The Biden administration is asking for greater reporting requirements on all-cash real estate transactions as it tries to crack down on money laundering in real estate.
The expanded regulations could force title insurance companies to turn over information about cash purchases from sell companies in more metro areas. Currently, title insurance companies in only 12 metro areas—including New York, Boston, Chicago, Los Angeles, San Francisco, and others—are required to file reports that identify customers who make all-cash purchases of residential real estate through shell companies if the transaction is greater than $300,000. The new regulations could expand reporting requirements to cover the entire U.S.
Also, the new regulations could include new disclosures for commercial purchases in addition to residential sales, Bloomberg reports, citing information from two senior administration officials.
Administration officials say the goal is to prevent those who obtained their money through corrupt or illicit acts from using U.S. real estate to hide it.
“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,” says Himamauli Das, acting director of the Treasury Department’s Financial Crimes Enforcement Network. “Addressing this risk will strengthen U.S. national security and help protect the integrity of the U.S. financial system.”
Earlier this year, Congress passed legislation requiring shell companies with 20 or fewer employees and less than $5 million in annual sales to report ownership information to the department. Some critics of the law have complained that the extra reporting requirements have created additional legal costs for small businesses.