Biden's Treasury Department takes aim at Trump and Putin with money laundering crackdown in real estate market

  • In Politics
  • 2021-12-07 18:18:17Z
  • By Business Insider
Trump, Putin, Biden
Trump, Putin, Biden  
  • The Biden administration unveiled new rules for fighting money laundering in real estate on Monday.

  • Treasury would ramp up scrutiny of all-cash deals, which now face less regulation than deals with loans.

  • Under current law, moguls like Trump don't have to disclose key details on all-cash deals under $3 million.

The Biden administration is set to crack down on all-cash deals in the housing market, a type of transaction beloved by former President Donald Trump and many Russian oligarchs close to President Vladimir Putin.

The effort aims to stamp out money laundering and other illicit activity, the Treasury Department's Financial Crimes Enforcement Network said in a Monday statement.

Specifically, the administration wants buyers in all-cash purchases worth at least $300,000 to disclose more information in such deals. The current limit is $3 million and only applies in the largest US cities. The lower threshold would allow FinCEN to monitor a much larger set of purchases for potential illicit activity. Since all-cash purchases don't involve mortgages and the bank requirements that come with them, it's currently "nearly impossible" to trace buyers behind their shell companies, the agency said.

"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 US real estate market," FinCEN Acting Director Himamauli Das said. "Addressing this risk will strengthen US national security and help protect the integrity of the US financial system."

President Donald Trump completed 14 all-cash purchases in the nine years before his presidential campaign, The Washington Post reported in 2018. The spending spree included five East Coast golf clubs and a Virginia winery, along with several multimillion-dollar purchases abroad. The all-cash deals are the kind that could fall under increased scrutiny from Treasury's new regulations, and investigations by ProPublica and WYNC have linked Trump's real-estate deals to alleged money launderers and criminal activity.

The regulation could also squash Russian oligarchs' interest in US real estate. The fall of the Soviet Union in the early 1990s created a small band of Russian billionaires as the national economy was privatized and businesses were sold at steep discounts through political connections, particularly ties to current president Vladimir Putin. The following decades have seen much of that cash parked outside of Russia, and US real estate has been a favorite for Russia's wealthiest.

In fact, a Reuters report in 2017 found that wealthy Russians had piled at least $98 million into Trump-branded properties in southern Florida. Separately, roughly one-third of owners in seven Florida-based Trump properties are limited liability companies, which obscure the identity of the true owners. The report found no wrongdoing by Trump or his business, but the deals - and their lack of key details - underscore just how murky all-cash real estate deals can be.

Laws passed after 9/11 ramped up regulation of the US financial sector and fought money laundering in banks. That shifted Russian wealth into US real estate, and the lack of similar rules allowed Russian billionaires to benefit from the surge in property values while keeping a low profile, Franklin Foer, a reporter at The Atlantic, told NPR in 2019.

"We closed off banking and then opened up the real estate sector to become this giant magnet for kleptocratic fortunes," Foer said. "There's a journalist who jokes Vladimir Putin could own those properties, and we wouldn't know."

The rules for all-cash real estate purchases are part of a collection of new regulations announced by the Biden administration on Monday. The White House also rolled out proposals for beefing up intelligence and law enforcement agencies to root out corruption, as well as improving collaboration across agencies for anti-corruption work.

Apart from the real-estate rules, the administration also aims to target financial-sector "gatekeepers" like lawyers and accountants to make it harder for them to avoid oversight. New transparency regulations could also make it easier for the government to identify bad actors hiding behind shell companies and other corporate structures, the White House said.


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