T
he US Department of the Treasury's FinCEN has recently implemented two new regulations to safeguard real estate and investment advisers against illicit finance. These regulations align with the Biden-Harris administration's US Strategy on Countering Corruption.

    The Treasury Secretary officials have announced that the department is actively working to prevent the US from being used as a haven for hiding and laundering illegally acquired funds. They are taking steps to close important loopholes in the US financial system that criminals exploit for serious crimes such as corruption and fraud. These measures aim to make it more difficult for lawbreakers to exploit the real estate and investment sectors.

    The new residential real estate rule requires specific industry professionals to report information to FinCEN regarding non-financed transfers of residential real estate to a legal entity or trust that poses a significant risk of illicit finance. This rule is designed to promote transparency, restrict the ability of illicit actors to anonymously launder illegal proceeds through the American housing market, and enhance law enforcement's investigative capabilities.

    The final investment adviser rule extends anti-money laundering/countering the financing of terrorism (AML/CFT) requirements to certain investment advisers registered with the US Securities and Exchange Commission (SEC), as well as exempt reporting advisers. This rule aims to ensure consistent application of AML/CFT requirements across the investment advisory industry.

    The Treasury considered public feedback and consulted extensively with industry groups, intergovernmental partners, and other key stakeholders. This included conducting listening sessions during the public comment periods to ensure that the rules would be effective and manageable while minimizing potential burdens on businesses, including small businesses.

    As a result, the final regulations were crafted with a balanced approach that aimed to foster economic growth and innovation. By integrating insights from a diverse array of perspectives, the Treasury ensured that the new rules would not only address critical issues but also support a fair and competitive market environment.