Focus is on money laundering, tax evasion
Paying in cash is a great way to get real estate sellers to accept your offer. They can close quickly without having to worry about whether the buyer has a bank loan approved. It can also be a great way to launder money, and that’s what has the Treasury Department concerned as it seeks public comment on possible regulation of all-cash real estate transactions exceeding a certain dollar amount.
“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,” Himamauli Das, acting director of Treasury’s Financial Crimes Enforcement Network, told the Associated Press.
As it stands, in 12 U.S. metropolitan areas title insurance companies must identify buyers in such transactions exceeding $300,000 for residential real estate purchases through a shell corporation. International criminals have long used cash purchases of U.S. real estate to launder illegally earned money. Current and former heads of state and government officials from other countries have used cash real estate purchases through shell companies as a tax dodge, sometimes legally, sometimes not.
The Treasury’s move is part the Biden administration’s U.S. Strategy on Countering Corruption. “As the world’s largest economy, the United States bears responsibility to address gaps in our own regulatory system and work with our allies and partners to do the same,” the White House said in a release announcing the strategy Monday.
Having more oversight over all-cash real estate transactions could “strengthen U.S. national security and help protect the integrity of the U.S. financial system,” Das said.