U.S. Sen. Sheldon Whitehouse (D-RI) is calling on the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to codify and strengthen the disclosure requirements for all-cash real estate transactions conducted through shell companies.
These disclosure requirements are for geographic targeting orders (GTOs), which FinCEN instituted in 2016 as a six-month pilot program in the New York and Miami metro areas to respond to the growing concern over money laundering through American real estate.
The program requires property title insurers to report to FinCEN beneficial ownership information—the real person or interest—of shell companies that use cash to purchase high-priced real estate. Since its launch, the program has expanded to a dozen jurisdictions in the U.S.
“The United States is engaged in a ‘clash of civilizations’ between rule-of-law nations and those governed by autocracy, kleptocracy, and criminality,” Whitehouse wrote to Himamauli Das, the acting director of FinCEN. “Regrettably, in that clash rule-of-law nations like the United States continue to aid and abet our adversaries by providing sanctuary for their stolen wealth, including by allowing anonymous transactions in the $60 trillion U.S. real estate market.”
Whitehouse is asking FinCEN to codify the reporting requirements and implement several changes to the GTO program. Specifically, he’d like to see it implemented across the country. He also advocates for eliminating the dollar thresholds for coverage and adding commercial transactions; aligning the definition of beneficial owner with the newly-enacted Corporate Transparency Act and collecting beneficial ownership information for certain sellers; documenting the source of funds; and ensuring someone is always responsible for filing.
“FinCEN must use this rulemaking as an opportunity to prevent kleptocrats and corrupt actors from hiding their illicit gains in the U.S. real estate market, to plug holes through which illicit cash can flow, and to protect the U.S. financial system,” Whitehouse added.