WASHINGTON (Reuters) -The U.S. Treasury Department's financial crimes unit on Wednesday proposed a long-awaited plan aimed at curbing the flow of illicit funds through American real estate markets.

The proposal, detailed by the Treasury Department's Financial Crimes Enforcement Network (FinCEN) on Wednesday, would require real estate professionals to flag suspicious activity seen in cash residential home purchases.

Title insurance companies, lawyers and certain other professionals involved in such deals would have to file reports for any non-financed sale or transfer of residential properties to an entity or trust, according to FinCEN's proposal.

If finalized, the new rule would replace a patchwork system that anti-corruption advocates have said has allowed bad actors to hide the proceeds of illicit activity by buying homes through legal entities or trusts, without financing.

Last year, Treasury Secretary Janet Yellen said that criminals for decades have anonymously hidden such ill-gotten gains in real estate, estimating $2.3 billion was laundered through U.S. real estate between 2015 and 2020.

Financial institutions have long been expected to flag suspicious activity to regulators, but cash real estate transactions generally have not been subject to such rules. The new requirements would demand real estate professionals involved in such transactions collect and report data to FinCEN about the property being sold, the seller and the beneficial owner of any legal entity receiving the property.

Officials first said in 2021 that they planned to implement such a rule.

Anti-corruption advocates applauded Wednesday's proposal.

"This draft rule sends a clear message that the U.S. plans to close off options for criminals looking to hide their ill-gotten gains in our real estate markets,” Ian Gary, executive director of the nonpartisan FACT Coalition, said in a statement.