InfoBytes Blog
FinCEN issues ANPRM to curb real estate-related illicit finance
On December 6, the Financial Crimes Enforcement Network (FinCEN) issued an advanced notice of proposed rulemaking (ANPRM) seeking comments on potential requirements under the Bank Secrecy Act (BSA) to address vulnerabilities in the U.S. real estate market to money laundering and other illicit activity. Systemic money laundering vulnerabilities in this space, FinCEN cautioned, present opportunities for corrupt officials and illicit actors to launder criminal proceeds through the purchase of real estate and threaten U.S. national security and the integrity of the U.S. financial system. FinCEN stressed that, because of the real estate market’s opacity and gaps in industry regulation, “the U.S. real estate market continues to be used as a vehicle for money laundering and can involve businesses and professions that facilitate (even if unwittingly) acquisitions of real estate in the money laundering process.” Regulated financial institutions, such as banks that provide real estate transactions, are subject to federal anti-money laundering rules and are not as susceptible to money laundering because they must report suspicious activity to FinCEN, the agency stated. However, FinCEN reported that when real estate is purchased in other ways, beneficial ownership can be extremely difficult to trace. Currently FinCEN does not impose the BSA’s general recordkeeping and reporting requirements on persons involved in all-cash real estate transactions (although title insurance companies are subject to specific transaction reporting requirements through Geographic Targeting Orders—covered by InfoBytes here). To address these issues, the ANPRM seeks comments on ways to enhance the transparency of the U.S. residential and commercial real estate market on a nationwide basis while minimizing the burden on businesses. Comments are due within 60 days of publication in the Federal Register.