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The Federal government is seeking to crack down on money laundering by unmasking individuals behind large all-cash purchases of Manhattan real estate by shell companies. For the next six months, through a new pilot program, the U.S. Treasury Department will require companies to disclose the names of individuals behind all-cash purchases of more than $3 million by LLCs.

While the new transparency requirements for limited liability companies are a positive development in the face of international money laundering, the program’s focus on the highest-end real estate neglects the New Yorkers we work with at the Center: those who own, or desire to own, more modest homes, largely in boroughs outside of Manhattan. These homeowners are among those most harmed locally by the rise in the use of shell LLCs in New York City real estate deals.

According to WNYC, all-cash LLC sales now comprise more than 10 percent of all residential condo and single family home sales in the five boroughs. For would-be first-time home purchasers, who almost always require a mortgage, it is increasingly difficult to compete in such a market.

LLCs play an even more corrosive role: they are used to perpetrate foreclosure rescue and deed theft scams that harm the City’s middle- and working-class homeowners. As we documented in our report, Who Can You Trust?, scammers actively target homeowners at risk of foreclosure, relying on the anonymity of LLCs to evade detection and responsibility for their crimes. These scammers seek to defraud homeowners looking for help with their mortgage by stealing their money or even the deeds to their homes — a trend that is accelerating and becoming more sophisticated with the booming real estate market.

The New York Times, which scrutinized the role of LLCs in home scams last fall, profiled several homeowners who were tricked into signing over the deeds to their homes, including Ozella Campbell, an elderly, disabled Bedford-Stuyvesant homeowner who lost her family’s brownstone to an LLC with a Great Neck, N.Y., address. However, no company by that name exists there, and Campbell’s relatives cannot reach the company’s owners. Ms. Campbell is stuck with an overdue $529,000 mortgage and now lives in an unheated, illegally converted garage in Canarsie, Brooklyn.

When scammers hide behind the LLC structure, it becomes extremely difficult for homeowners to undo wrongs committed against their property or to seek justice. Often it is impossible to even identify the individuals affiliated with the LLC. For example, one homeowner in the Times story discovered that the deed to her home had been fraudulently transferred to an LLC that listed her home address as its address. And even when homeowners are able to take their cases to court and to win judgments against LLCs, the individuals perpetrating the scam can simply dissolve the corporation and evade liability, while continuing to operate under a new corporate entity.

The abuse of the LLC structure is not only a problem in New York: A recent CityLab piece details how LLCs in Detroit fail to pay taxes on a property and then form a new entity to repurchase the same property at auction at a fraction of the debt owed.

If the Treasury is going to take a stand against faceless LLCs dealing in luxury condos in Manhattan, they should also look out for some of our most vulnerable citizens. While there are plenty of legitimate reasons to employ the LLC structure, our government has a responsibility to take all steps necessary to increase transparency and keep out the bad actors, whether they be oligarchs from abroad or scammers from the next county over.