REHOBOTH BEACH, Delaware: Money launderers attempting to legitimize illegal wealth by purchasing residential real estate with cash will now face new regulations introduced by the Treasury Department.
Investment advisers and real estate professionals must now report cash transactions involving residential properties sold to legal entities, trusts, and shell companies. The requirements do not apply to sales to individuals or purchases involving mortgages or other financing.
The Biden administration is broadening its efforts to combat money laundering and prevent the flow of illicit funds through the U.S. financial system. The Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury, will oversee the implementation of these rules.
A 2019 study on money laundering’s impact on Canadian real estate found that such activities could increase housing prices by 3.7 percent to 7.5 percent. Under the new regulations, professionals involved in these transactions must report the names of the sellers and beneficiaries, as well as details of the property and payments involved.
Treasury Secretary Janet Yellen stated that the new rules address significant regulatory gaps in the system.
Ian Gary, executive director of the FACT Coalition, which advocates for corporate transparency, praised the regulations as essential safeguards against money laundering.
The new rules have received some support from industry representatives. Tori Syrek, spokesperson for the National Association of Realtors, called the regulations a practical approach to combating money laundering.
The Biden administration has prioritized increasing corporate transparency, including requiring small businesses to register with the government to prevent the misuse of anonymous shell companies. However, in March, a federal district judge in Alabama ruled that the Treasury cannot mandate small business owners to disclose details about their owners and beneficiaries.