FinCEN Expects to Propose New Anti-money Laundering Rule This Year
January 5, 2023
FinCEN intends to issue a Notice of Proposed Rulemaking (NPRM) to address money laundering (AML) threats in the U.S. real estate sector in April, the Department of the Treasury indicated on its website.
During his keynote address during the ABA/ABA Financial Crimes Enforcement Conference in December, FinCEN Acting Director Himamauli Das mentioned the potential for a new AML rule in 2023. Das said FinCEN is focused on increasing transparency in U.S. real estate transactions and “to prevent corrupt elites and others from using the U.S. real estate market to launder and hide their ill-gotten wealth.”
FinCEN began issuing Geographic Targeting (GTOs) orders in January 2016 requiring title insurance companies to file reports and maintain records concerning all-cash purchases of residential real estate above a certain threshold in select metropolitan areas of the United States. In October, FinCEN once again renewed and expanded these orders.
Das said FinCEN is actively considering comments to the Advance Notice of Proposed Rulemaking (ANPR) the agency issued in December 2021.
Last year, ALTA submitted a letter recommending FinCEN develop tailored and specific transaction reporting requirements for the all-cash real estate transactions involving corporate entities, instead of imposing a traditional anti-money laundering regime like those imposed on banks. ALTA also said FinCEN should finalize regulations for the development of a beneficial ownership database required under the Corporate Transparency Act (CTA) before taking further actions that would add additional burdens to the title insurance industry.
“The collection of beneficial ownership data under the CTA should reduce (if not eliminate) the need for real estate and title professionals to collect and report this duplicative information,” ALTA wrote. “Instead, reporting companies should be able to rely on information already collected under the CTA and only require reporting of beneficial owner data when it is not otherwise collected under the CTA.”
Additionally, given the data coverage of many title data providers, it is possible that FinCEN could develop more targeted real estate programs given those commercial options.
“The burden is currently falling on small businesses and title insurers to gather information and function as ‘private investigators,’” according to ALTA. “Once implemented, the CTA should ensure that most law enforcement asset tracing is possible using those commercial sources. This would make it possible for a real estate rule to focus on specific coverage gaps. A narrower set of real estate specific data would be less costly and time consuming to collect and provide.”
Contact ALTA at 202-296-3671 or firstname.lastname@example.org.