US Set to Disclose New Real Estate Regulations to Combat Money Laundering

The US Treasury Department is ready to introduce rigid regulations to close security loopholes in the real estate industry that allow money launderers, terrorists, and other criminals to disguise their illegally attained funds. 

The long-awaited regulation will obligate real estate agencies to combat financial crime at a national level. To comply with that, property industry professionals must ensure the identities of beneficial owners of the company buying the estate in cash and should compile the record of Anti-Money laundering (AML) compliance to share it with Treasury’s Financial Crimes Enforcement Network (FinCEN). 

Previously FinCEN had only regulated banks to confirm customer identity and report suspicious activities. These types of rules are not implemented for the nationwide real estate industry. However, the FinCEN regulates real estate agencies by disclosure rules known as Geographical Targeting Orders (GTOs), but this law is only implemented in a few cities such as Miami, New York, and Los Angles. This rule was implemented in 2016 by FinCEN to stop anonymous purchases of an estate, but until now, there is no rule which supervises it on a national level. It is expected that the new rule will cover a wide range of GTOs nationwide. 

According to Treasury Secretary Janet Yallen, $2.3 Billion was laundered through the US real estate industry between 2015 and 2020. Criminals have been utilising various loopholes for decades to hide their illicit funds in real estate. Government affairs director of the advocacy group the FACT Coalition, Erica Hanichak, stated, “that’s why FinCEN is taking this important step to put something officially on the books that would root out money laundering through the sector once and for all.” 

FinCEN is struggling to disclose all the regulations to unmask the legitimate identity of the ultimate beneficial owners of the companies. A bipartisan group of lawmakers forced the FinCEN to make the regulation according to the April public letter. This decision between the lawyers and FinCEN slowed the implementation of the new regulation on the real estate industry.

According to the US news agency, the American Land Association accepted the new regulation to combat financial crimes, but they requested to slow down the process until the shell company rule is completed. 

Suggested Reads:

US SENATOR JOE MANCHIN INTRODUCES DIGITAL ASSET ANTI-MONEY LAUNDERING ACT TO CURB UNAUTHORISED CRYPTO FLOW

US FEDERAL RESERVE FINES DEUTSCHE BANK $186 MILLION FOR ANTI-MONEY LAUNDERING FAILURES

US SEIZES 18 CRYPTO ATMS BOUGHT WITH FRAUDULENT LOANS