In a significant move to combat money laundering in the real estate sector, a long-anticipated U.S. rule has advanced to the crucial stage of White House review

Proposed by the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department, this rule represents the final obstacle before its formal introduction next year.

According to government records, the rule arrived at the Office of Information and Regulatory Affairs on Monday, marking a pivotal step in the regulatory process. Once subjected to the office's scrutiny, the rule is slated to enter a two-month public comment period in February 2024, as indicated by the records.

The forthcoming rule is poised to mandate real estate professionals to disclose the identities of beneficial owners associated with companies engaging in real estate transactions with cash. This measure aims to close a perceived loophole that, according to anti-corruption advocates, has permitted criminals to discreetly funnel illicit gains into U.S. properties while maintaining anonymity.

Highlighting the broader context, the Treasury Department announced earlier this month that FinCEN is expected to formally propose the rule in early 2024. Notably, while financial institutions have long been obligated to scrutinize the sources of customer funds and report suspicious transactions, no such nationwide regulations currently exist for the real estate industry.

It is worth noting that FinCEN has implemented real estate purchase disclosure rules in select cities, including New York and Miami, since 2016. However, experts have pointed out that these rules have been relatively easy to circumvent, underscoring the need for a comprehensive and nationwide approach to address money laundering risks within the real estate sector.

The proposed rule's journey through the regulatory landscape signifies a concerted effort to bolster transparency and accountability within the real estate market, aiming to mitigate the potential misuse of property transactions for illicit financial activities. As the rule progresses through the review process, stakeholders and the public at large will have the opportunity to contribute their perspectives during the upcoming public comment period in February 2024.

By fLEXI tEAM