By US GOV
The U.S. Department of the Treasury (Treasury) has long recognized the illicit finance risks posed by abuse of the U.S. real estate market and of legal entities and trusts by criminals and corrupt officials to launder ill-gotten gains through transfers of residential real estate. The abuse of U.S. residential real estate markets threatens U.S. economic and national security and can disadvantage individuals and small businesses that seek to compete fairly in the U.S. economy. The proposed rule is designed to enhance transparency nationwide in the U.S. residential real estate market and to assist Treasury, law enforcement, and national security agencies in protecting U.S. economic and national security interests by requiring certain persons involved in real estate closings and settlements to file reports and maintain records related to identified non-financed transfers of residential real estate to specified legal entities and trusts on a nationwide basis, including information regarding beneficial owners of those entities and trusts. Among the persons required by the Bank Secrecy Act (BSA) to maintain anti-money laundering (AML) programs are “persons involved in real estate closings and settlements.”
Yet, for many years, FinCEN has exempted such persons from comprehensive regulation under the
BSA and has issued a series of time-limited and geographically focused “geographic targeting
orders” (GTOs) to the real estate sector in lieu of more comprehensive regulation. Information
received in response to FinCEN’s GTOs relating to non-financed transfers of residential real
estate (Residential Real Estate GTOs) have demonstrated the need for increased transparency
This notice of proposed rulemaking (NPRM) thus proposes a new reporting requirement for non-financed residential real estate transactions, consistent with the BSA’s longstanding directive to impose AML requirements on persons involved in real estate closings and settlements. At the same time, FinCEN has carefully considered the comments received in response to an advance notice of proposed rulemaking (ANPRM) on AntiMoney Laundering Regulations for Real Estate Transactions, and FinCEN appreciates the burdens that traditional AML program and SAR requirements may impose on persons involved in real estate transactions. This NPRM therefore proposes a streamlined reporting framework
designed to minimize unnecessary burdens while also enhancing transparency. Although certain
information collected under this proposed rule may also be available to law enforcement, in
some instances, through the new beneficial ownership reporting requirements imposed by the
Corporate Transparency Act (CTA), the CTA’s reporting regime and this proposed rule serve
different purposes.
“Sellers may now be required to diligence the buyer in an all cash deal.” – Shruti Gurudanti, Rose Law Group partner and director of corporate transactions
