OPINION:
For decades, the U.S. housing market has been used by criminals, corrupt officials and traffickers around the world as a safe place to park dirty money with no questions asked.
Luxury condos, suburban homes and investment properties are not just symbols of wealth; they have become key tools of the global illicit economy.
Behind anonymous shell companies and all-cash transactions, bad actors can quietly move and store wealth in the U.S. with remarkable ease, driving up housing prices and putting homeownership further out of reach for American families.
That is precisely the problem the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) addressed with its Residential Real Estate Rule. It is also why a recent decision by a federal district court in Texas to strike down that rule is so deeply misguided and dangerous for those of us tasked with keeping communities safe.
At its core, the rule requires basic transparency in a narrow slice of high-risk real estate transactions. Specifically, it targets all-cash purchases made through legal entities or trusts and requires reporting of the true, “beneficial” owners behind them.
This is not regulatory overreach. It is a long-overdue closing of one of the most well-documented loopholes in the U.S. anti-money-laundering system.
Law enforcement has been clear for years that information such as this is indispensable. Financial intelligence reporting, such as suspicious activity reports filed by banks, is widely used in money laundering investigations and has led directly to prosecutions.
The real estate rule brings that same visibility to a sector that, until now, has largely operated in the dark.
Without it, criminal investigators are left trying to follow money through a maze of shell companies, nominee buyers and opaque ownership structures. The rule provides actionable leads — including names, entities and transaction details — that can mean the difference between stopping a criminal network and letting it flourish.
Criminal enterprises have repeatedly used U.S. real estate to launder proceeds from drug trafficking, fraud and corruption. In Texas, where this bill is being held up, federal prosecutors charged nine individuals with distributing more than 1.5 million opioid pills, alleging the network used all-cash purchases of residential real estate through legal entities to launder the proceeds.
In Georgia, a woman involved in a methamphetamine trafficking conspiracy purchased five properties, including a seven-bedroom waterfront home in Jonesboro, using bulk cash to conceal illicit profits.
In Miami, a real estate broker pleaded guilty to helping sanctioned Russian oligarchs maintain, sell and profit from luxury condominiums, allowing them to move and preserve wealth despite sanctions.
Human trafficking networks depend on these same financial pathways. When illicit profits can be easily laundered into stable assets such as real estate, it sustains and incentivizes exploitation. Cutting off those pathways is not just a financial integrity issue but is also a human rights imperative.
Yet the Texas district court dismissed this reality, concluding that these transactions are not inherently “suspicious” and that FinCEN exceeded its authority under the Bank Secrecy Act.
That conclusion ignores decades of evidence to the contrary.
The Treasury Department’s National Money Laundering Risk Assessment has consistently identified non-financed real estate transactions as a major vulnerability, precisely because they fall outside the safeguards applied to traditional financial institutions.
The court’s conclusion also misreads the law. Congress explicitly authorized FinCEN to require reporting from non-financial businesses when necessary to combat money laundering.
Real estate professionals, who sit at the center of these transactions, are exactly the kinds of actors envisioned under that authority. Notably, other federal courts reviewing similar challenges, including one in Florida, have upheld the rule.
The good news is that the Trump administration appears to recognize what is at stake. It has already mounted a strong defense of the rule, affirming both its legal foundation and its critical role in protecting U.S. national security and economic integrity.
Now, that effort must continue. An appeal is essential.
Allowing this ruling to stand would reopen a well-known back door for illicit finance at the very moment the United States is under increasing global scrutiny for its anti-money-laundering regime. It would send a message that, despite years of progress, our country is still willing to tolerate anonymous money flowing into its most valuable assets.
Reinstating the rule, on the other hand, would demonstrate that the U.S. is serious about closing loopholes, supporting law enforcement and ensuring that its housing market serves families and communities, not criminal enterprises.
As written, the rule strikes the right balance and provides actionable information to law enforcement without burdening real estate professionals with costly, full-scale anti-money-laundering programs. This flexible design minimizes compliance costs while helping law enforcement keep communities safe.
At a time when human trafficking, drug cartels and corrupt actors continue to exploit financial systems worldwide, the U.S. cannot afford to weaken one of its most important lines of defense.
The administration has taken an important stand by defending this rule. It should finish the job. Appeal the decision. Restore the safeguards. And make clear that the U.S. housing market is no longer a haven for illicit finance.
• Frank Russo is senior adviser at CPAC Center for Combating Human Trafficking and a partner at Modern Forits Public Safety Solutions.
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