Treasury Implements New Rules to Address Illicit Finance in Real Estate and Investment Advisers

The U.S. Department of the Treasury's FinCEN has announced two new rules aimed at preventing illicit finance within the residential real estate and investment adviser sectors.

The residential real estate rule requires professionals to report non-financed transfers of property to legal entities or trusts, targeting high-risk transactions to enhance transparency and support law enforcement.

The investment adviser rule imposes anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements on certain SEC-registered and exempt reporting advisers, addressing inconsistencies in the industry.

U.S. Secretary of the Treasury Janet L. Yellen stated, “The Treasury Department has been hard at work to disrupt attempts to use the United States to hide and launder ill-gotten gains... through these two new rules that close critical loopholes in the U.S. financial system that bad actors use to facilitate serious crimes like corruption, narcotrafficking, and fraud. These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors.”

Treasury considered public feedback and consulted with industry groups and stakeholders to ensure the rules are effective and practical, aiming to minimize business burdens while enhancing the fight against illicit finance.