US Treasury Department Takes Action Against Money Laundering in Real Estate

In an effort to clamp down on financial crimes, the U.S. Treasury Department has introduced new regulations aimed at curbing money laundering through cash purchases of residential real estate.
The regulations, finalized on Wednesday, target transactions involving legal entities such as trusts and shell companies, which have been identified as high-risk for money laundering activities.
Under the new regulations, real estate professionals and investment advisers will now be required to report detailed information about the parties involved in such transactions, including the names of sellers and beneficiaries, as well as specifics about the properties and payments.
However, these regulations do not apply to individual buyers or transactions that involve mortgages or other financing options.
Newsweek reached out to the U.S. Treasury Department via email on Wednesday for comment.
The initiative is part of the Biden administration’s broader strategy to address the movement of illicit funds through the American financial system. Cash purchases of residential properties have long been viewed as a potential avenue for laundering dirty money, a practice that can also inflate housing prices.
This comes as rising home prices are one of the big economic issues in this year’s presidential campaign, which will see Democratic presidential nominee Kamala Harris face off against Republican presidential nominee Donald Trump.
In a news release, Treasury Secretary Janet Yellen pointed towards the significance of these new rules, stating that they aim to close critical regulatory gaps and prevent criminals from exploiting the U.S. real estate and investment sectors.
“These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors,” Yellen said.
According to the Associated Press (AP), FACT Coalition, a nonprofit advocating for corporate transparency, praised the regulations. Executive Director Ian Gary said that the rules are “much-needed safeguards” that represent a crucial step in the fight against financial secrecy and impunity for financial criminals in the U.S.
“After years of advocacy by lawmakers, anti-money laundering experts and civil society, the era of unmitigated financial secrecy and impunity for financial criminals in the U.S. seems to finally be over,” Gary told the AP.
The Treasury Department previously announced in 2021 they wanted new regulation requirements for all-cash real estate deals and asked for the public’s input on a new real estate market regulation that would address weak spots in the current market.
In 2021, Himamauli Das, the acting director of the Treasury Financial Crimes Enforcement Network, said in a statement that more transparency about purchases from the real estate market could “strengthen U.S. national security and help protect the integrity of the U.S. financial system.”
“Increasing transparency in the real estate sector will curb the ability of corrupt officials and criminals to launder the proceeds of their ill-gotten gains through the U.S. real estate market,” he added.