Anti-fraud groups praise FinCEN AML proposal for real estate transactions

Treasury Department

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking (NPRM) that would require the handlers of all-cash residential real estate transactions in all U.S. cities and counties to disclose the beneficial owners.

All-cash residential real estate transactions have long been eyed as easy ways for criminals and oligarchs to launder money and access the U.S. financial system. Residential real estate transactions that require borrowing are less attractive to bad actors because the financial institutions handling them must adhere to anti-money laundering (AML) standards set by the Bank Secrecy Act. Those standards include having an AML program in place and reporting suspicious transactions to FinCEN.

FinCEN fought against this loophole with geographic targeting orders (GTOs), which were first launched in New York City and Miami in 2016 and require professionals involved in real estate closings and settlements to file a report with the agency listing the beneficial owners of all-cash residential real estate transactions.

The agency proposed applying the requirements of GTOs to the entire country in its NPRM, released Wednesday.

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