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Rubio, Wyden, Whitehouse Amendment to Tackle Money Laundering Through High-End Real Estate Clears Senate

Oct 4, 2018 | Press Releases

Washington, D.C. – Today, Senators Marco Rubio (R-FL), Ron Wyden (D-OR) and Sheldon Whitehouse (D-RI), succeeded in passing bipartisan legislation to lay the groundwork to expand a U.S. Department of the Treasury initiative to crack down on foreign nationals laundering money through high-end real estate. Passed as an amendment to a government funding measure, the senators’ legislation requires the Treasury Department to issue a report on its program that collects shell corporations’ beneficial ownership information—details on the true owner of the company— to prevent illegal money from terrorism, sex trafficking, money laundering and other illegal activities from being hidden in real estate transactions. The Treasury report would include a feasibility study on expanding the program nationwide and making the orders permanent. The legislation received support from the Financial Accountability & Corporate Transparency (FACT) Coalition and the Fraternal Order of Police. The legislation piggy-backs on the Wyden-Rubio Corporate Transparency Act, a bill which creates a federal beneficial ownership standard for states who don’t already have one.

Yesterday, the Miami Herald published an in-depth report on Senator Marco Rubio’s continued efforts to crackdown on dirty money in real estate.

“Shell companies involved in shady activities are a big problem, especially throughout South Florida,” Rubio said.  “With this provision, a study would be conducted to look at requiring all shell companies that make cash transactions, regardless of their area, to disclose their identities. This would be an important step toward ensuring illegal money is not entering our real estate markets and driving up the cost of housing for all.”

“It’s no secret that shady, expensive real estate deals are what bad actors use to finance terrorism, launder money and defraud the government at the expense of American taxpayers,” Wyden said.  “This bipartisan measure will increase transparency and give Congress the ability to better target and prevent anonymous shell company abuse.  I urge my colleagues in the House to pass our legislation, which will bring law enforcement officials one step closer to getting the disclosure they need to stop dark money from flowing into the United States.”

“Law enforcement leaders from around the world and top nonpartisan experts say uncovering the true owners of shell companies is a big help in solving crime,” Whitehouse said.  “This bipartisan amendment is a small step to help lay the groundwork for blocking an avenue that Russian oligarchs and international drug cartels can use to stow dirty money in the United States.  It’s also a step toward stopping criminals and terrorists – and even foreign governments looking to attack our democracy – from exploiting America’s laws and financial system.”

In 2016, the Treasury Department established the Geographic Targeting Orders (GTOs) initiative to help track money laundering through expensive American real estate. The program requires property title insurers to report to Treasury’s Financial Crimes Enforcement Network (FinCEN) beneficial ownership information of shell companies that use cash to purchase high-end real estate in targeted real estate markets around the country. The senators’ legislation requires FinCEN to report on what it has collected through the GTO program, how it uses the information, and how a record of beneficial ownership information would help law enforcement detect and prevent money laundering. Finally, the legislation calls on FinCEN to study expanding the GTO program beyond the initial test cities to the national level.

In the markets covered by the GTO program, Treasury data shows that roughly 30 percent of reported transactions involved an entity flagged by FinCEN in a suspicious activity report used to track potential money laundering. In addition, the crack-down of infusion of illegal capital into real estate markets has reduced the pace at which housing prices increase, thus, making homeownership more attainable for families priced out of exponentially rising real estate markets.