US real estate is exempt from AML enforcement – which means it has become a safe haven for kleptocrats

Tracing how US real estate became the asset of choice for sanctioned Russian tycoons, African autocrats, drug lords, and uberrich Americans requires going back to the darkest days of the early 21st century. The PATRIOT Act—passed in the aftermath of 9/11, when fears about money being spirited to terrorist cells were white-hot—contained a suite of policies to prevent suspect funds from entering the United States. American banks were required to scrutinize transactions and flag suspicious activity.

The law’s money-laundering provisions were intended to go much further, forcing other industries—particularly real estate—to shore up their dirty money defenses. But shortly after the law’s passage, the Treasury Department announced a temporary exemption for real estate deals. Bush administration officials declared that they wanted to further study the law to make sure it wouldn’t inadvertently hamstring the industry. Months passed, then years, then decades. Today, this exemption remains firmly in place, and American real estate agents and firms are still under no legal ­obligation to check the sources of their clients’ wealth or report even the most obvious red flags. Not surprisingly, the world’s elites have taken full advantage.

Pick a case of international kleptocracy, and you are likely to discover a link to US properties. Millions connected to ­Malaysia’s sprawling IMDB scandal, all looted from the country’s sovereign wealth fund, were plowed into hotels in New York and Beverly Hills. (Plundered funds, fittingly, were also allegedly used to finance the film The Wolf of Wall Street.) In 2014, the New York Times reported, the daughter of a former longtime ruler of the Republic of Congo bought an apartment at the Trump International Hotel and Tower in Manhattan. (There’s no indication Trump broke the law, but this was one of many intersections between kleptocratic regimes and his real estate empire.) Another example: The world’s second-longest-­standing dictator, Equatorial Guinea’s Teodoro Obiang Nguema Mbasogo, owns a massive home in Maryland, where for years he was neighbors with former Gambian despot Yahya Jammeh.