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function to test programs.[24] 25. Should FinCEN geographically limit the scope of any proposed regulation? Based on the NAR estimates of total home sales and median sale prices, this means that approximately 1.21 million residential real estate transactions, with an approximate value of $463 billion, likely proceed without any AML reporting obligations. 86 FR 17557 (Apr. Follow the instructions for submitting comments. related to liability of principal for act or omission of agent. For this rulemaking process, FinCEN is considering how best to focus its regulatory attention on residential and commercial real estate transactions. documents in the last year, 24 2. New Report Finds U.S. Real Estate Sector a Safe Haven for Money Laundering, Press Release, Global Financial Integrity (Aug. 9, 2021), v. containing beneficial ownership requirements, would affect the real estate industry. 1 (D. Md. 386 F. Supp. FinCEN concluded that the beneficial owners of real estate purchases by publicly traded companies are identifiable through other regulatory filings. Moreover, data on real estate purchases is held in a patchwork of different state and county databases, making investigation and analysis difficult. United States 03/01/2023, 828 A SYDNEY property developer has scored himself a free $1.7 million home by simply moving in and renting it out following the death of the occupant. Should FinCEN's proposed rule be limited to transactions involving legal entities or should it cover natural persons as well? The Secretary of the Treasury (Secretary) has delegated to the Director of FinCEN the authority to implement, administer, and enforce compliance with the BSA and associated regulations. 0000001141 00000 n 51. Do you anticipate being able to integrate implementation costs into your existing compliance-related budget? frc@fincen.gov. Finally, it may be relevant to identify those financial institutions or nonfinancial trades or businesses that are primarily involved in the transfer and presentation of purchase funds in exchange for title or other rights. 18. How might such a rule impact your business? General Information Regarding the Real Estate Market. The most suspicious activity highlighted in the report was money laundering to promote tax evasion. v. ); (vi) the purpose of the transaction; (vii) the intended use of the proceeds of a sale; and (viii) the businesses involved in the transfer of funds? A variety of perspectives on the U.S. real estate market will provide FinCEN with the information essential for any future rulemaking. businesses incur higher costs compared to others? documents in the last year, by the International Trade Commission 5312(a)(2)(U). e.g., 80. Atty. Additionally, FinCEN seeks specific comment on whether to include trustsbroadly defined as a legal relationship in which one person holds title to property, subject to an obligation to keep or use the property for the benefit of anotherwithin the reporting Definition of Trust, Internal Revenue Service, Jul. Please describe any best practices related to due diligence on the seller and buyer of residential or commercial real estate; confirmation of the legality of the transaction; inquiries as to the source of acquisition funding; and any other issues that may relate to the marketing, negotiation of terms, and closing of the transaction. 49. 30, 2020); Check them out. [31] https://gfintegrity.org/press-release/new-report-finds-u-s-real-estate-sector-a-safe-haven-for-money-laundering/. 43. 1503 & 1507. amount for the reporting threshold for transactions? Louise Story & Stephanie Saul, Stream of Foreign Wealth Flows to Elite New York Real Estate, N.Y. Times (Feb. 7, 2015), 2004); United States Reaches Settlement to Recover More Than $700 Million in Assets Allegedly Traceable to Corruption Involving Malaysian Sovereign Wealth Fund, Press Release, Department of Justice (Oct. 30, 2019), FinCEN invites comments regarding the approach that it should take with respect to regulatory treatment of residential and commercial real estate and the money laundering threats presented by these sectors. 56. This website provides information of a general nature about REINSW, its products and services, and real estate practice in NSW. in the United States real estate market. Ability to tailor the Manual to your circumstances. [62] United States 5318(g)(1) and related program requirements under 31 CFR 5318(h).[2]. Aug. 6, 2020). This feature is not available for this document. These markup elements allow the user to see how the document follows the It is not an official legal edition of the Federal While every effort has been made to ensure that 352(c), 115 Stat. Real estate agent functions 3B. What are the benefits and drawbacks of a new form requirement to file key information deemed important by FinCEN versus full AML/CFT program requirements? FinCEN therefore seeks comment on whether there are other persons involved in non-financed real estate closings and settlements who should be considered. 67. Lakshmi Kumar & Kaisa de Bel, Acres of Money Laundering: Why U.S. Real Estate is a Kleptocrat's Dream, Global Financial Integrity, p. 4 (Aug. 2021). Would certain financial institutions or nonfinancial trades or Further, in the FATF's 2016 Mutual Evaluation Report (MER) of the United States, the FATF identified numerous money laundering vulnerabilities in the U.S. real estate sector, noting that purchasers often use legal persons to hold real estate and the opaqueness of legal persons . 308, 1, 37 Stat. What kinds of transactions, if any, should be excluded? 20. 28. Case No. 0000000703 00000 n documents in the last year, 983 . The responsibility for reporting information to FinCEN was placed on title insurance companies because the title insurance industry is concentrated among a limited number of participants and title insurance companies play a central role in the vast majority of real estate transactions. What are the key benefits for a particular stakeholder ( 1 (D. MD Jul. Tenn. Aug. 20, 2019); 3 . 2009) (purchase of multiple properties in El Paso, TX); As previously noted, other businesses and professions involved in real estate transactions, such as real estate brokers and agents, title company representatives, and closing agents (including attorneys when involved), currently are not subject to AML/CFT reporting obligations, and some of these, such as title insurance and real estate agents, are not mandatory in many transactions. E. What information should FinCEN require regarding real estate transactions covered by a proposed regulation?