal their identity (Beauchamp estates)

Wealthy individuals who channel money into high end property in New York and Miami will no longer be able to hide behind all-cash transactions as police crack down on money laundering in the real estate market.

A move from the Financial Crimes Enforcement Network (FinCEN) means that anyone who buys a property in Manhattan for over $3 million or in Miami-Dade County for over $1 million without external financing will have to reveal their identity to the authorities.

All-cash transactions are usually made via title insurance, or “shell”, companies, who will have to report the information from 1 March. Shell company transactions are extremely common in the high end real estate market and are perfectly legal.

FinCEN is concerned, however, that buyers of property who hand over large amounts of cash are using those apartments and houses to embezzle funds.

“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,” said FinCEN Director Jennifer Shasky Calvery in a statement.

This is the first time such a move has been made.

The reported information will be put into FinCEN’s database and made available to law enforcement officials.

A New York Times article found that there were more than 1,045 residential sales in Manhattan in the last six months of 2015 that breached the $3 million mark, according to real estate data company PropertyShark.

Jonathan Miller, President and CEO of real estate appraisal firm Miller Samuel, said the $3 million threshold in New York means that the move affects the top 10% to 15% of residential properties in the market. Only 15% of Manhattan-based residential property is foreign-owned, but that increases to nearer 40% when just looking at modern apartments.

"New York has a long history of cash transactions - it's around 50% of transactions now - and the majority of ownership is domestic. We have the most billionaires in the world living in New York," he said.

He questioned the impact of the new law, adding that the requirement to report the buyer’s identity only lasts for six months and therefore anyone involved in illicit dealing would likely be “put off” anyone from buying property during that time.

Mr Miller also said that New York has a “tremendous” number of empty apartments as the market is pied-à-terre and suburban dwellers often also have an apartment in the city.

A high-end estate agent in New York, who did not want to be named, told The Independent: “Increasingly in New York, buildings of expensive apartments are going up - there may be some lights on but no one is home.”

Land prices are at a record high, pushing property developers to create high end modern condos and not provide affordable housing.

Certain Limited Liability Companies and title insurance companies will be covered under this order because “title insurance is a common feature in the vast majority of real estate transactions”, the Treasury Department said Wednesday.

The enforcement will remain valid from 1 March until 27 August 2016, and will be extended across the country depending on the initial findings.