The U.S. Department of the Treasury issued a report that recommends a new rule that would require real estate professionals to identify potential money laundering schemes in the residential real estate markets.
The “National Money Laundering Risk Assessment” report put forth by Treasury’s Financial Crimes Enforcement Network (FinCEN) seeks to have real estate professionals flagging suspicious activity connected to all-cash cash residential home purchases. Other stakeholders in the real estate process – including title insurance companies and attorneys – would also be required to report questionable all-cash transactions. Previously, such reporting was limited to financial services companies.
“Because of the key role real estate professionals play in closings and settlements, this is a critical vulnerability, and real estate professionals have been found to act as both witting and unwitting participants in money laundering schemes,” said the report.
The report also noted, “Predicate offenses for money laundering through real estate continue to involve domestic and transnational activity, including narcotics trafficking, corruption, human trafficking, fraud, and sanctions evasion. Illicit actors often make non-financed purchases using legal vehicles or arrangements designed to obfuscate the purchaser’s identity and source of funds to integrate ill-gotten proceeds into the formal economy.”
“Whether it’s terrorism, drug trafficking, Russian aggression, or corruption, illicit finance is the common thread across our nation’s biggest national security threats,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Treasury, through our National Risk Assessments, is at the cutting edge of analyzing the global risk environment to protect the U.S. and international financial systems from abuse by illicit actors. We urge both the public and private sectors to engage with these reports, as well as our forthcoming National Strategy for Combatting Terrorist and Other Illicit Finance.”
Treasury is expected to issue a separate report related to commercial real estate later in the year.