Debbas of Romer Debbas predicts new U.S. Treasury rules will have an adverse impact on New York's luxury market

New York, NY New Federal rules requiring that entities, such as LLCs, which invest in or purchase New York luxury apartments, identify their members will likely negatively affect the market for sale of such properties, predicts one expert who has represented hundreds of foreign national buyers and investors. The rule, announced in January by the Treasury Department, became effective March 1. It is intended to trace alleged money laundering operations, but may come at a price to the New York economy, according to Pierre Debbas, partner in the law firm Romer Debbas, who specializes in helping foreign buyers legitimately create such identities for tax planning and liability protection. The fact that the Treasury Department has information on foreign buyers in itself is not a bad thing and very well may uncover illicit dealings, said Debbas. “But what if perfectly U.S. legal transactions must now be made available to any foreign government, including China, where many foreign investors reside and where there are legal limits to how much citizens can spend outside of the country.” “If China or other countries are given open access to U.S. data, these countries could prevent their citizens from making investments that are perfectly legal in the U.S. This could divert a significant amount of capital from New York and eventually other U.S. cities to foreign cities such as London,” Debbas said. “At the very least Treasury should make some assurance they will not release information on investors unless they were sure the investors were violating international law or engaging in money laundering.” “In representing hundreds of foreign nationals in my career, I can fortunately say I have never been suspicious of any money-laundering activity from our clients,” said Debbas. “Every transaction in New York City is already recorded on The Automated City Register Information System (ACRIS), but there are buyers who do not want the whole world to know where they live or how much they paid for their property.”