FinCEN has posted the following on its website in light of a recent litigation outcome regarding the Corporate Transparency Act (“CTA”) in the Eastern District of Texas. As we have blogged, and as the below notes, other federal district courts have reached opposite conclusions. Also, the Eleventh Circuit still needs to rule on
FinCEN Alert: Fraud Schemes Using Generative Artificial Intelligence to Circumvent Financial Institution’s Identity Verification, Authentication, and Due Diligence Controls
On November 13, 2024, the Financial Crimes Enforcement Network (FinCEN) issued FIN-2024-Alert004 to help financial institutions identify fraud schemes associated with the use of deepfake media created with generative artificial intelligence (GenAI) in response to increased suspicious activity reporting. “Deepfake media” are a type of synthetic content that use artificial intelligence/machine learning to create realistic
FinCEN Issues Proposed Reporting Form for Residential Real Estate Deals
As we previously blogged, the Financial Crimes Enforcement Center (“FinCEN”) published Anti-Money Laundering Regulations for Residential Real Estate Transfers (“Final Rule”) regarding residential real estate. The Final Rule, set to go into effect on December 1, 2025, institutes a new Bank Secrecy Act reporting form – the “Real Estate Report” (“Report”) – which imposes a nation-wide reporting requirement for the details of residential real estate transactions, subject to certain exceptions, in which the buyer is a covered entity or trust.
FinCEN has now published the proposed Report, which is here, and requested comments within 60 days. The Reports are to be filed through FinCEN’s electronic online reporting system.
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FinCEN Issues Alert on Countering Financing of Hizballah and Terrorist Activities
On October 23rd, the Financial Crimes Enforcement Network (“FinCEN”) issued a supplementary alert regarding countering financing of the U.S.-designated foreign terrorist organization Hizballah (the “Alert”). In May 2024, FinCEN published an initial alert that focused on the countering of financing Iran-backed terrorist organizations, including Hizaballah. This Alert focuses solely on Hizballah and indicates that as part of the U.S. Department of the Treasury’s (“Treasury”) campaign against Hizballah for the past two decades, financial institutions (“FIs”) must remain vigilant in identifying suspicious activity of the terrorist organization.
According to the Alert, is it estimated that Iran has provided $700 million per year in support of Hizballah. Hizballah is known to generate revenue through various illicit activities including oil smuggling, money laundering, black market money exchange, counterfeiting, and illegal weapons procurement. Funds are laundered through businesses in West Africa, Europe, and South America.
In an accompanying press release, FinCEN Director Gacki noted that the Alert was released in part due to Hizaballah’s recent attacks against Israel. In addition, the Alert is consistent with FinCEN’s National Priorities, which include domestic and foreign terrorism.
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FinCEN Issues Consent Order Against Card Club for “Fundamentally Unsound” AML Program
Card Club Will Pay $900,000 and Undertake AML Program Review
The Financial Crimes Enforcement Network (“FinCEN”) has entered into a Consent Order with the Sahara Dunes Casino, doing business as the Lake Elsinore Hotel and Casino (“Lake Elsinore”). The Consent Order describes Lake Elsinore, located in California, as a “medium-sized card club” with 22 tables offering card games such as poker.
In the Consent Order, Lake Elsinore has admitted to willful violations of the Bank Secrecy Act (“BSA”), including failing to implement and maintain an effective Anti-Money Laundering (“AML”) compliance program, failing to file Currency Transaction Reports (“CTRs”) and Suspicious Activity Reports (“SARs”), and recordkeeping failures involving a negotiable instruments log, which is supposed to list each transaction between a casino or card club and its customers involving certain monetary instruments with a face value of $3,000 or more. Lake Elsinore has agreed to pay a $900,000 penalty and be subject to an AML program review.
The conduct at issue in the Consent Order is old: it occurred from about September 2014 through February 2019. The enforcement action arose from a 2017 examination of Lake Elsinore by the California Bureau of Gambling Control (“CABGC”). The Consent Order illustrates how a federal enforcement action can flow from a state regulatory agency working with FinCEN – as well as just how long that process can take. The Consent Order further illustrates that some BSA-covered institutions will operate with little to no day-to-day AML compliance until an exam occurs.
FinCEN Withdraws Designation of ABLV Bank as Foreign Financial Institution “Of Primary Money Laundering Concern”
A Gesture Providing Limited Solace to a Now-Defunct Bank
Six years ago, in early 2018, we blogged about the U.S. Department of the Treasury’s Financial Crimes Enforcement Network’s (“FinCEN’s”) designation of ABLV Bank, AS (“ABLV”), then the second-largest bank in Latvia, as a foreign financial institution “of primary money laundering concern” pursuant
FinCEN Reports Check Fraud Amounting to $688 Million Over Six Month Period
The Financial Crimes Enforcement Network (“FinCEN”) issued last month an in-depth report on check fraud stemming from mail theft (“Report”). This is a pernicious and expanding problem. The Report follows upon a joint alert issued by FinCEN and the U.S. Postal Service (“USPS”) in February 2023, on which we blogged.
Mail theft-related check fraud
FinCEN Finalizes Rule Subjecting Investment Advisers to AML/CFT Regulations
Following up on its Notice of Proposed Rulemaking (“NPR”), which we discussed back in March, the Financial Crimes Enforcement Network (FinCEN) released on August 28th a final rule extending Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) requirements to certain investment advisers (Final Rule).
The Final Rule adds “investment adviser” to the definition of “financial institution” at 31 C.F.R. 1010.100(t). The Final Rule applies to registered investment advisers (RIAs), and investment advisers (IAs) that report information to the Securities Exchange Commission (SEC) as exempt reporting advisers (ERAs), subject to certain exceptions. IAs generally must register with the SEC if they have over $110 million in assets under management (AUM). ERAs are investment advisers that (1) advise only private funds and have less than $150 million in AUM in the United States or (2) advise only venture capital funds.
The Final Rule requires certain IAs to: (1) develop and maintain an AML/CFT compliance program; (2) file Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs); (3) comply with the Recordkeeping and Travel Rules; (4) respond to Section 314(a) requests; and (5) implement special due diligence measures for correspondent and private banking accounts.
FinCEN released a Fact Sheet in conjunction with the Final Rule, which becomes effective January 1, 2026.
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FinCEN Issues Final BSA Reporting Requirements for Residential Real Estate Deals
On August 29, the Financial Crimes Enforcement Center (“FinCEN”) published Anti-Money Laundering Regulations for Residential Real Estate Transfers (“Final Rule”) regarding residential real estate. The Federal Register publication is 37 pages long. We have created a separate document which sets forth only the provisions of the Final Rule, at 31 C.F.R. § 1031.320, here.
The Final Rule institutes a new BSA reporting form – the “Real Estate Report” (“Report”) –which imposes a nation-wide reporting requirement for the details of residential real estate transactions, subject to some exceptions, in which the buyer is a covered entity or trust. As expected, FinCEN has adopted a “cascade” approach to who is responsible for filing a Report, specifically implicating – among others – title agencies, escrow companies, settlement agents, and lawyers.
Importantly, the person filing the Report may reasonably rely on information provided by others. Parties involved in a covered transaction also may agree as to who must file the Report. However, the Final Rule does not allow for incomplete reports, which likely will create practical problems.
The Final Rule does not require covered businesses to implement and maintain comprehensive anti-money laundering (“AML”) compliance programs or file Suspicious Activity Reports (“SARs”), like many other institutions covered by the Bank Secrecy Act (“BSA”). FinCEN has indicated that separate proposed rulemaking on commercial real estate transactions is forthcoming. However, the existence of a commercial element with a property does not automatically except a transfer from the Final Rule. For example, the transfer of a property that consists of a single-family residence that is located above a commercial enterprise is covered if all of the other reporting criteria are met.
FinCEN has published a Fact Sheet which summarizes the basics of the Final Rule. FinCEN also has published an eight-page set of FAQs on the Final Rule. The Final Rule will be effective on December 1, 2025. FinCEN has not yet issued a proposed form of the Report.
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FinCEN’s Notice of Proposed Regulations to Strengthen and Modernize AML/CFT Compliance Programs: A Podcast
With Guest Speaker Nick St. John
We are very fortunate to have Nick St. John, Director of Federal Compliance at America’s Credit Unions, as our guest speaker in this podcast on the Notice of Proposed Rulemaking issued by the Financial Crimes Enforcement Network and federal banking regulators regarding the enhancement and modernization of anti-money