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

December 20, 2023

The much-anticipated US rule to combat real estate money laundering has reached the White House for regulatory review, the last stage before its formal proposal next year. As per government records, the rule proposed by the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department has made its way to the Office of Information and Regulatory Affairs (OIRA).

Following a thorough review by the office, the rule is scheduled to undergo a two-month public consultation phase in February 2024, as reported by AML Intelligence.

The rule is anticipated to mandate real estate professionals including title insurers to reveal beneficial owners of the companies engaged in cash transactions for real estate. This move seeks to close a loophole that anti-corruption experts claim, has facilitated criminals to hide illicit gains anonymously in the US real estate.

Referring to the rule proposal statement in the Federal Registry,

“The systemic money laundering vulnerabilities presented by the U.S. real estate sector, and consequently, the ability of illicit actors to launder criminal proceeds through the purchase of the real estate threatens U.S. national security and the integrity of the U.S. financial system.”

Janet Yellen, Treasury Secretary said in a statement, “By one estimate, illicit actors laundered at least $2.3 billion through U.S. real estate between 2015 and 2020. And the real number is almost certainly much higher.”

FinCEN has been taking initiatives to effectively combat financial crimes like money laundering and terrorist financing. In November 2023, FinCEN in collaboration with BIS (Department of Commerce’s Bureau of Industry and Security) issued a joint notice on Suspicious Activity Reporting (SARS). The notice seeks to strengthen export laws and eradicate evasion of US export regulations globally. The notice also outlines the warning signs of global non-compliance with export laws and acts as a guide for both financial institutions and export companies.