REHOBOTH BEACH, Del. (AP) — The U.S. Treasury Department has regulations issued The aim is to make it more difficult for criminals to launder money through cash payments for residential properties.
Under the rules passed Wednesday, investment advisers and real estate professionals will have to report cash sales of residential properties to legal entities, trusts and shell companies. The rules do not apply to sales to individuals or purchases with mortgages or other financing.
The new rules are part of the Biden administration’s efforts to combat money laundering and the movement of dirty money through the American financial system. Purchasing residential real estate using only cash is considered a high money laundering risk.
The Treasury Department’s Financial Crimes Enforcement Network, also known as FinCEN, will administer the regulations.
Money laundering in the residential property sector can also drive up housing costs – and rising property prices are one of the major economic problems In this year’s presidential election campaign. A 2019 study on the impact of money laundering on real estate values A study conducted by a group of Canadian scientists found that money laundering investments in real estate drove up property prices by 3.7 to 7.5 percent.
Under the new rules, professionals involved in the sale must disclose the names of the sellers and the people who will benefit from the transaction. They must also provide details of the property being sold and the payments related to it, among other things.
Treasury Secretary Janet Yellen said in a press release that the new rules would address some of the country’s biggest regulatory deficiencies.
“These steps will make it harder for criminals to exploit our strong residential real estate and investment advisory sectors,” she said.
Ian Gary, executive director of the FACT Coalition, a nonprofit organization that promotes corporate transparency, called the rules “much-needed safeguards” in the fight against dirty money in the United States.
“After years of advocacy by lawmakers, anti-money laundering experts and civil society, the era of complete financial secrecy and impunity for financial criminals in the United States appears to finally be over,” Gary said.
Some industry representatives welcome the new rules.
Tori Syrek, a spokeswoman for the National Association of Realtors, said FinCEN’s final rule is a pragmatic approach to combating money laundering and other crimes. “Bad actors are taking advantage of current vulnerabilities,” Syrek said. “FinCEN’s final rule is a pragmatic, risk-based approach to combating money laundering and these other crimes.”
The Biden administration has made increasing corporate transparency part of its overall agenda, including by creating a requirement that tens of millions of small businesses register with the authorities to prevent the criminal misuse of anonymous shell companies.
However, a federal district judge in Alabama ruled in March that the Treasury Department cannot require small business owners to provide detailed information about their owners and other people who benefit from the business.
