Today, in its ongoing efforts to combat illicit finance and protect U.S. national security, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury has issued two new rules to safeguard the residential real estate and investment adviser sectors from illicit activities. These rules are key components of the Biden-Harris administration’s U.S. Strategy on Countering Corruption.
“The Treasury Department has been diligently working to disrupt the misuse of the United States for hiding and laundering illegal gains,” said U.S. Secretary of the Treasury Janet L. Yellen. “These efforts include addressing major regulatory gaps through the implementation of these two rules, which close critical loopholes in the U.S. financial system exploited by bad actors to facilitate crimes such as corruption, narcotrafficking, and fraud. These measures will make it more difficult for criminals to misuse our strong residential real estate and investment adviser sectors.”
The final rule for residential real estate mandates certain professionals in the industry to report information to FinCEN regarding non-financed transfers of residential properties to legal entities or trusts, which pose a high risk for illicit finance. This rule aims to enhance transparency, restrict illicit actors from anonymously laundering proceeds through the U.S. housing market, and strengthen law enforcement investigations.
The final rule for investment advisers imposes anti-money laundering and countering the financing of terrorism (AML/CFT) requirements—such as AML/CFT compliance programs and obligations for suspicious activity reporting—on certain investment advisers registered with the U.S. Securities and Exchange Commission (SEC), as well as on those reporting to the SEC as exempt advisers. This rule seeks to address inconsistencies in the application of AML/CFT requirements within this industry.
Throughout the rulemaking process, the Treasury Department carefully considered public feedback and engaged with industry groups, intergovernmental partners, and other key stakeholders—including through listening sessions during public comment periods—to develop rules that are effective, manageable, and minimize potential burdens on businesses, including small businesses.
By FCCT Editorial Team
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