U.S. Treasury Intensifies Efforts to Combat Money Laundering in Real Estate, According to Reuters

U.S. Treasury Targets Money Laundering in Real Estate Sector

The U.S. Treasury has intensified its efforts to combat international money laundering within the real estate market by requiring title insurance companies to disclose the identities of all-cash buyers in select regions of California and Texas, as well as additional areas in New York and Florida.

Originally focused on Manhattan and Miami-Dade County, the initiative will expand in August to include all five boroughs of New York City, Florida’s Broward and Palm Beach counties, Los Angeles, the San Francisco Bay Area, San Diego, California, and San Antonio, Texas.

The information collected will not only aid in identifying potential suspects involved in illicit activities but will also be shared with local law enforcement. According to the Financial Crimes Enforcement Network (FinCEN), this data will inform future regulatory measures.

"By broadening this initiative, we will gain deeper insights into the money-laundering risks present in our national real estate markets, which will help guide our regulatory decisions moving forward," said Jamal El-Hindi, Acting Director of FinCEN.

The American Land Title Association, which represents title insurance firms, has stated it will offer resources to help its members comply with these new requirements. Michelle Korsmo, the association’s CEO, emphasized the commitment of its members to responsibly handle millions of real estate transactions each year as an independent party in the closing process.

This mandate could impose stricter anti-money laundering standards on luxury real estate transactions, particularly as the industry has historically been less scrutinizing of wealthy clientele and their financial sources, noted Mark Hays, a senior advisor with the anti-corruption organization Global Witness.

To clarify the reporting thresholds, an all-cash transaction in Manhattan requires reporting if it exceeds $3 million, while the surrounding boroughs have a threshold of $1.5 million. In Florida, the threshold is set at $1 million, $2 million in California, and the lowest at $500,000 in Texas.

The inclusion of San Diego and San Antonio—cities along the U.S.-Mexico border known for drug cartel-related crimes—suggests a potential collaboration between FinCEN and the Drug Enforcement Administration, according to Josh Hanna from Deloitte’s anti-money laundering division.

Miami serves as a significant connection to Latin America, while San Francisco and other areas in California are major gateways to Asia and Central America, making these locations critical hubs for global cash transactions, as highlighted by Hays from Global Witness.