08.01.18

Whitehouse, Rubio, Wyden Legislation to Tackle Money Laundering through High-End Real Estate Clears Senate

Washington, DC – Today, Senators Sheldon Whitehouse (D-RI), Marco Rubio (R-FL), and Ron Wyden (D-OR) succeeded in passing bipartisan legislation to lay the groundwork for expanding a U.S. Department of the Treasury initiative to crack down on foreign nationals laundering money through high-end American 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—for expensive real estate deals in certain markets around the country.  The Treasury report would include a feasibility to study on taking the program nationwide.

“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,” said Whitehouse.  “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.” 

“Shell companies involved in shady activities are a big problem, especially throughout South Florida,” said Rubio.  “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.” 

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 various 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.  The legislation also 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.

Whitehouse has introduced the bipartisan TITLE Act to require the collection of information on the real person behind the incorporation of a company in the United States—a step leading law enforcement officials and nonpartisan experts agree is critical to tracking illegal activity facilitated by shell corporates.  He has also introduced comprehensive legislation to limit foreign influence in our elections, which includes measures to guard against foreign adversaries using shell corporations to carry out their agenda.  And he has led hearings in the full Senator Judiciary Committee, the Senate Judiciary Subcommittee on Crime and Terrorism, and the Helsinki Commission to highlight the issue and spur action to address dangers from shell corporation. 

The Fraternal Order of Police and the Financial Accountability & Corporate Transparency Coalition have endorsed the senators’ amendment.

 

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