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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules
Money laundering vulnerabilities exist throughout the United States real estate market. These vulnerabilities are not limited to any particular sector.
Although in recent years FinCEN has focused its information collection efforts on non-financed purchases of residential real estate by shell companies, FinCEN believes that other areas of the real estate market, such as commercial real estate and certain real estate purchases by natural persons, may merit regulatory coverage.
For this rulemaking process, FinCEN
is considering how best to focus its regulatory attention on residential and commercial real estate transactions.
FinCEN notes that money laundering risks stem from transactions in both the commercial and residential real estate sectors, and both merit appropriate regulatory treatment. At the same time, FinCEN recognizes that an iterative approach may be warranted given the complexities and differences between different market sectors and the potential burdens that new reporting and recordkeeping requirements may have for businesses. If an iterative approach is warranted, FinCEN could initially focus on residential real estate followed by additional action to promulgate regulations covering the commercial real estate sector, as well as any other regulatory gaps that may exist with money laundering vulnerabilities involving real estate. FinCEN invites comments regarding the approach that it should take with respect to regulatory treatment of residential and commercial real estate and the money laundering threats presented by these sectors.
This ANPRM seeks comment to assist FinCEN in preparing a potential proposed rule that would seek to impose nationwide recordkeeping and reporting requirements on certain persons participating in transactions involving non-financed purchases of real estate. FinCEN has not previously imposed the BSAs general recordkeeping and reporting requirements on businesses involved in non-financed real estate transactions, but FinCEN has imposed more specific transaction reporting requirements on title insurance companies in the form of time-limited Geographic Targeting Orders under 31 U.S.C. 5326a. This ANPRM seeks public comment on whether FinCEN should impose a similar, ongoing, and expanded reporting requirement through regulations. Such a rule could be promulgated under 31 U.S.C. 5318a2.
FinCEN invites comments on alternative approaches to address the risk of money laundering in non-financed real estate transactions, including, for example,
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potentially promulgating general BSA
recordkeeping and reporting requirements for persons involved in real estate settlements and closings under 31 U.S.C. 5318g1 and related program requirements under 31 CFR
5318h.2
FinCEN seeks comment on the potential scope of any such regulations, including, among other things: The persons who should be subject to the requirements; which types of real estate purchases should be covered; what information should be reported and retained; the geographic scope of such a requirement; and the appropriate reporting dollar-value threshold.
FinCEN also invites general comments regarding 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.
II. Money Laundering in Real Estate Treasury, working with law enforcement partners, has highlighted the money laundering risks and typologies associated with the U.S. real estate market. As Treasury explained in its 2020 National Strategy for Combating Terrorist and Other Illicit Financing, criminals with widely divergent levels of financial sophistication use real estate at all price levels to store, launder, or benefit from illicit funds. In that report Treasury identified the risks of the laundering of illicit proceeds through real estate purchases as a main vulnerability and key action item for strengthening the U.S. Anti-Money Laundering/Countering the Financing of Terrorism AML/CFT framework. Law enforcement actionsincluding complaints, indictments, and prosecuted casesconfirm the conclusions in the report on the linkages between real estate transactions and money laundering and other illicit activities.3
2 31

U.S.C. 5312a2U.
e.g., United States v. Real Property Located in Potomac, Maryland, Commonly Known as 9908
Bentcross Drive, Potomac, MD 20854, Case No. 20
cv02071, Doc. 1 D. MD Jul. 15, 2020; United States v. Raul Torres, Case No. 1:19CR390, Doc. 30
N.D. Ohio Mar. 30, 2020; United States v. Bradley, No. 3:15cr000372, 2019 U.S. Dist. LEXIS 141157
M.D. Tenn. Aug. 20, 2019; United States v. Paul Manafort, Case 1:18cr-00083TSE, Doc. 14 E.D.
Va. Feb. 26, 2018; United States v. Miller, 295 F.
Supp. 3d 690 E.D. Va. 2018; United States v.
Patrick Ifediba, et al., Case No. 2:18cr00103
RDPJEO, Doc. 1 N.D. Alabama Mar. 29, 2018;
Atty. Griev. Commn of Md. v. Blair, 188 A.3d 1009
MD Ct. App. 2018; United States v. Coffman, 859
F. Supp. 2d 871 E.D. Ky. 2012; United States v.
Delgado, 653 F.3d 729 8th Cir. 2011; United States v. Fernandez, 559 F.3d 303 5th Cir. 2009; United States v. 10.10 Acres Located on Squires Rd., 386
F. Supp. 2d 613 M.D.N.C. 2005; State v. Harris, 861 A.2d 165 Super. Ct. App. Div. 2004; United 3 See,
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Indeed, as the Congressional Research Service recently noted, real estate money laundering schemes can involve a wide range of conventional domestic criminals, as well as transnational criminals, including drug cartels and human traffickers, international terrorists, and foreign kleptocrats corrupt high-level officials. 4 As such, the purchase of real estate, often combined with methods to conceal a purchasers identity and source of funds, can allow criminals to integrate ill-gotten proceeds into the legal economy. 5
Reports by foreign governments, international standard setters, and a variety of reports by non-governmental organizations NGOs, intergovernmental organizations, academics, trade organizations, media, and other members of civil society confirm the substantial risk that the real estate market presents for the money laundering problem.
In January 2007, for example, the Financial Action Task Force FATF, as the global standard setter for combatting money laundering, terrorism financing, and proliferation finance, published a wide-ranging report and series of recommendations that highlighted the vast scope of the money laundering problem in the real estate sector. The FATF has issued guidancemost recently in June 2021recommending AML/CFT requirements for certain entities involved in real estate transactions.6 Further, in the FATFs 2016 Mutual Evaluation Report MER
of the United States, the FATF
identified numerous money laundering vulnerabilities in the U.S. real estate sector, noting that purchasers often use legal persons to hold real estate and the opaqueness of legal persons . . . is a States Reaches Settlement to Recover More Than $700 Million in Assets Allegedly Traceable to Corruption Involving Malaysian Sovereign Wealth Fund, Press Release, Department of Justice Oct.
30, 2019, https www.justice.gov/opa/pr/unitedstates-reaches-settlement-recover-more-700-millionassets-allegedly-traceable; Acting Manhattan U.S.
Attorney Announces $5.9 Million Settlement of Civil Money Laundering And Forfeiture Claims Against Real Estate Corporations Alleged to Have Laundered Proceeds of Russian Tax Fraud, Press Release, Department of Justice May 12, 2017, https www.justice.gov/usao-sdny/pr/actingmanhattan-usattorney-announces-59-millionsettlement-civil-money-laundering-and.
4 Money Laundering in the U.S. Real Estate Sector, Congressional Research Service Nov. 9, 2021.
5 Id.
6 See generally Money Laundering & Terrorist Financing through the Real Estate Sector, Financial Action Task Force Jun. 29, 2007; see International Standards on Combating Money Laundering and the Financing of Terrorism &
Proliferation: The FATF Recommendations, Financial Action Task Force, pp. 1920 Jun. 2021.

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