From strip malls in Houston suburbs to beach houses in Brownsville, Texas is an enormous haven for money launderers. But for a long time, nobody has seemed to be in any hurry to do anything to stop dirty money flowing into the Lone Star State. Could that be changing?
For several years, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (better known as FinCEN) has required additional data on some real estate deals in Miami, Houston, San Antonio, and other places often targeted by criminals for money laundering. But those Geographic Targeting Orders missed a lot of suspect deals in other places. Our Texas Observer series, “Follow the Money,” found that prosecutors alleged that 50 pieces of Texas real estate, valued at $58 million today had been purchased by Mexican kleptocrats between 1998 and 2017. But only 11, worth less than $7 million, would have been covered by those orders, according to a 2021 Observer analysis of court records by journalist Jason Buch.
This month, FinCEN unveiled a proposed rule that would require people involved in real estate transactions and closings nationwide to query the purchasers of residential real estate who use companies or other entities (and often cash) about the true owners (called the beneficial owners) of those often-mysterious entities. The proposed regulation is lengthy, but essentially real estate agents, title companies, and others who handle such deals would be required to ask more questions of buyers—and to keep records on their responses.
