WASHINGTON, December 6 - The Biden administration pledged on Monday to crack down on criminals, kleptocrats and others who pay cash for houses to launder money as part of a larger anti-corruption drive linked to this week's U.S. Treasury Secretary Wally Adeyemo, who spoke to the Brookings Institution think tank, as well as to tighter enforcement and increased collaboration with allies.
In June, President Joe Biden ordered officials to step up the fight against corruption. The U.S. national security strategy on countering corruption was released Monday.
The current law allows people to form companies anonymously to conduct all cash real estate deals that hide their source of funds, so real estate markets are at risk of becoming a safe haven for criminals, kleptocrats, and others seeking to park corrupt profits, Adeyemo said.
A third of all U.S. home sales are due to all-cash real estate deals, according to the National Association of Realtors.
Non-profit Global Financial Integrity estimates that $2.3 billion has been laundered through the U.S. real estate market over the past five years due to the article US-US corruption-realestate u-s targets-money-laundering-in-all-cash homebuyers.
Half of the transactions it looked at involved politically exposed people at higher risk for corruption and bribery.
The latest U.S. moves came after a series of leaked documents, including October's release of the Pandora Papers at www.reuters. The documents-dump allegedly links world leaders secret-wealth -- 2021 -- 10 -- 03, raised questions about how government officials and others discreetly move money abroad, possibly to dodge taxes or accountability for wrongdoing.
The Treasury Department is creating a new rule that will require disclosures from certain types of U.S. and foreign companies to identify who is behind all-cash real estate transactions and find out if those purchases are being used to hide illegal profits.
Adeyemo said Treasury would make sure that the cost of compliance did not harm small businesses, and should total no more than $50 per company.
The agency may require more investment funds, such as hedge funds and private equity vehicles, to engage in anti-money laundering efforts. They expect to announce as soon as this week new efforts to create a database identifying the owners behind shell companies that used to move money anonymously.
Adeyemo said that Treasury had sanctioned 216 targets using anti-corruption authorities, including Monday's designation of a Democratic Republic of Congo national accused of providing funds to blacklisted Israeli investor Dan Gertler.
Biden is hosting a virtual democracy summit with 110 participants on Thursday and Friday in an effort to confront what his administration sees as authoritarian forces led by China and Russia.