A pair of rules intended to safeguard the residential real estate and investment adviser sectors from unlawful finance by addressing “critical vulnerabilities in the U.S. financial system and to protect national security” were announced Wednesday by the Treasury Department’s financial crimes enforcement arm.
The Financial Crimes Enforcement Network (FinCEN) said in a release that the rules will make it harder for criminals to exploit strong residential real estate and investment adviser sectors. The rules will close “critical loopholes in the U.S. financial system that bad actors use to facilitate serious crimes like corruption, narcotrafficking, and fraud.”
FinCEN said the first regulation, the residential real estate rule, will require certain industry professionals to report information to the agency about non-financed transfers of residential real estate to a legal entity or trust, which FinCEN said present a high illicit finance risk. “The rule will increase transparency, limit the ability of illicit actors to anonymously launder illicit proceeds through the American housing market, and bolster law enforcement investigative efforts,” the agency said.
The agency said the second directive, the investment adviser rule, would apply to anti-money laundering/countering the financing of terrorism (AML/CFT) requirements. That includes, FinCEN said, AML/CFT compliance programs and suspicious activity reporting obligations — to certain investment advisers that are registered with the U.S. Securities and Exchange Commission (SEC) — as well as those that report to the SEC as exempt reporting advisers. “The rule will help address the uneven application of AML/CFT requirements across this industry,” FinCEN said.
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