Mansion Global

‘Panama Papers’ Confirm Funny Money in Miami Property Market

The Miami Herald identifies several real estate players hidden behind shell companies  

Save

An unprecedented leak of documents from Panama-based Mossack Fonseca reveals shady players active in South Florida property.

Sylvain Sonnet / Getty Images
An unprecedented leak of documents from Panama-based Mossack Fonseca reveals shady players active in South Florida property.
Sylvain Sonnet / Getty Images

It’s being called the “largest leak in history.” The so-called Panama Papers shine a bright light on “one of the world's most secretive companies,” the Panamanian law firm Mossack Fonseca. In the BBC’s words, the documents “show how Mossack Fonseca has helped clients launder money, dodge sanctions and avoid tax.” Much of the reporting so far has focused on “the $2bn offshore trail that leads to Vladimir Putin.” The Miami Herald took a closer look at home — the property market, in particular. The Panama Papers, they report, “offer a glimpse into the tightly guarded world of high-end South Florida real estate and the global economic forces reshaping Miami’s skyline.” As the Herald points out, there’s nothing inherently illegal about offshore companies and holdings. It’s not uncommon for wealthy buyers to seek privacy behind the closed walls of corporate entities that — again, legally — shield their identities. But “the secrecy that surrounds those companies makes it easy and tempting to break the law,” the Herald’s Nicholas Nehamas wrote. Money laundering is a problem for every major city around the world, but Miami-Dade County is arguably at greater risk. Specifically, the U.S. Treasury Department is now looking more closely at $1 million purchases made by shell companies; cash deals accounted for more than half of all sales in Miami in 2015, or double the national average. The Herald writes: [A]nalysis of the never-before-seen records found 19 foreign nationals creating offshore companies and buying Miami real estate. Of them, eight have been linked to bribery, corruption, embezzlement, tax evasion or other misdeeds in their home countries. That’s a drop in the ocean of Miami’s luxury market. But Mossack Fonseca is one of many firms that set up offshore companies. And experts say a lack of controls on cash real-estate deals has made Miami a magnet for questionable currency. “The guys who want to clean up dirty money are always going to try to penetrate the system at its weakest spot,” said Joe Kilmer, a former Drug Enforcement Administration special agent. “You’ve got so much real estate being bought and sold in South Florida. It’s easy to hide in plain sight.”

The Panama Papers were obtained from an anonymous whistleblower by the German newspaper Süddeutsche Zeitung, whose editors shared them with The International Consortium of Investigative Journalists. The ICIJ partnered with 109 media organizations in 76 countries to analyze the estimated 11.5 million documents. By way of comparison, the Edward Snowden leak of classified NSA information is believed to have involved 1.7 million documents, just 200,000 of which were given to journalists. More:High-End Home Buyers Will Find It Harder to Remain Hidden