Opinion | The Obscure Element Elevating Housing Prices: "Dirty Money"
Dirty money significantly contributes to the ongoing housing affordability crisis, a factor that often goes unnoticed.
TroibNews 
The housing affordability crisis in the United States has reached a level of urgency that has garnered attention from presidential candidates. Former President Donald Trump points to immigrants as the culprits for rising prices and proposes to lower demand by prohibiting mortgages for "illegal immigrants" and deporting them. Meanwhile, Vice President Kamala Harris is focused on increasing supply with a promise to construct 3 million new homes.
However, since the beginning of the century, the number of housing units has grown more quickly than the number of households. This indicates that there is more to the situation than a simple supply issue or demand driven solely by household increases, independent of immigrants.
Demand for real estate isn't exclusively about the number of potential homebuyers; it also involves the financial resources those buyers bring to the market. Buyers without sufficient funds cannot inflate prices. Instead, it's those with substantial wealth—especially significant sums of money—that drive prices up for everyone else.
A significant portion of luxury real estate purchases involves funds that are often connected to illegal activities, which is distorting the housing market for average homebuyers.
In March, federal authorities confiscated a luxury apartment in Manhattan owned by the daughter of Denis Sassou Nguesso, the long-standing ruler of the Republic of the Congo. The forfeiture complaint in U.S. District Court alleges that the money used to purchase the $7 million apartment, which has a view of Central Park, came from “misappropriation, theft, or embezzlement” from the Congo treasury, detailing the series of shell companies that facilitated the laundering of these funds.
Media reports have spotlighted the name associated with the apartment building—Trump International Hotel and Tower—but have largely overlooked the broader story.
There has been a significant and troubling increase in dirty money flowing into luxury residential properties in major U.S. cities such as New York, Los Angeles, and Miami. A considerable portion of this cash originates from Africa, which has experienced over $600 billion in illicit capital flight since the start of the century, as well as from Latin America, Asia, Eastern Europe, and the Middle East.
The amounts involved are substantial. Almost a decade ago, The New York Times noted that anonymous shell companies represented more than half of all property purchases in Manhattan and Los Angeles, almost half in the San Francisco Bay area, and over a third in Miami. Although more recent statistics aren’t available, this suggests that the hidden wealth in Manhattan real estate alone likely exceeds $100 billion.
Many of these luxury properties remain unoccupied, purchased to conceal illicit wealth rather than to serve as homes. For instance, Sassou Nguesso’s apartment in Trump Tower has been vacant since its purchase in 2014.
These corrupt financial practices not only harm citizens of countries like the Congo but also inflate prices in U.S. urban real estate markets, making housing less affordable for everyday Americans—from first-time homebuyers unable to enter the market to families unable to upsize their homes, as well as tenants facing rising rents. Dirty money is a significant but often overlooked factor in the current housing crisis.
It might be easy to believe that high-priced condominiums in metropolitan areas wouldn’t affect the prices of homes that average Americans seek. However, prices in the luxury segment trigger a ripple effect. As buyers are squeezed out of the top tier of the market, they drive up prices in the next tier down, creating a chain reaction that ultimately excludes low-income individuals, including many essential workers, who end up commuting long distances from lower-cost areas. This phenomenon also affects real estate markets in other regions as remote workers migrate away from expensive urban centers.
Contrary to popular perception, immigrants seeking work in the United States aren’t exacerbating this crisis; in fact, they may be making it better. Many new immigrants choose to live with relatives and frequently participate in the construction industry, thus contributing to housing supply. The real issue lies with the influx of illicit funds.
Although there are measures to tackle this problem, they have not been effectively implemented. Following the events of September 11, 2001, Congress enacted Title III of the Patriot Act to fight money laundering and terrorist financing, requiring banks to report suspicious foreign money transfers. However, lobbyists succeeded in securing a “temporary” exemption for the real estate sector, allowing a loophole that continues to exist, enabling what has been described as a “growth opportunity for high-end real estate.”
Interestingly, the United States stands as the only G7 nation that does not mandate real estate professionals to comply with anti-money laundering regulations. It is not surprising, then, that a significant amount of the world’s illicit assets are being funneled into U.S. real estate.
In August of this year, the Treasury Department finally proposed new reporting requirements for real estate transactions. These regulations, set to take effect in December 2025 and only applicable to new sales, have been characterized by transparency advocates as “a major turning point in the fight against dirty money.”
However, historical context warrants caution. The Financial Crimes Enforcement Network (FinCEN), responsible for enforcing these new regulations, remains critically underfunded and understaffed. A recent Brookings Institution study analyzing a 2016 pilot program for monitoring real estate transactions in specific counties found no noticeable impact, attributing the results to insufficient enforcement. As Abraham Lincoln reportedly stated, “Laws without enforcement are just good advice.”
The boundary between the U.S. economy and international capital is less visible than national borders but equally important. Currently, U.S. Customs and Border Protection has over 60,000 employees, while the Treasury Department's FinCEN operates with a mere 300.
To effectively tackle the nation’s housing crisis, we should shift our focus away from undocumented workers and concentrate on the issue of undocumented money.
Thomas Evans for TROIB News
However, since the beginning of the century, the number of housing units has grown more quickly than the number of households. This indicates that there is more to the situation than a simple supply issue or demand driven solely by household increases, independent of immigrants.
Demand for real estate isn't exclusively about the number of potential homebuyers; it also involves the financial resources those buyers bring to the market. Buyers without sufficient funds cannot inflate prices. Instead, it's those with substantial wealth—especially significant sums of money—that drive prices up for everyone else.
A significant portion of luxury real estate purchases involves funds that are often connected to illegal activities, which is distorting the housing market for average homebuyers.
In March, federal authorities confiscated a luxury apartment in Manhattan owned by the daughter of Denis Sassou Nguesso, the long-standing ruler of the Republic of the Congo. The forfeiture complaint in U.S. District Court alleges that the money used to purchase the $7 million apartment, which has a view of Central Park, came from “misappropriation, theft, or embezzlement” from the Congo treasury, detailing the series of shell companies that facilitated the laundering of these funds.
Media reports have spotlighted the name associated with the apartment building—Trump International Hotel and Tower—but have largely overlooked the broader story.
There has been a significant and troubling increase in dirty money flowing into luxury residential properties in major U.S. cities such as New York, Los Angeles, and Miami. A considerable portion of this cash originates from Africa, which has experienced over $600 billion in illicit capital flight since the start of the century, as well as from Latin America, Asia, Eastern Europe, and the Middle East.
The amounts involved are substantial. Almost a decade ago, The New York Times noted that anonymous shell companies represented more than half of all property purchases in Manhattan and Los Angeles, almost half in the San Francisco Bay area, and over a third in Miami. Although more recent statistics aren’t available, this suggests that the hidden wealth in Manhattan real estate alone likely exceeds $100 billion.
Many of these luxury properties remain unoccupied, purchased to conceal illicit wealth rather than to serve as homes. For instance, Sassou Nguesso’s apartment in Trump Tower has been vacant since its purchase in 2014.
These corrupt financial practices not only harm citizens of countries like the Congo but also inflate prices in U.S. urban real estate markets, making housing less affordable for everyday Americans—from first-time homebuyers unable to enter the market to families unable to upsize their homes, as well as tenants facing rising rents. Dirty money is a significant but often overlooked factor in the current housing crisis.
It might be easy to believe that high-priced condominiums in metropolitan areas wouldn’t affect the prices of homes that average Americans seek. However, prices in the luxury segment trigger a ripple effect. As buyers are squeezed out of the top tier of the market, they drive up prices in the next tier down, creating a chain reaction that ultimately excludes low-income individuals, including many essential workers, who end up commuting long distances from lower-cost areas. This phenomenon also affects real estate markets in other regions as remote workers migrate away from expensive urban centers.
Contrary to popular perception, immigrants seeking work in the United States aren’t exacerbating this crisis; in fact, they may be making it better. Many new immigrants choose to live with relatives and frequently participate in the construction industry, thus contributing to housing supply. The real issue lies with the influx of illicit funds.
Although there are measures to tackle this problem, they have not been effectively implemented. Following the events of September 11, 2001, Congress enacted Title III of the Patriot Act to fight money laundering and terrorist financing, requiring banks to report suspicious foreign money transfers. However, lobbyists succeeded in securing a “temporary” exemption for the real estate sector, allowing a loophole that continues to exist, enabling what has been described as a “growth opportunity for high-end real estate.”
Interestingly, the United States stands as the only G7 nation that does not mandate real estate professionals to comply with anti-money laundering regulations. It is not surprising, then, that a significant amount of the world’s illicit assets are being funneled into U.S. real estate.
In August of this year, the Treasury Department finally proposed new reporting requirements for real estate transactions. These regulations, set to take effect in December 2025 and only applicable to new sales, have been characterized by transparency advocates as “a major turning point in the fight against dirty money.”
However, historical context warrants caution. The Financial Crimes Enforcement Network (FinCEN), responsible for enforcing these new regulations, remains critically underfunded and understaffed. A recent Brookings Institution study analyzing a 2016 pilot program for monitoring real estate transactions in specific counties found no noticeable impact, attributing the results to insufficient enforcement. As Abraham Lincoln reportedly stated, “Laws without enforcement are just good advice.”
The boundary between the U.S. economy and international capital is less visible than national borders but equally important. Currently, U.S. Customs and Border Protection has over 60,000 employees, while the Treasury Department's FinCEN operates with a mere 300.
To effectively tackle the nation’s housing crisis, we should shift our focus away from undocumented workers and concentrate on the issue of undocumented money.
Thomas Evans for TROIB News
