On August 28, 2024, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) announced that it issued two new final rules to deter bad actors from using the U.S. residential real estate and investment adviser sectors to hide and launder illicit funds.
FinCEN issued the final residential real estate rule that will require certain industry professionals to report transactions involving the transfer of non-financed residential real estate to a legal entity or trust – a situation that presents a high illicit finance risk. The rule will go into effect on December 1, 2025. FinCEN also issued the final investment adviser rule that will apply anti-money laundering/countering the financing of terrorism (“AML/CFT”) requirements, including the filing of suspicious activity reporting, to registered investment advisers and exempt reporting advisers. This rule will be effective on January 1, 2026.
According to FinCEN, both rules were issued after considering feedback from the public and consulting with industry groups, intergovernmental partners and other key stakeholders. To further clarify the provisions in the final rules, FinCEN issued Fact Sheets for each of the rules and Frequently Asked Questions regarding Real Estate Reports. The FAQs were published to provide real estate professionals, particularly those involved in property closings and settlements, with guidance regarding their upcoming reporting obligations.
FinCEN Press Release | Federal Register – Residential Real Estate | Fact Sheet – Residential Real Estate | Real Estate Report FAQs | Federal Register – Investment Advisers | Fact Sheet – Investment Advisers