The Financial Crimes Enforcement Network (FinCEN) has gotten more active in fighting money laundering. While the last administration mostly focused on putting parties on the sanctions list, the current administration is looking to expand regulatory requirements. One of the several initiative recently launched is targeted at real estate.
On December 8, FinCEN announced an Advance Notice of Proposed Rulemaking on real estate transactions. It’s an advanced notice so there is no text to parse, just areas for discussion. The focus is on recordkeeping and reporting requirements on for people participating in transactions involving non-financed purchases of real estate.
Unlike the Geographic Targeted Orders, this new rulemaking could include commercial real estate. FinCEN recently renewed the Geographic Targeted Orders for all-cash purchases of real estate in Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle.
FinCEN is looking for comment on the potential scope of regulations. It has identified a few areas specifically:
- Scope of recordkeeping and reporting
- Who should be subject to the requirements
- Which types of real estate purchases should be covered
- Geographic scope of such a requirement,
- Appropriate reporting dollar-value threshold.
FinCEN is also looking for general comments on the risk of money laundering and other illicit financial activities in the real estate market and the extent to which any reporting requirements would address that risk. In footnote 76, FinCEN lists a bunch of prosecuted cases in which real estate was a vehicle for money laundering:
- United States v. Real Property Located in Potomac, Maryland, Commonly Known as 9908 Bentcross Drive, Potomac, MD 20854, Case No. 20-cv-02071, Doc. 1 (D. Md. Jul. 15, 2020) (purchase of property in Potomac, MD)
- United States v. Raul Torres, Case No. 1:19CR390, Doc. 30 (N.D. Ohio Mar. 30, 2020) (purchase of multiple properties in Cleveland, OH); United States v. Bradley, No. 3:15-cr-00037- 2, 2019 U.S. Dist. LEXIS 141157 (M.D. Tenn. Aug. 20, 2019) (purchase of multiple properties in Wayne County, MI);
- United States v. Coffman, 859 F. Supp. 2d 871 (E.D. Ky. 2012) (purchases of properties in Kentucky and South Carolina);
- United States v. Paul Manafort, Case 1:18-cr-00083-TSE, Doc. 14 (E.D. Va. Feb. 26, 2018) (purchase of a property in Virginia);
- United States v. Miller, 295 F. Supp. 3d 690 (E.D. Va. 2018) (purchase of properties in Virginia and Delaware);
- Atty. Griev. Comm’n of Md. v. Blair, 188 A.3d 1009 (MD Ct. App. 2018) (purchase of properties in Washington, DC and Maryland);
- United States v. Patrick Ifediba, et al., Case No. 2:18-cr-00103-RDP-JEO, Doc. 1 (N.D. Ala. Mar. 29, 2018) (purchase of multiple properties in Alabama);
- United States v. Delgado, 653 F.3d 729 (8th Cir. 2011) (purchase of multiple properties in Kansas City, MO),
- United States v. Fernandez, 559 F.3d 303 (5th Cir. 2009) (purchase of multiple properties in El Paso, TX);
- United States v. 10.10 Acres Located on Squires Rd., 386 F. Supp. 2d 613 (M.D.N.C. 2005) (purchase of two properties in North Carolina);
- State v. Harris, 861 A.2d 165 (Super. Ct. App. Div. 2004) (purchase of multiple properties in a non-GTO-covered jurisdiction in New Jersey);
- see also Lakshmi Kumar & Kaisa de Bel, “Acres of Money Laundering: Why U.S. Real Estate is a Kleptocrat’s Dream,” Global Financial Integrity, p. 29 (Aug. 2021) (highlighting money laundering cases outside of jurisdictions covered by the Real Estate GTOs)
Comments on the proposed rulemaking must be received on or before February 7, 2022.
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