Three senators – Senate Banking Committee Ranking Member Sherrod Brown, Sen. Ron Wyden, ranking member on the Senate Finance Committee, and Sen. Claire McCaskill, ranking member on the Homeland Security and Government Affairs Committee – have asked the Government Accountability Office to investigate how the Committee on Foreign Investment in the United States (CFIUS) examines U.S. real estate transactions involving foreign investors.
In their request, the senators state that:
- There has been a significant increase in foreign investment in U.S. commercial properties, including two recent unsuccessful, high-profile transactions involving Chinese conglomerate Anbang that raised national security concerns;
- Real estate deals, utilizing shell companies, are a favored means of laundering illicit finances; and
- National security considerations may be implicated by the fact that several senior administration officials, including the President, have significant real estate holdings and maintain multiple residences that could be the subject of foreign acquisitions in the future.
In light of the third factor noted, it should be no surprise that the three Senators requesting the investigation are all Democrats.
Regardless of whether GAO initiates an investigation, parties to real estate deals involving foreign purchasers or investors should be aware that such transactions can raise sensitive issues under not only CFIUS, but also the Patriot Act, FinCEN regulations, and U.S. export and trade sanctions laws.