Lew Sichelman is a seasoned writer with 50 years of covering the housing and mortgage markets under his belt. His biweekly Inman column publishes on Tuesdays.
Uncle Sam is getting serious about illicit money laundering, especially as it applies to real estate. Real estate agents aren’t on the hook yet, but if they knowingly participate in efforts to buy houses with ill-gotten gains, they could find themselves in a heap of trouble.
On the heels of the recent change in requirements for title companies to report on cash deals, other federal agencies this week called on lenders to adopt new techniques to root out money laundering and similar illicit financial activities.
The Fed is calling for change
In a joint statement, the Federal Reserve and four other regulators encouraged the institutions they govern to explore innovative approaches to meet their Bank Secrecy Act compliance obligations as they relate to money laundering by people who use illicit gains to purchase houses, condos and expensive automobiles, among other things.
The joint statement was issued by the Fed, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the U.S. Treasury’s Office of Terrorism and Financial Intelligence.
The five agencies said they recognize that innovation in the private sector can help banks and credit unions identify and report money laundering, terrorist financing and other crimes. The statement specifically mentioned artificial intelligence as well as other new technologies as possibilities.
They also said they would not penalize lenders who don’t choose to pursue other approaches, as long as they maintain effective anti-money laundering programs.
The statement also assures that regulators “are committed to continued engagement with the private sector and other interested parties. The agencies have or will establish projects or offices that will work to support the implementation of responsible innovation and new technology in the financial system.”
It comes only a few weeks after Financial Crimes Enforcement Network (FinCEN) expanded its investigation into real estate money laundering. A part of the Treasury Department, FinCEN revised its rules that require title insurance companies to identify the persons behind shell companies used in all-cash purchases of residential real estate.
The purchase amount threshold, which previously varied by city, is now set at $300,000 for each covered metropolitan area. FinCEN is requiring that covered purchases using virtual currencies also be reported.
Lew Sichelman is a seasoned writer with 50 years of covering the housing and mortgage markets under his belt. His biweekly Inman column publishes on Tuesdays.
