FinCEN Proposes New Rule to Combat Money Laundering & Enhance Transparency in Real Estate

February 9, 2024

Financial Crimes Enforcement Network (FinCEN) under the US Department of Treasury has issued a ‘Notice of Proposed Rul Making’ to deter money laundering and increase transparency in the US residential real estate.

As per the proposed rule, certain professionals in the real estate sector would be obligated to report to FinCEN about cash transfer of residential properties to legal entities or trust. The proposal seeks to address money laundering in residential real estate, while minimzing potential burden on businesses and exempting the reporting obligations for transactions involving individuals.

Reporting Requirements for Real Estate Transactions

The proposed policy highlights the circumstances under which a report would be submited, designates the reporting entity, outlines the required infromation such as details of beneficial owners of legal entities or trust and establishes the timeframe for reporting transactions. The information collected from these reports would facilitate the Department of the Treasury and its law enforcement and national security partners in mitigating vulnerabilities that expose the US residential real estate to exploit by illicit actors.

While emphasizing on the significance of safeguarding against money laundering activities, Andrea Gacki, Director FinCEN reportedly stated ,

“Illicit actors are exploiting the U.S. residential real estate market to launder and hide the proceeds of serious crimes with anonymity, while law-abiding Americans bear the cost of inflated housing prices,”

She further stated,

“Today marks an important step toward not only curbing abuse of the U.S. residential real estate sector, but safeguarding our economic and national security.”

Additionally, the regulation aligns with the Bank Secrecy Act’s directive to broaden anti-money laundering (AML) in the real estate. It further builds on the implementation of FinCEN’s Real Estate Geographic Targeting Order initiative, emphasizing the crucial requirement of enhanced transparency and robust measures within the sector nationwide.

Note: FinCEN seeks written feedback from the public regarding proposed rule. Comments will be accpeted within a 60 days period after the publication date in the Federal Register.

Also read: New US Rule to Combat Real Estate Money Laundering Heads to White House for Regulatory Review