New US rule targeting real estate money laundering slated for early 2024

06.22.2024

A long-awaited rule meant to clamp down on money laundering through the U.S. real estate market is likely to be proposed in early 2024, according to the U.S. Treasury Department.

The new regulations may require real estate professionals to report the beneficial owners of companies that buy properties in cash to the department’s Financial Crimes Enforcement Network, according to Reuters.

In August, Reuters reported that FinCEN was slated to issue a notice of proposed rulemaking that month but the agency pushed back the timeline without explanation.

ICIJ learned that FinCEN submitted the rule to the White House’s Office of Management and Budget for review last week, with a view to formally proposing it in February 2024.

Treasury’s announcement coincided with the release of a new report by anti-corruption advocacy group Transparency International, which found that the U.S. lags behind other wealthy countries in its anti-money laundering framework for the real estate industry.

To inform recommendations for U.S. lawmakers, the report compared data from 21 countries, 19 of which are members of the Organization for Economic Cooperation and Development, or OECD.

Researchers described the United States as a “singular outlier” among the surveyed countries. In all but the U.S., anti-money laundering obligations for real estate transactions applied across the entire country, and to both residential and commercial property purchases, the report said.

The sector’s lack of transparency has been on Treasury’s radar for some time. In March, Treasury Secretary Janet Yellen cited one estimate that at least $2.3 billion in illicit funds were laundered through U.S. real estate between 2015 and 2020.

Banks, by comparison, are required to track the source of clients’ funds and report suspicious transactions to FinCEN.

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