By: Frederick Reese
The increase in cash sales on high-valued properties and the condo craze in Miami does not necessarily mean anything illicit is going on beyond these particular laundering cases. However, it increases the likelihood that something could be happening. Real estate and the nation’s limited liability laws offer money launderers an extraordinary amount of cover and maneuverability.
A limited liability company is a sole proprietorship or partnership that maintains a veil of partial anonymity for its owners or “members.” An LLC works by creating an assumed “personage” that acts on the behalf of the LLC holders’ interests. An LLC can hold property, enter into agreements, create accounts and act as a legally-compliant individual, while not bearing the corporate tax obligations and filing requirements of a proper corporation.
As long as LLC’s resources and those of its “members” do not directly or conspicuously mingle and as long as the LLC does not create a “nuisance” — such as incurring debt beyond its means to repay or causing felonious offenses — the veil of anonymity cannot be pierced. This means that “members” of the LLC can enter or leave the agreement undetected, can change ownership without requesting permission, and in some states, with only one natural person needed to maintain the validity of an LLC, the LLC can collapse without the need to reassign or restructure the company’s holdings.
Most importantly, for most states, setting up an LLC is an easy three-step process. First, a person has to pick a unique LLC name that complies with the state’s business naming laws. Second, a person has to fill out the LLC Articles of Organization and mail it to the state’s Secretary of State, along with the filing fee and any taxes that may be due on filing. Finally, a notice of the LLC filing must be published in the filer’s local newspaper, if the filing state requires this.
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