New Anti-Money Laundering Proposal Targets Real Estate Transactions

By Franco Faraudo

It has long been known that real estate is one of the many places where criminals and corrupt politicians put their ill-begotten gains. Treasury Secretary Janet Yellen even estimated that as much as $2.3 billion was laundered through U.S. real estate between 2015 and 2020. Currently, there are rules requiring the benefactors of real estate purchases to be disclosed but only in a few select cities like New York and Miami. Now the Federal government announced an upcoming rule change that would require title insurers to report the identities of any transaction in the country to the Treasury’s Financial Crimes Enforcement Network.

The disclosure law has been a long time coming, but many worry that it might not be enough to actually cut down on money laundering. FinCEN has struggled to complete a related rule that would disclose the benefactors of shell companies, which are often used in the purchase of real estate. Without that rule, a huge loophole might still be available to those who want to buy a property in the U.S. with anonymity. There are also concerns that the Financial Crimes Enforcement Network will not be able to handle the huge increase in data without a much larger budget. Loopholes and enforcement aside, the new disclosure rule will change the real estate transaction process for decades to come.

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