The powerful real estate lobby appears to be siding with oligarchs in opposing tougher new laws that would prevent them from hiding their assets in U.S. property purchases.
Even before Russian President Vladimir Putin sent troops into Ukraine Washington lawmakers were crafting legislation that would shred the secrecy veil that hides the identities of foreign nationals who purchase billions of dollars of U.S. real estate every year. Momentum for those reforms only has grown since Russia’s invasion and the worldwide focus on seizing oligarchs’ assets.
Politico reports that House Financial Services Chair Maxine Waters (D-Calif.) soon plans to introduce legislation to strengthen anti-corruption laws related to the industry. And Sen. Sheldon Whitehouse (D-R.I.), is pressuring the Treasury unit known as FinCEN (Financial Crimes Enforcement Network), to craft strict rules to cut down on money laundering through property holdings.
“American real estate can’t be a dark repository for oligarch money,” Whitehouse told Politico.
But the National Association of Realtors (NAR), the industry’s biggest lobbying group, is resisting powerful reforms, instead calling for “tailored reforms that address specific issues,” according to spokesperson Patrick Newton.
“This approach focuses on illegal activity while minimizing any negative impact on the real estate economy, which makes up nearly one-fifth of the overall U.S. economy,” Newton said. “NAR has confidence that targeted and effective policy will prevail in the rule-making process.”
NAR has a huge stake in the issue. According to its own industry research, foreigners made up 8.6 percent of all commercial buyers in 2021 and 59 percent of commercial real estate transactions in the U.S. that included buyers from overseas involved all-cash purchases between 2016 and 2020.
Under today’s laws, anyone, including a foreign national, can form an anonymous company and have that entity use cash to purchase residential or commercial real estate. That’s one way oligarchs and others have been parking their money in the U.S. That’s a key reason that Treasury Secretary Janet Yellen said in December, “There’s a good argument that, right now, the best place to hide and launder ill-gotten gains is actually the United States.”