Russian oligarchs will not like this: New York passed a new law on real estate

To increase the transparency of real estate transactions, New York State passed an innovative law in September. How will this affect the Russian oligarchs and why they will not like it, writes the publication Eurasianet.

Wealthy and influential people from the former Soviet Union have long used shell companies registered as limited liability companies to buy real estate in Manhattan. Moreover, they mainly paid in cash.

“It was a legal way to keep the name of the buyer of the property secret, which allowed to launder illegal proceeds. But such fraud in the state of New York seems to have sunk into oblivion, ”the publication said.

What changes the new law

According to the new law, when concluding most types of real estate transactions in the state of New York, it is now required to disclose information about all the owners, managers and agents associated with the LLC participating in the transaction.

The Hudson Institute’s Kleptocracy Initiative on Twitter called the law “bad news for kleptocrats gaining wealth in Manhattan penthouses.”

It is still unknown whether the information disclosed on real estate buyers will be in the public domain.

On the subject: The pitfalls of buying and selling housing in the US: realtors answered questions from readers ForumDaily

"Member of State Parliament and co-author of the law Alessandra Biagi reported New York real estate blog that this information can be obtained using the procedure provided for by the Law on Freedom of Information, ”the publication notes.

At the same time, some real estate lawyers believe that people involved in transactions with LLCs will try to stop any attempts to divulge these data through the courts.

Why does the new law affect Russians

Over the past two decades, buyers from Russia and other former Soviet republics have spent hundreds of millions of dollars buying luxury real estate in New York, particularly in Manhattan. This is evidenced by various publications since the 2014 year.

For example, the investigation In the 2015 year, the New York Times revealed that in just one multi-story building that towers above New York City Central Park, various buyers from the Eurasian region were the actual owners of 20 apartments worth more than $ 200 million.

“The vast majority of purchases are related to LLCs,” the source said.

Other investigation in 2018, it showed that among those who earned large capital through transactions involving LLC, was the real estate empire of Donald Trump.

Interest in real estate fades

However, the source notes that in recent years, the interest of the oligarchs in New York real estate decreased.

“There are a number of reasons for this, including growing tensions between the US and Russia, the economic downturn in Russia, as a result of which the Kremlin is forcing oligarchs to invest domestically, and the introduction of a high tax on real estate transactions in New York City in the amount of over a million dollars, ”the publication explained.

Journalist Leonid Ragozin, living in Riga, on Twitter call New York Legislative Initiative "Step Forward." However, according to him, much remains to be done so that the United States ceases to be a place for the influx of dark money from Eurasia.

Ragozin also said that the US government was forcing small countries, especially Latvia, to increase the transparency of their banking sector. However, it did not show the same interest in changing its own mechanisms that created the conditions for money laundering, especially “financial black holes like Delaware.”