US seeks to crack down on real estate money laundering

THE US Treasury Department’s financial crimes unit on Wednesday (Feb 7) proposed a plan that will require real estate professionals to flag suspicious activity, in a bid to curb illicit funds flowing through residential real estate.

The plan, proposed by the Financial Crimes Enforcement Network (FinCEN), would require reporting from real estate professionals involved in cash transactions for residential real estate. Anti-corruption advocates have long pushed for regulators to close a loophole seen as allowing illicit funds to flow through cash home purchases.

Last year, Treasury Secretary Janet Yellen acknowledged that criminals for decades have anonymously hidden ill-gotten gains in real estate, estimating US$2.3 billion was laundered through US real estate between 2015 and 2020.

Financial institutions have long been expected to flag suspicious activity to regulators, but cash real estate transactions generally have not been subject to such rules.

Now, certain people involved in real estate closings would have to file and keep records of suspicious activity, according to FinCEN’s proposal filed with the US Federal Register.

Officials first said in 2021 that they planned to implement such a rule. REUTERS