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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules
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requirement attaches to some entity involved in every non-financed transaction. At the same time, FinCEN
seeks to minimize the burden on reporting entities and to avoid unnecessary and duplicative reporting.
FinCEN seeks comments on whether to assign a hierarchical, cascading reporting obligation on different entities depending on which are involved in a particular covered transaction, in a manner similar to the IRSs regulation for submitting Form 1099S Proceeds from Real Estate Transactions.75 For that IRS regulation, the person responsible for closing the transaction, which may be a settlement agent or attorney, for instance, depending on the nature of the transaction, is required to file the Form 1099S. And if there is no person responsible for closing the transaction, the reporting requirement then falls to other persons involved in the transaction, such as the purchasers broker. In that way, the IRS regulation ensures that for every transaction, some entity involved is required to report.
FinCEN is considering, and invites comments on, such an approach.
FinCEN also solicits comments on whether and how to assign a reporting requirement to any or all of the following entities: Title insurance companies, title or escrow companies, real estate agents or brokers, real estate attorneys or law firms, settlement or closing agents, as well as other entities listed below in the comments section.
FinCEN also invites comments on any additional financial institutions or nonfinancial trades or businesses that should be covered by a proposed regulation. Finally, FinCEN is aware that there are substantial differences in practices, customs, and requirements for real estate transactions in different jurisdictions within the United States and invites comment on those differences and how to best design a rule that takes into account such jurisdictional differences.
C. Geographic Scope and Transaction Threshold Although the Real Estate GTOs have been targeted at particular geographic locations within the United States, FinCENs preliminary view is that fully addressing the money laundering vulnerabilities in the real estate market requires a nationwide rule. While money laundering activity in real estate transactions may be more common in some areas than others, it can occur in any location. Indeed, a survey of recent 75 See 26 CFR 1.60454 Information reporting on real estate transactions with dates of closing on or after January 1, 1991.

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state and federal court indictments and prosecuted cases demonstrates that real estate money laundering is not limited to the jurisdictions covered by the Real Estate GTOs.76 Because such activity can occur in any location, limiting the scope of the regulations by geography may simply push money laundering activity into other locations. A uniform national requirement would also provide consistency and predictability to businesses required to maintain records and make reports. FinCEN
nevertheless invites comment on the geographic reach of any proposed regulation, whether the geographic coverage should be limited, and any underlying information to support such limitations. Commenters are invited to comment particularly on the differences in practices, customs, and requirements for real estate transactions in geographic areas of the United States that merit specific consideration because of their relevance to the potential for the abuse of real estate transactions by money launderers.
FinCEN also welcomes comment on the appropriate transaction threshold, if any, for a reporting requirement.
FinCENs GTOs contain a $300,000
threshold. Other BSA reporting requirements have other thresholds.77
76 See, 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 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
cr000372, 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 1:18cr00083TSE, 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. Commn 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. 2:18cr00103
RDPJEO, 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 Kleptocrats Dream, Global Financial Integrity, p.
29 Aug. 2021 highlighting money laundering cases outside of jurisdictions covered by the Real Estate GTOs.
77 See, e.g., 31 U.S.C. 5316a1requirement to report importing or exporting monetary instruments of more than $10,000 at one time; 31 CFR

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However, any transaction threshold may enable money launderers to structure their behavior to avoid a reporting requirement. A survey of court cases indicates that real estate used in money laundering is not limited to properties that sell for greater than $300,000, the current GTO threshold.78 For these reasons, FinCEN is considering a reporting requirement with no transaction threshold. According to figures published by NAR, existing residential home sales of less than $100,000 constitute less than 5% of overall sales.79 Therefore, not setting a minimum threshold appears unlikely to substantially increase the burden on entities required to report under any future regulation. FinCEN solicits comments, however, on whether a minimum threshold should be included.
D. Purchases by Certain Entities Under the Real Estate GTOs, only cash purchases by the following legal entities are reportable transactions: a corporation, limited liability company, partnership or other similar business entity, whether formed under the laws of a state, or of the United States, or a foreign jurisdiction, other than a business whose common stock or analogous equity interests are listed on a securities exchange regulated by the Securities and Exchange Commission SEC or a self-regulatory organization registered with the SEC, or an entity solely owned by such a business.
Given the known money laundering typology of using shell companies to obscure the ultimate owners of real estate, FinCEN believes these entities should likely be covered in any proposed regulation. FinCEN seeks comment on which legal entities should be included.
Additionally, FinCEN seeks specific comment on whether to include trusts broadly defined as a legal relationship in which one person holds title to property, subject to an obligation to keep or use the property for the benefit of anotherwithin the reporting 1010.330arequirement to report receipt of currency in excess of $10,000 in the course of trade or business.
78 See, e.g., United States v. Bradley, No. 3:15cr 000372, 2019 U.S. Dist. LEXIS 141157 M.D. Tenn.
Aug. 20, 2019 multiple transactions under $10,000; Atty. Griev. Commn of Md. v. Blair, 188
A.3d 1009 MD Ct. App. 2018 several transactions under $20,000; United States v. Coffman, 859 F.
Supp. 2d 871 E.D. Ky. 2012 purchases of property for under $150,000; United States v. Delgado, 653
F.3d 729 8th Cir. 2011 multiple transactions under $100,000; United States v. 10.10 Acres Located on Squires Rd., 386 F. Supp. 2d 613
M.D.N.C. 2005 transaction under $50,000.
79 Summary of August 2021 Existing Home Sales Statistics, National Association of Realtors Sep.
22, 2021.

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