Home ownership is a source of financial security for millions of Americans, but the non-financed residential real estate market has also long attracted those seeking to anonymously hide or launder illicit proceeds. Illicit and other criminal actors exploit this regulatory gap to hide ill-gotten gains from narcotics trafficking, corruption, human trafficking, fraud, and sanctions evasion. Left unchecked, this activity can distort housing market prices and make it more difficult for the average American to afford a home.

On February 7, FinCEN issued a Notice of Proposed Rulemaking to combat and deter money laundering in the U.S. residential real estate sector by increasing transparency. The proposed rule would require certain professionals involved in real estate closings and settlements to report information to FinCEN about non-financed transfers of residential real estate to legal entities or trusts. FinCEN’s proposal is tailored to target residential real estate transfers considered to be high-risk for money laundering, while minimizing burden.

SUMMARY:

FinCEN is issuing a proposed rule to require certain persons involved in real estate closings and settlements to submit reports and keep records on identified non-financed transfers of residential real property to specified legal entities and trusts on a nationwide basis. Transfers made directly to an individual would not be covered by this proposed rule. The proposed rule describes the circumstances in which a report must be filed, who must file a report, what information must be provided, and when a report is due. These reports are expected to assist the U.S. Department of the Treasury; Federal, State, and local law enforcement; and national security agencies in addressing illicit finance vulnerabilities in the U.S. residential real estate sector and to curtail the ability of illicit actors to anonymously launder illicit proceeds through the purchase of residential real property, which threatens U.S. economic and national security.

Publication Date:02/16/2024
Agencies: Department of the Treasury Financial Crimes Enforcement Network