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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. 

Continue Reading  FinCEN Issues Proposed Reporting Form for Residential Real Estate Deals

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.

Continue Reading  FinCEN Issues Alert on Countering Financing of Hizballah and Terrorist Activities

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.

Continue Reading  FinCEN Issues Final BSA Reporting Requirements for Residential Real Estate Deals

Strategy Touts Regulations on Beneficial Ownership, Real Estate and Investment Advisers, but Bemoans Lack of Supervisory Resources for Non-Bank Financial Institutions

The U.S. Department of the Treasury has issued its 2024 National Strategy for Combatting Terrorist and Other Illicit Financing (“Strategy”).  It is a 55-page document which, according to the government’s press release, “addresses the key risks from the 2024 National Money Laundering, Terrorist Financing, and Proliferation Financing Risk Assessments. . . and details how the United States will build on recent historic efforts to modernize the U.S. anti-money laundering/countering the financing of terrorism (AML/CFT) regime, enhance operational effectiveness in combating illicit actors, and embrace technological innovation to mitigate risks.”

The Strategy discusses an enormous list of topics.  Given the breadth of its scope, the Strategy generally makes only very high-level comments regarding any particular topic.  This post accordingly is extremely high level as well, and offers only a few select comments. 

Continue Reading  Treasury Issues Broad National Strategy for Combatting Illicit Financing

On February 16, the Financial Crimes Enforcement Center (“FinCEN”) published a Notice of Proposed Rulemaking (“NPRM”) regarding residential real estate.  The final version of the NPRM published in the Federal Register is 47 pages long.  We have created a separate document which more clearly sets forth the proposed regulations themselves, at 31 C.F.R. § 1031.320, here.

FinCEN also has published a Fact Sheet regarding the NPRM, here.  The Fact Sheet, slightly over four pages long, is helpful and walks through the basics of many of the proposed requirements.

The NPRM proposes to impose 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.  Title agencies, escrow companies, settlement agents, and lawyers need to pay particular attention to the NPRM because, based on FinCEN’s “cascade” approach to who should be responsible for complying with the reporting requirements, these parties are the most likely to be responsible.

Although the NPRM pertains only to residential transactions, FinCEN has indicated that it intends to publish a separate proposed rulemaking in 2024 regarding commercial real estate transactions.

Continue Reading  FinCEN Proposes BSA Reporting Requirements for Residential Real Estate

FinCEN announced on October 20 that, once again, it is extending the Geographic Targeting Order, or GTO, which requires U.S. title insurance companies to identify the natural persons behind so-called “shell companies” used in purchases of residential real estate not involving a mortgage.  FinCEN also has expanded slightly the reach of the GTOs and the FAQs.

The new GTO is here.  FinCEN’s press release is here.  FAQs issued by FinCEN on the GTOs are here.  This is a topic on which we previously have blogged extensively.

Continue Reading  FinCEN Renews and Expands GTO

The new Director of FinCEN, Andrea Gacki, addressed several key topics on October 3, 2023 at the Association of Certified Anti-Money Laundering Specialists (“ACAMS”) conference in Las Vegas, Nevada.  Specifically, Director Gacki addressed the issues of beneficial ownership under the Corporate Transparency Act (“CTA”); the real estate industry; investment advisers; fentanyl trafficking; and whistleblowers…

On August 30, 2023, the Federal Council of Switzerland announced proposed laws (the “Press Release”) to strengthen its anti-money laundering (“AML”) efforts in important ways.

The proposal includes an obligation for attorneys and other advisers to conduct due diligence; the creation of a centralized, non-public register of beneficial owners (“BO”); and new measures concerning sanctions violations, real estate transactions, and precious metal traders.  

The Federal Council has found that “[m]oney laundering and terrorist financing pose a serious threat to financial system integrity” and that criminals (whether in Switzerland or over the world) misuse legal entities to conceal assets and in furtherance of illicit activity.  As a “major financial centre,” The Federal Council realizes that Switzerland is exposed to these risks.  In the eyes of the world, the United States and Switzerland often have vied for the dubious title of the world’s top haven for tax evasion and money laundering.  And Switzerland has been feeling the pressure due to being one of the world’s top economies which still has not implemented regulations for BOs.

The Federal Council published the proposed laws in German (which we do not review in this blog), and issued in English an FAQ and an informative graphic.  The Federal Council is seeking input until November 29, 2023, and will act on the legislation in 2024.

The aim of the proposed laws is to “contribute significantly to protecting the financial centre from funds of criminal origin, and to strengthening Switzerland as a business location.”  Although the Swiss financial sector has more robust safeguards against money laundering and terrorist financing activities, the FAQ explains that “there are gaps in other, nonfinancial areas in this respect” and that “it is necessary to also include particularly risky activities in the non-financial sector in efforts to prevent and combat financial crime.” The Federal Council has found that the “high money laundering risks associated with legal entities and trusts” require legislation to strengthen the Swiss framework. According to the Press Release, prosecuting authorities would benefit from increased transparency to more quickly and accurate identifying the true owners of legal entities. 

Continue Reading  Switzerland Proposes Due Diligence for Attorneys and Broader Beneficial Owner Reporting Laws

Without much fanfare, the Financial Crimes Enforcement Network (FinCEN) published in June its Spring 2023 Rulemaking Agenda, which provides proposed timelines for upcoming key rulemakings projected throughout the rest of 2023.  FinCEN continues to focus on issuing rulemakings required by the Anti-Money Laundering Act of 2020 (the “AML Act”) and the Corporate Transparency Act (“CTA”).  FinCEN has been criticized for being slow in issuing regulations under the AML Act and the CTA, but Congress has imposed many obligations upon FinCEN, which still is a relatively small organization with a limited budget.

Continue Reading  FinCEN Provides Key Updates on Rulemaking Agenda Timeline

First of Two Blog Posts in a Series Pertaining to Attorneys Convicted of Money Laundering

In February, we blogged on the indictment of Vladimir Voronchenko (“Voronchenko”) in the Southern District of New York (“SDNY”), who was charged in connection with a scheme to make payments to maintain multiple properties in New York and Florida owned by his friend and associate, sanctioned Russian oligarch Viktor Vekselberg (“Vekselberg”).  The February indictment also contained allegations that Voronchenko had retained a then unnamed U.S.-based attorney to help carry out those alleged money laundering activities.

On April 25, the U.S. Attorney’s Office for the SDNY announced that Robert Wise (“Wise”), a New York attorney, had pled guilty to a single count of conspiring to commit money laundering, in violation of 18 U.S.C. § 371.  The substantive offense that was the object of the conspiracy was 18 U.S.C. § 1956(a)(2)(A), which criminalizes the act of transferring monetary instruments or funds into or outside of the United States with the intent to promote the carrying on of specified unlawful activity.  Interestingly, the superseding information charges Wise with violating the general criminal conspiracy statute, Section 371 (which carries a statutory maximum sentence of “only” five years), rather than violating the specific money laundering conspiracy provision, 18 U.S.C. § 1956(h) (which carries a statutory maximum sentence of 20 years).  It is unclear whether Wise is cooperating with investigators.

In our next post, we will discuss the Fourth Circuit’s affirmation of attorney Kenneth Ravenell’s conviction at trial for money laundering conspiracy, in violation of Section 1956(h).

Continue Reading  New York Attorney Pleads Guilty to Conspiring to Commit Money Laundering in Connection with Indicted Russian Oligarch