AML/CFT: Real Estate Disclosure Rules Published

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. 

Written comments on this proposed rule must be submitted on or before April 16, 2024.

Among the persons required by the Bank Secrecy Act (BSA) to maintain anti-money laundering (AML) programs are “persons involved in real estate closings and settlements.”  Yet, for many years, FinCEN has exempted such persons from comprehensive regulation under the BSA and has issued a series of time-limited and geographically focused “geographic targeting orders” (GTOs) to the real estate sector in lieu of more comprehensive regulation. 

Although certain information collected under this proposed rule may also be available to law enforcement, in some instances, through the new beneficial ownership reporting requirements imposed by the Corporate Transparency Act (CTA), the CTA's reporting regime and this proposed rule serve different purposes.

The proposed rule would require certain persons involved in residential real estate closings and settlements to file, and to maintain a record of, a streamlined version of a Suspicious Activity Report (SAR), referred to here as a “Real Estate Report.”

The information required to be reported in the Real Estate Report would identify the reporting person, the legal entity or trust to which the residential real property is transferred, the beneficial owners of that transferee entity or transferee trust, the person that transfers the residential real property, and the property being transferred, along with certain transactional information about the transfer.

Although this rule does not rely on the CTA for its legal authority, FinCEN is proposing to adopt many of the CTA's exemptions for purposes of this proposed definition, insofar as the policy rationales for those exemptions align with the goals of this proposed rule.

[89 FR 12424]