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New Treasury Regulations Target Cash Transactions in Real Estate to Combat Money Laundering

Banking and Insurance

USA’s New Treasury Regulations Target Cash Transactions

Business Honor
29 August, 2024

The U.S. Treasury Department has unveiled new regulations aimed at cracking down on money laundering through all-cash real estate transactions.

Finalized on Wednesday, these regulations mandate that investment advisers and real estate professionals report cash transactions involving residential properties sold to legal entities, trusts, and shell companies. Notably, these requirements will not extend to sales made to individuals or transactions involving mortgages.

The move forms part of the Biden administration's broader strategy to combat financial crime and curb the flow of illicit money through the U.S. financial system. All-cash transactions in real estate are deemed a high risk for money laundering, given their potential to conceal the origins of illicit funds.

The Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department, will oversee the implementation of these new rules. The regulations require disclosure of the sellers' and beneficiaries' names, property details, and transaction payments, among other pertinent information.

Treasury Secretary Janet Yellen highlighted that these measures address critical regulatory gaps, stating, “These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors.”

Ian Gary, executive director of the FACT Coalition, praised the new rules as essential safeguards against financial crime. “After years of advocacy, the era of financial secrecy and impunity in the U.S. seems to finally be over,” Gary commented.

Industry reactions have been positive. Tori Syrek of the National Association of Realtors welcomed the regulations as a practical approach to mitigating money laundering risks, noting, “Bad actors are exploiting the current vulnerabilities. FinCEN’s final rule is a pragmatic, risk-based approach to combating these crimes.”