President Joe Biden‘s administration has announced a crackdown on cash home purchases as part of a broader mission to stamp out corruption ahead of the Summit for Democracy, which Biden will host on Thursday.

“For too long, corrupt actors and their financial facilitators have taken advantage of vulnerabilities in the U.S. and international financial systems to launder their assets and obscure the proceeds of crime. Similarly, corrupt actors amass ill-gotten wealth through illicit gains of other resources, including minerals and wildlife,” the administration said in its 38-page National Security Strategy on Countering Corruption. “To counter corruption effectively around the globe, the U.S. Government must, at home and abroad, combat money laundering, illicit trafficking, and other forms of criminal activity that fuel corruption and allow criminal actors to launder and shelter the proceeds of their illicit activities.”

Deputy United States Treasury Secretary Wally Adeyemo said in a statement at the Brookings Institution in Washington, D.C. that “our real estate markets are at risk of becoming a safe haven for criminals, kleptocrats and others seeking to park corrupt profits,” specifically due to the allowance of anonymous cash transactions.

The strategy states that “certain types of real estate transactions are vulnerable to abuse by illicit actors seeking to launder criminal proceeds, including the proceeds of corruption. For example, many real estate transactions involve the use of shell companies, all-cash purchases, purchases by international wire from countries with strict banking secrecy regimes, processes that limit transparency, and the use of intermediaries without AML/CFT obligations. These vulnerabilities are exacerbated by a perception that real estate can be a safe way to park value and obfuscate the source of illicit funds.”

It adds that “geographic targeting orders” have been issued against title insurance companies “requiring them to identify the natural persons behind legal entities used in all-cash purchases of residential real estate exceeding $300,000 in 12 U.S. metropolitan areas. The GTOs have provided greater insight into illicit finance risks in the residential real estate market, but are only a temporary solution.”

Despite that, an estimated $2.3 billion has been laundered into the American economy via real estate transactions executed with cash.

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