The international community’s cohesive and comprehensive response to Russian President Vladimir Putin’s invasion of Ukraine has been a sight to behold. President Joe Biden and his counterparts in the United Kingdom and European Union member states have levied sanctions on the Russian economy that have no analog in modern history. Among the most surprising elements of the international response to the ongoing tragedy in Ukraine is that countries have begun seizing the physical assets of Putin-connected Russian billionaires:

“We’re joining with our European allies to find and seize their yachts, their luxury apartments, their private jets,” Biden said triumphantly and to great applause during his recent State of the Union address. “We are coming for your ill-begotten gains.”

But despite this international crusade against kleptocracy, countries have been struggling to find and seize these billionaires’ most important asset: real estate. In the United States, as in many countries, real estate is an attractive investment for kleptocrats looking to park dubiously sourced money, as it continues to be one of the least transparent industries. This lack of transparency, and the flood of corrupt and illegal cash that it invites into an industry that touches every element of American society both undermines the United States’ ability to levy sanctions to stop international conflicts- and impacts any number of domestic issues, from the fight for democracy to the racial wealth gap. That’s the immensity of this problem – but also the promise inherent in fixing it.

Not only can corrupt actors hide their identities behind webs of anonymous shell companies, they can also use these companies to purchase property. This allows them to elude most onerous bank secrecy and anti-money laundering laws by not taking out a mortgage or other loan to buy the real estate in so-called all cash transactions. A web of enablers, including lawyers and real estate agents, facilitates these purchases by helping kleptocrats funnel their money into the country and into the property market, all while doing essentially no investigation into the ultimate beneficial owners behind their client companies.

Unsurprisingly, this patchwork legal structure has made the United States residential and commercial real estate a haven for corrupt and illegal money. For decades, corrupt foreign actors, including Russian oligarchs in Putin’s inner circle, have parked their corrupt or illegal money in American properties. Of course, Russians in Putin’s orbit aren’t the only people with money they’d like to make disappear into the American real estate mist. In their recent Pandora Papers exposé, the International Consortium of Investigative Journalists (ICIJ) found that King Abdullah II of Jordan used shell companies to purchase 14 luxury properties across the United States and United Kingdom. And in one instance, an organization involved in an international pedophilia scandal used opaque offshore trusts to invest millions of dollars into American real estate. A recent study of 100 instances of real estate money laundering in the United States found that “well over 50 percent” of the cases involved so-called Politically Exposed Persons, or people who have direct ties to foreign corruption.

Some of these kleptocrats recently found that their investments also served another purpose: potentially influencing the American president. Former President Donald Trump’s real estate company, which he owned throughout his presidency, relies heavily on anonymous shell companies that purchase his condominiums in all-cash transactions. More than one-fifth of all Trump condominiums purchased in the United States since 1980 have been purchased in this manner. Trump’s business, and the immense potential for corrupt influence it created throughout his time in office, is a perfect example of how letting these kleptocrats funnel money into U.S. real estate through unregulated and opaque transactions could be a threat to American democracy. These are not idle concerns – the American founders took this threat so seriously that they prohibited the President from receiving any profit, gain or advantage from a foreign head of state or government. Unfortunately, the government’s inability to identify who owns real property in the United States is now having a direct impact on the fight for democracy abroad, as it has likely allowed Russian oligarchs to escape the worst of the United States’ sanctions.

These all-cash anonymous real estate transactions can have an equally insidious impact on ordinary people in the United States – and marginalized communities in particular. Real property, like luxury apartments in New York or mansions in Malibu, are among the safest investments possible, as the housing market almost never crashes. That’s why most Americans’ wealth is in their homes instead of in the stock market: historically, a house that can be passed down from generation to generation has been the best way to lift families out of poverty into the middle class, especially for Black and Brown Americans (who, even now, have far fewer equity investments on average than White Americans). And this is also why the 2008 crash, when so many lost their homes entirely, was so hard for so many people, and particularly Black and Brown Americans who are even more reliant on real estate to be a source of generational wealth than White Americans. The current state of the real estate industry, which is awash in shady cash, is exacerbating some of the same long-term racial equity problems.

According to a recent Washington Post study, real estate investors wielding all-cash offers have been snapping up residential real estate at a breakneck pace, a practice that has contributed to the wild escalation of real estate valuation across the country. In doing so, these funds have, as Sen. Sherrod Brown (D-OH) explained in a recent Senate Banking Committee hearing, “bought up properties, they raised rents, they cut services, they priced out family home buyers, and they forced renters out of their homes.” In 2021, investors wielding anonymous all-cash transactions were the buyers in 30 percent of home sales in majority Black neighborhoods – and only 12 percent of sales in other zip codes. When investors, buoyed by their ability to funnel money into these purchases with essentially no regulatory scrutiny, crowd out prospective first-time home buyers, they prevent prospective homebuyers from putting their money into the one investment that has helped pull Americans out of poverty for generations. The impact is especially acute in Black and Brown communities, where family wealth was drastically harmed by the Great Recession. As these investors use anonymous transactions to buy up majority-Black neighborhoods, they help make it hard for Black Americans to rebuild their generational wealth – even as White Americans have largely recovered from the crash. All of this fuels the precipitous rise in the racial wealth gap.

The Pandora Papers exposé of Pretium Partners is a good case study of an investment fund that owns thousands of residential properties across the country. Pretium raised capital from various offshore trusts that the ICIJ traced back to wealthy foreign principals to invest in distressed real estate markets following the 2008 financial crisis. Pretium’s real estate investment arm, Progress Residential (Progress), is now a major player in the American residential real estate market. Progress acquires up to 2,000 residential properties per month in “rapid all-cash” transactions. During the pandemic, Progress allegedly routinely violated the national eviction moratorium, and appears to have concentrated its eviction filings in predominantly Black and Brown communities.

This is the very real, very personal cost of the broken real estate market.

There are two important ways that the U.S. government can begin to address this problem. First, Congress needs to pass the Establishing New Authorities for Businesses Laundering and Enabling Risks to Security Act (the ENABLERS Act). The ENABLERS Act would impose common-sense “know your customer” (KYC) and other anti-money laundering requirements onto the people and industries that help facilitate the flow of corrupt and illegal money into the United States. For example, if an oligarch is looking to shelter some suspiciously-acquired cash in, say, a luxury condo in a certain former president’s New York building, they would normally hire a law firm to help create the web of shell companies they’d need to obscure their identity. Then, they’d hire a real estate professional to make the all-cash offer and work with the law firm to move their money into, say, a title company, for final disbursement. Right now, none of the people involved have to conduct even the most basic KYC checks. But the ENABLERS Act would address this problem, and a number of related issues. These basic steps would help law enforcement find out precisely who is buying American real estate, and they would ensure that the people tasked with handling this money as it flows into the United States play their part in the fight against corruption.

The U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, also needs to develop a regulatory framework that will clean up an industry that is awash in corrupt and illicit cash. FinCEN is currently at the beginning of a rulemaking process that could allow it to do so. It is a monumental undertaking. My organization, Citizens for Responsibility and Ethics in Washington, or CREW, recently submitted a comment to FinCEN that explains in detail our suggestions for how it could do so. FinCEN must write these rules with the knowledge that corruption in the real estate industry impacts everything from the fight for democracy to the racial wealth gap. Slowing or even stopping the torrent of opaquely-sourced cash currently flowing into the real estate industry would be a huge victory in the fight against corruption – and could play an important role in the fight to close the racial wealth gap.

There’s a lot to do here, and it’s important the U.S. government acts quickly. Congress could and should attach the ENABLERS Act to any piece of must-pass legislation. But it’s also important to get this right. The broken U.S. legal regime has had a profound impact on the lives of every single American, and on ordinary people in other countries, whose suffering is funded by oligarchic wealth. It has contributed to the expanding racial wealth gap and the resulting decline in Black and Brown generational wealth, and it has harmed the public’s faith in American government. And, of course, it is currently complicating sanctioning Putin’s inner circle. That’s why it is important that Congress and the Biden administration take major steps toward fixing a system that has helped keep generations of Americans from achieving the American dream, and to open up another front in the fight for democracy.

IMAGE: A woman walks around a huge puddle on Park Avenue in New York March 4, 2015 as warming temperatures started to melt snow. (TIMOTHY A. CLARY/AFP via Getty Images)