EU, against money laundering in the real estate sector

The Joe Biden government revealed yesterday, December 6, some measures to combat money laundering through its real estate sector.

The Treasury Department’s Financial Crime Enforcement Network (FinCEN), a US anti-money laundering agency, published a proposed rulemaking that will be subject to public discussion.

In it, it proposes to implement mechanisms to better identify the buyers of real estate, the selling agents as well as the final beneficiaries, that is, the true owners of the assets.

It could also tighten reporting requirements to authorities, especially for cash transactions.

“The United States (EU) real estate market continues to be used as a vehicle for money laundering and can involve companies and professionals who facilitate real estate acquisitions and participate (even without knowing it) in the money laundering process”, detailed the organism.

FinCEN stated that, in August 2021, the civil organization Global Financial Integrity found that people and companies had laundered approximately 2.3 billion dollars through real estate in the United States during the five years prior to the publication of its study.

Among the cases it reviewed, more than 50% involved politically exposed persons and the study highlighted that “the use of anonymous shell companies and complex corporate structures continues to be the number one money laundering typology involving real estate.”

The problem in numbers

In 2020, 6.46 million home sale transactions were carried out. For this year 6.6 million operations are projected with an average sale price of $ 350,000.

The total value of US residential real estate sales is expected to exceed $ 2.3 trillion by 2021.

According to figures released by the National Association of Realtors, in both 2020 and 2021, approximately 19% of existing residential home sales were unfunded transactions.

Based on that data, FinCEN estimates that the annual percentage of cash residential home purchases is approximately 18.5 percent.

“As part of a government-wide effort, the United States Department of the Treasury is taking a series of actions to combat corruption and prevent it from undermining trust in democratic institutions,” the agency said.

“The Treasury is uniquely equipped with tools to root out corruption at home and abroad by targeting vulnerabilities in financial systems that allow malicious actors to profit from corruption and other criminal activities,” he added.

Corruption hits GDP

President Joe Biden has also emphasized anti-corruption efforts. During his administration, he has said that corruption breaks public trust, deepens economic and political inequality, and degrades the business environment.

The White House has disclosed that acts of corruption cost between 2 and 5% of the world’s Gross Domestic Product, although it did not provide further details.

In June, Joe Biden issued regulations to improve collaboration between government agencies on issues such as illicit finance.

The United States also joined the agreement for the application of a global tax on multinational companies – promoted by the OECD – which seeks that large corporations pay a minimum tax rate of 15%, which seeks to combat tax evasion and eradicate tax havens.

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