On December 6, the Financial Crimes Enforcement Network (FinCEN) requested public input, through an advanced notice of proposed rulemaking (the ANPR), on the potential imposition of nationwide recordkeeping and reporting requirements on persons involved in certain residential and commercial real estate transactions pursuant to its authority under the Bank Secrecy Act (BSA).
FinCEN has previously imposed anti-money laundering (AML) requirements on certain non-bank participants in financed residential real estate transactions[2] and has used geographic targeting orders to impose specific recordkeeping and reporting requirements on title insurance companies in certain transactions involving cash purchases of residential real estate by legal entities. However, other real estate transactions, including most commercial real estate transactions that do not involve bank financing, generally do not trigger specific AML recordkeeping or reporting requirements.
The ANPR signals that FinCEN views this as a “gap” to be filled; it asserts that “money laundering risks stem from transactions in both the commercial and residential real estate sectors, and both merit appropriate regulatory treatment.” FinCEN seeks comment on, among other things, what parties should be subject to, and which transactions should trigger, such recordkeeping and reporting requirements.
Please click here to read the full alert memorandum.