FinCEN releases final rules to protect real estate from illicit finance

More details about the new regulations

Both rules fulfil key objectives outlined in the Biden-Harris administration's US Strategy on Countering Corruption.

The US Treasury Secretary officials have announced that the Treasury Department is actively working to prevent the US from being used as a haven for hiding and laundering illegally acquired funds. Steps are being taken to close important loopholes in the US financial system that criminals exploit for serious crimes such as corruption and fraud. These measures make it more difficult for lawbreakers to exploit the real estate and investment sectors.

The new residential real estate rule will mandate specific industry professionals to report information to FinCEN regarding non-financed transfers of residential real estate to a legal entity or trust that pose a significant risk of illicit finance. This rule aims to help transparency, restrict the ability of illicit actors to anonymously launder illegal proceeds through the American housing market, and strengthen law enforcement's investigative capabilities.

The final investment adviser rule will extend anti-money laundering/countering the financing of terrorism (AML/CFT) requirements to certain investment advisers registered with the US Securities and Exchange Commission (SEC), as well as exempt reporting advisers. This rule aims to ensure consistent application of AML/CFT requirements across the investment advisory industry.

The Treasury considered public feedback and consulted extensively with industry groups, intergovernmental partners, and other key stakeholders. This included conducting listening sessions during the public comment periods to ensure that the rules will be effective and manageable, while also minimising potential burdens on businesses, including small businesses.

As a result, the final regulations were crafted with a balanced approach that aimed to foster economic growth and innovation. By integrating insights from a diverse array of perspectives, the Treasury ensured that the new rules would not only address critical issues but also support a fair and competitive market environment.