U.S. Department of Treasury building in Washington, D.C. (Source: Shutterstock)
The Financial Crimes Enforcement Network (FinCEN) announced Monday it will submit a proposed rule with the Federal Registrar to address the vulnerabilities in the U.S. real estate market that are susceptible to money laundering and other illegal activity.
In a statement from the U.S. Treasury Department, FinCEN officials said they see "systemic money laundering vulnerabilities presented by the U.S. real estate sector, and consequently, the ability of illicit actors to launder criminal proceeds through the purchase of real estate" that threatens national security and the integrity of our financial system.
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The Advanced Notice of Proposed Rule Making (ANPRM) stated that it is assisting FinCEN with a proposed rule to enhance the transparency of the domestic real estate market on a nationwide basis and protect the U.S. real estate market from exploitation by criminals and corrupt officials.
FinCEN published a copy of the proposed rule this week and it has yet to be filed with the Federal Registrar. Once published, ANPRM said it would like comments on the benefits to law enforcement and the prevention of illicit finance "as well as potential burdens or challenges that such a reporting requirement might present," the statement read.
"Increasing transparency in the real estate sector will curb the ability of corrupt officials and criminals to launder the proceeds of their ill-gotten gains through the U.S. real estate market," Acting Director of FinCEN Himamauli Das said. "Addressing this risk will strengthen U.S. national security and help protect the integrity of the U.S. financial system. We urge stakeholders to provide input to assist us in developing an approach that enhances transparency while minimizing burden on business."
While FinCEN acknowledged that the regulatory structure of banks and credit unions help thwart money laundering, there are gaps in regulations when a buyer does not use a mortgage and when the buyer pays cash "it can be nearly impossible to trace the beneficial owners behind shell companies that are often used to purchase the real estate."
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
