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Money Laundering Risks in the U.S. Real Estate Sector

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Three customer identification gaps facilitate money launderers in re-investing their illicit proceeds in the U.S. real estate sector, allowing them to remain anonymous. First, the criteria to decide which real estate transactions must undergo data collection and reporting requirements are too lax. Second, when a real estate agency is involved in a real estate transaction, identification requirements apply only to the client of the real estate agency, leaving the other party uncovered. Third, in case a legal professional advises a buyer on how to conclude a transaction, no customer identification measures are required at all. The first customer identification gap is left by the most recent Geographic Targeting Order (GTO) in identifying the transactions subject to reporting requirements. The GTO imposes customer identification requirements only for those who buy residential real properties located in 14 specific counties of the United States (see annex). Thus, every non-residential