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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules requirement.80 FinCEN notes that recent high profile DOJ enforcement actions, including a forfeiture action to recover an alleged $3.5 million in corrupt proceeds laundered through the purchase of a Potomac, Maryland, mansion via a trust, indicate that consideration of any proposed rule should also include the risks presented by U.S. and foreign trusts.81
Due to the inherent opacity of purchases by legal entities, the Real Estate GTOs focused on purchases by such entities. However, FinCEN is also concerned about real estate money laundering risks involving natural persons, such as the use of nominees or straw-man purchasers. FinCEN is thus considering the extent to which any proposed rule should address this issue. FinCEN is particularly interested in comments broadly addressing the most appropriate way to treat natural persons in regulations addressing money laundering in the real estate sector. Moreover, FinCEN seeks views on how the use of natural persons in money laundering schemes could be addressed by potential rules covering entities which may still be involved in most transactions by natural persons.

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E. Type of Real Estate FinCEN is considering the best approach to extending reporting requirements or other regulatory treatment to both residential and commercial real estate given the important differences between the residential and commercial real estate markets. FinCEN is especially interested in how such a regulation might be structured to address the differences between commercial and residential real estate transactions and whether the risk in non-residential real estate is sufficient to justify the burdens that a reporting requirement for nonresidential real estate could impose.
FinCEN also invites comments on whether to address both commercial and residential real estate sectors in the same rule or to take an iterative approach.
IX. Request for Comment FinCEN seeks comments on the questions listed below, but invites any other relevant comments as well.
FinCEN encourages commenters to reference specific question numbers to facilitate FinCENs review of comments.
80 Definition of Trust, Internal Revenue Service, https www.irs.gov/charities-non-profits/
definition-of-a-trust.
81 See 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.

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A. General Information Regarding the Real Estate Market FinCEN is issuing this ANPRM to solicit public comment on issues pertaining to potential BSA
recordkeeping and reporting requirements. FinCEN invites the views of real estate businesses and professionals, trade organizations, law enforcement, federal agencies, state, local, and Tribal governments, NGOs, members of civil society, and any other interested parties. A variety of perspectives on the U.S. real estate market will provide FinCEN with the information essential for any future rulemaking.
1. Describe a typical residential real estate transaction.
2. Describe a typical commercial real estate transaction.
3. What are the products, services, activities, or affiliations associated with residential real estate transactions?
Commercial real estate transactions?
4. What percentage of residential real estate transactions involve purchases by legal entities or trusts?
5. What kinds of professionals are most common in real estate transactions, such as real estate brokers, settlement agents, title insurers, attorneys, etc.? Does this differ for residential and commercial real estate?
What kinds of professionals or participants are most able to request, verify, and report documentation related to purchasers? Is title insurance required in most of the transactions? If not, how common is the use of title insurance?
6. What are the typical transaction costs to close a residential real estate deal? For commercial real estate?
Typically, what percentage of the sale price do these costs represent?
7. What sort of due diligence is normally conducted, before or at closing, regarding i the parties to a transaction particularly of any natural persons who are the beneficial owners of the buyer or seller; ii the source of funds for any transaction; and iii other key aspects of the transaction? Does this process differ for commercial and residential transactions?
8. What sort of existing recordkeeping or reporting requirements, unrelated to BSA compliance, exist for real estate transactions? If so, what information must be recorded or reported, to whom, for how long, and what entity provides oversight and ensures compliance? Do these requirements differ for residential and commercial real estate transactions?
9. Please describe any best practices related to due diligence on the seller and buyer of residential or commercial
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real estate; confirmation of the legality of the transaction; inquiries as to the source of acquisition funding; and any other issues that may relate to the marketing, negotiation of terms, and closing of the transaction.
10. What percentage of residential real estate purchases are all-cash transactions?
11. What percentage of commercial real estate purchases are all-cash transactions?
12. Are the beneficial owners of legal entity purchasers involved in real estate transactions normally identified by some participant in a real estate transaction?
13. How do due diligence processes, if any, differ for commercial or residential properties?
14. What do persons involved in real estate transactions do if they have any suspicions about a transaction, customer, or source of funds?
15. How often are attorneys used in all-cash residential or commercial real estate transactions? Why are they used?
16. How often are real estate brokers or agents used in all-cash residential real estate transactions? Why are they used?
17. Is the decision to use real estate brokers, or agents, or attorneys different for all-cash real estate transactions?
18. Please describe when an escrow account must be used for a real estate transaction.
19. Please explain how payment is most often tendered for real estate purchases e.g., mortgage, domestic wires, foreign wires, checks, currency, CVC. Which of these categories of payment are higher-risk?
20. Please note any differences not already covered in provision of services for residential real estate transactions versus those for commercial real estate transactions.
B. What are the money laundering risks in real estate transactions?
FinCEN solicits comment on money laundering activities in general terms, not identifying actual parties or properties involved in connection with real estate transactions, the existence of any safeguards in the sector to prevent money laundering, and what additional steps may be necessary to protect the real estate industry from abuse by money launderers.
21. Describe the potential money laundering and illicit finance risks and vulnerabilities arising in the U.S. real estate market. Are these risks different for the residential and commercial real estate sectors?
22. Identify specific activities and services that present the highest and
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