HousingWireHousingWire
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced on Wednesday the publication of two rules that extend anti-money laundering regulations to real estate agents and investment advisers, which is part of a broader Biden administration plan designed to curb corruption.
“The final residential real estate rule will require certain industry professionals to report information to FinCEN about non-financed transfers of residential real estate to a legal entity or trust, which present a high illicit finance risk,” FinCEN announced. “The rule will increase transparency, limit the ability of illicit actors to anonymously launder illicit proceeds through the American housing market, and bolster law enforcement investigative efforts.”
FinCEN detailed the potential impact of the new rule in an associated “fact sheet,” which describes a nationwide requirement for “certain persons involved in real estate closings and settlements to report information to FinCEN about specified transfers of residential real estate that are a high risk for illicit finance.”
The final real estate rule will take effect on Dec. 1, 2025.
The rule for investment advisers is effective on Jan. 1, 2026. It includes “minimum standards for anti-money laundering and countering the financing of terrorism (AML/CFT) programs” to be established by registered investment advisers (RIAs) and exempt reporting advisers (ERAs). These parties must report suspicious activity to FinCEN under provisions of the Bank Secrecy Act.
The rules were “loosened” following input from trade groups, according to reporting at the The Wall Street Journal. These groups reportedly took issue with the originally proposed versions of the rule for investment advisers, but they said the the final version “represented an improvement to the department’s 2015 proposal,” the Journal reported.
FinCEN explained that in terms of the real estate rule, a new flexibility has been added to make the requirements less burdensome. Parties to a real estate transaction can now “adopt a written agreement that designates a particular individual with the duty to report,” the Journal reported.
Meanwhile, a standard of reasonability has been adopted that will allow the person reporting a transaction to “rely on information provided by another party, so long as they don’t have any reason to suspect the reliability of the information.”
U.S. Treasury Secretary Janet Yellen said her department has been aiming to disrupt attempts by bad actors to use the U.S. as a hiding and laundering place for “ill-gotten gains,” and that addressing regulatory deficiencies are a part of that effort.
“These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors,” Yellen said.
