![]() ![]() The GTOs only apply to residential real estate, leaving the commercial sector completely opaque and vulnerable to money laundering activity.The GTOs’ emphasis on title insurance companies as the sole gatekeepers responsible for the record keeping and reporting of high-risk real estate transactions enables criminals to easily circumvent AML checks.The narrow scope of the GTOs ignores typologies that utilize trusts, the use of natural persons as third parties, typologies such as overvaluation and undervaluation, and schemes initiated by the seller. The GTOs only apply to all-cash purchases made by specific legal vehicles, and simply require title insurance companies to report beneficial ownership information of the buyer.The current GTO threshold of $300,000 is arbitrary and ignores the fact that money laundering schemes can occur through the purchase and sale of multiple properties with lower values.As evidenced by GFI’s research, the majority of real estate money laundering cases between 2015 – 2020 were not concentrated in luxury residential real estate markets but involved properties located outside of the GTO geographic scope. The limited geographic reach of the GTOs presupposes where real estate money laundering takes places.For the reasons outlined below the GTOs cannot act as a substitute for a comprehensive rule that tackles the risk of money laundering in the U.S. However, the GTOs policy has several shortcomings, including limitations inherent to a temporary, location specific order. regulatory approach of using GTOs which are temporary and location specific were valuable in its inception. Weaknesses of the current Geographic Targeting Orders approach national security and underscores the need for comprehensive regulations tackling the money laundering risk in the U.S. This high influx of foreign and corrupt money poses a serious threat to U.S. Eighty-two percent of those cases involved foreign sources of money, and well over 50% involved politically exposed persons (PEPs). ![]() real estate in cases reported between 20. Real Estate is a Kleptocrat’s Dream” and found that more than $2.3 billion was laundered through U.S. In August 2021, GFI published a report titled, “Acres of Money Laundering: Why U.S. real estate market as their preferred destination to hide and launder proceeds from illicit activities. These cases have exposed the ease with which kleptocrats, criminals, sanctions evaders, and corrupt government officials choose the U.S. The last few years have seen civil society groups, journalists, and governments expose a veritable avalanche of real estate money laundering (REML) cases that span the globe, including in the U.S. ![]()
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