12424 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

1 31 U.S.C. 5312(a)(2)(U). 2 31 U.S.C. 5318(h). 

DEPARTMENT OF THE TREASURY 

Financial Crimes Enforcement Network 

31 CFR Chapter X 

RIN 1506–AB54 

Anti-Money Laundering Regulations 

for Residential Real Estate Transfers 

AGENCY: Financial Crimes Enforcement 

Network (FinCEN), Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: FinCEN is issuing a proposed 

rule to require certain persons involved 

in real estate closings and settlements to 

submit reports and keep records on 

identified non-financed transfers of 

residential real property to specified 

legal entities and trusts on a nationwide 

basis. Transfers made directly to an 

individual would not be covered by this 

proposed rule. The proposed rule 

describes the circumstances in which a 

report must be filed, who must file a 

report, what information must be 

provided, and when a report is due. 

These reports are expected to assist the 

U.S. Department of the Treasury; 

Federal, State, and local law 

enforcement; and national security 

agencies in addressing illicit finance 

vulnerabilities in the U.S. residential 

real estate sector and to curtail the 

ability of illicit actors to anonymously 

launder illicit proceeds through the 

purchase of residential real property, 

which threatens U.S. economic and 

national security. 

DATES: Written comments on this 

proposed rule must be submitted on or 

before April 16, 2024. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

• Federal E-Rulemaking Portal: 

https://www.regulations.gov. Follow the 

instructions for submitting comments. 

Refer to Docket Number FINCEN–2024– 

0005 and RIN 1506–AB54. 

• Mail: Policy Division, Financial 

Crimes Enforcement Network, P.O. Box 

39, Vienna, VA 22183. Refer to Docket 

Number FINCEN–2024–0005 and RIN 

1506–AB54. 

Please submit comments by one 

method only. 

FOR FURTHER INFORMATION CONTACT: The 

FinCEN Regulatory Support Section at 

1–800–767–2825 or electronically at 

frc@fincen.gov. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary 

The U.S. Department of the Treasury 

(Treasury) has long recognized the illicit 

finance risks posed by abuse of the U.S. 

real estate market and of legal entities 

and trusts by criminals and corrupt 

officials to launder ill-gotten gains 

through transfers of residential real 

estate. The abuse of U.S. residential real 

estate markets threatens U.S. economic 

and national security and can 

disadvantage individuals and small 

businesses that seek to compete fairly in 

the U.S. economy. The proposed rule is 

designed to enhance transparency 

nationwide in the U.S. residential real 

estate market and to assist Treasury, law 

enforcement, and national security 

agencies in protecting U.S. economic 

and national security interests by 

requiring certain persons involved in 

real estate closings and settlements to 

file reports and maintain records related 

to identified non-financed transfers of 

residential real estate to specified legal 

entities and trusts on a nationwide 

basis, including information regarding 

beneficial owners of those entities and 

trusts. 

Among the persons required by the 

Bank Secrecy Act (BSA) to maintain 

anti-money laundering (AML) programs 

are ‘‘persons involved in real estate 

closings and settlements.’’ 1 Yet, for 

many years, FinCEN has exempted such 

persons from comprehensive regulation 

under the BSA and has issued a series 

of time-limited and geographically 

focused ‘‘geographic targeting orders’’ 

(GTOs) to the real estate sector in lieu 

of more comprehensive regulation. 

Information received in response to 

FinCEN’s GTOs relating to non-financed 

transfers of residential real estate 

(Residential Real Estate GTOs) have 

demonstrated the need for increased 

transparency and further regulation of 

this sector. This notice of proposed 

rulemaking (NPRM) thus proposes a 

new reporting requirement for nonfinanced residential real estate 

transactions, consistent with the BSA’s 

longstanding directive to impose AML 

requirements on persons involved in 

real estate closings and settlements. At 

the same time, FinCEN has carefully 

considered the comments received in 

response to an advance notice of 

proposed rulemaking (ANPRM) on AntiMoney Laundering Regulations for Real 

Estate Transactions, and FinCEN 

appreciates the burdens that traditional 

AML program and SAR requirements 

may impose on persons involved in real 

estate transactions. This NPRM 

therefore proposes a streamlined 

reporting framework designed to 

minimize unnecessary burdens while 

also enhancing transparency. Although 

certain information collected under this 

proposed rule may also be available to 

law enforcement, in some instances, 

through the new beneficial ownership 

reporting requirements imposed by the 

Corporate Transparency Act (CTA), the 

CTA’s reporting regime and this 

proposed rule serve different purposes. 

In contrast to the beneficial 

ownership reporting requirements 

outlined in the CTA, this proposed rule 

is a tailored reporting requirement that 

would capture a particular class of 

activity that Treasury deems high-risk 

and that warrants reporting on a 

transaction-specific basis. More 

specifically, the proposed rule would 

require certain persons involved in 

residential real estate closings and 

settlements to file, and to maintain a 

record of, a streamlined version of a 

Suspicious Activity Report (SAR), 

referred to here as a ‘‘Real Estate 

Report.’’ The persons subject to these 

reporting and recordkeeping 

requirements would be deemed 

reporting persons for purposes of the 

proposed rule and would be determined 

through a ‘‘cascading’’ approach based 

on the function performed by the person 

in the real estate closing and settlement. 

The ‘‘cascade’’ is designed to minimize 

burdens on persons involved in real 

estate closings and settlements while 

avoiding gaps in reporting and 

incentives for evasion. To provide some 

flexibility in this cascade approach, real 

estate professionals would also have the 

option to designate a reporting person 

from among those in the cascade by 

agreement. 

The information required to be 

reported in the Real Estate Report would 

identify the reporting person, the legal 

entity or trust to which the residential 

real property is transferred, the 

beneficial owners of that transferee 

entity or transferee trust, the person that 

transfers the residential real property, 

and the property being transferred, 

along with certain transactional 

information about the transfer. The 

reporting person would be required to 

file the Real Estate Report no later than 

30 days after the date of closing. 

Because of the streamlined nature of 

these Real Estate Reports compared to 

traditional SARs, as well as the flexible 

‘‘cascade’’ framework, persons subject to 

this reporting requirement would not 

need to maintain the types of AML 

programs otherwise required of 

financial institutions under the BSA.2


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Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 12425 

3U.S. Department of the Treasury, Remarks by 

Secretary Janet L. Yellen on Anti-Corruption as a 

Cornerstone of a Fair, Accountable, and Democratic 

Economy at the Summit for Democracy (Mar. 28, 

2023), available at https://home.treasury.gov/news/ 

press-releases/jy1371. 4 Id; U.S. Department of the Treasury, Strategic 

Plan 2022–2026 (2022), p. 23, available at https:// 

home.treasury.gov/system/files/266/Treasury

StrategicPlan-FY2022-2026.pdf. 5 Id. at p. 24. 6For the purposes of this proposed rule, 

‘‘residential real property’’ means: (1) real property 

located in the United States containing a structure 

designed principally for occupancy by one to four 

families; (2) vacant or unimproved land located in 

the United States zoned, or for which a permit has 

been issued, for the construction of a structure 

designed principally for occupancy by one to four 

families; or (3) shares in a cooperative housing 

corporation. 

7The White House, United States Strategy for 

Countering Corruption (Dec. 2021), p. 22, available 

at https://www.whitehouse.gov/wp-content/ 

uploads/2021/12/United-States-Strategy-onCountering-Corruption.pdf; U.S. Department of the 

Treasury, National Money Laundering Risk 

Assessment (Feb. 2022), p. 5, available at https:// 

home.treasury.gov/system/files/136/2022-NationalMoney-Laundering-Risk-Assessment.pdf. 

8The FATF is a global standard-setter of antimoney laundering and counter terrorist financing 

guidelines. The FATF has noted that ‘‘[c]riminals 

gravitate towards sectors that apply or are believed 

to apply less comprehensive regulation and 

mitigation measures or where supervision is found 

to be lacking,’’ and that ‘‘[t]he purchase of real 

estate allows for the movement of large amounts of 

funds all at once in a single transaction as opposed 

to multiple transactions of smaller values.’’ See 

Financial Action Task Force, Guidance for a Risk 

Based Approach: Real Estate Sector (July 2022), p. 

18, available at https://www.fatf-gafi.org/content/ 

dam/fatf-gafi/guidance/RBA-Real-Estate-Sector.pdf.

coredownload.pdf. 

9See Financial Action Task Force, United States 

Mutual Evaluation Report (Dec. 2016), p. 1, 

available at https://www.fatf-gafi.org/content/dam/ 

fatf-gafi/mer/MER-United-States-2016.pdf.

coredownload.inline.pdf. 

10 Global Financial Integrity, ‘‘Acres of Money 

Laundering: Why U.S. Real Estate is a Kleptocrat’s 

Dream’’ (Aug. 2021), pp. 13–16, available at https:// 

gfintegrity.org/report/acres-of-money-launderingwhy-u-s-real-estate-is-a-kleptocrats-dream/. 

According to its website, GFI is ‘‘a Washington, DCbased think tank focused on illicit financial flows, 

corruption, illicit trade and money laundering.’’ See 

Global Financial Integrity, ‘‘About,’’ available at 

https://gfintegrity.org/about/. 

11Financial Action Task Force, Guidance for a 

Risk Based Approach: Real Estate Sector (July 

2022), pp. 29–30, available at https://www.fatfgafi.org/content/dam/fatf-gafi/guidance/RBA-RealEstate-Sector.pdf.coredownload.pdf; see e.g., U.S. 

Department of Justice, Press Release, Over $1 

billion in misappropriated 1MDB Funds Now 

Repatriated to Malaysia (Aug. 5, 2021), available at 

https://www.justice.gov/opa/pr/over-1-billionmisappropriated-1mdb-funds-now-repatriatedmalaysia. The term ‘‘PEP’’ generally includes a 

current or former senior foreign political figure, 

their immediate family, and their close associates. 

See Federal Financial Institutions Examination 

Council, FFIEC BSA/AML Examination Manual, 

Politically Exposed Persons—Overview (v5 2015), 

p. 290; see also Board of Governors of the Federal 

Reserve System, Federal Deposit Insurance 

Corporation, Financial Crimes Enforcement 

Network, National Credit Union Administration, 

and Office of the Comptroller of the Currency, Joint 

Statement on Bank Secrecy Act Due Diligence 

Requirements for Customers Who May Be 

Considered Politically Exposed Persons (Aug. 21, 

2020), available at https://www.federalreserve.gov/ 

newsevents/pressreleases/files/bcreg20200821a1.

pdf. 

12See Complaint for Forfeiture, U.S. v. Real 

Property Located in Potomac, Maryland, Commonly 

Known as 9908 Bentcross Drive, Potomac, MD 

20854 (D. Md. July 15, 2020) (Case No. 20–cv– 

02071). 

13The White House, National Security Strategy 

(Oct. 2022), p. 36, available at https://

www.whitehouse.gov/wp-content/uploads/2022/10/ 

Biden-Harris-Administrations-National-SecurityStrategy-10.2022.pdf. 

II. Background 

A. Illicit Finance Risks in the U.S. Real 

Estate Sector 

As Secretary of the Treasury 

(Secretary) Yellen noted at the 2023 

Summit for Democracy, ‘‘[c]orrupt 

actors have for decades anonymously 

stashed their ill-gotten gains in real 

estate. Those looking to exploit our 

system have been able to—with 

anonymity—store illicit proceeds in an 

appreciating asset . . . Treasury is 

working to remove that anonymity[.]’’ 3

The Secretary has made increasing 

transparency in the domestic and 

international financial system a national 

priority, noting that ‘‘illicit proceeds 

. . . equaling an estimated two percent 

of U.S. gross domestic product (GDP) 

flow through the U.S. financial system 

each year. Permitting illicit actors to 

benefit from the stability and security of 

the U.S. financial system weakens 

financial transparency, distorts markets, 

and hurts ordinary Americans.’’ 4

Treasury’s Strategic Plan for 2022 to 

2026 makes clear that one indicator of 

success in combatting illicit actors’ 

abuse of the U.S. financial system is 

achieving an ‘‘updated regulatory 

framework for real-estate [sic] to 

effectively cover cash transactions.’’ 5

The United States’ stable real estate 

market and strong property rights 

protections make U.S. residential real 

estate attractive to illicit actors looking 

to launder the proceeds of crime and 

corruption. This is particularly the case 

for non-financed transfers that are 

currently outside the purview of the due 

diligence requirements imposed on 

regulated financial institutions pursuant 

to the BSA. For purposes of this rule, a 

non-financed transfer is any transfer 

that does not involve an extension of 

credit to the transferee secured by the 

transferred residential real property 6

and extended by a financial institution 

that has both an obligation to maintain 

an AML program and an obligation to 

report suspicious transactions. Money 

launderers exploit the absence of an 

obligation on any party to a nonfinanced transfer to conduct due 

diligence. 

As a result, and as the 

Administration’s 2021 U.S. Strategy for 

Countering Corruption notes, the United 

States’ real estate market is a significant 

destination for the laundered proceeds 

of illicit activity. Treasury’s 2022 

National Money Laundering Risk 

Assessment (2022 NMLRA) also reflects 

this. The 2022 NMLRA identifies a lack 

of transparency in non-financed real 

estate transfers in particular as a key 

weakness in the U.S. Anti-Money 

Laundering and Countering the 

Financing of Terrorism (AML/CFT) 

regulatory regime.7

International bodies, such as the 

Financial Action Task Force (FATF) and 

non-government organizations, have 

likewise noted the sector’s appeal for 

illicit actors intent on laundering 

funds.8 In particular, the FATF has 

recommended that the United States 

take appropriate action to address 

money laundering risks in relation to 

non-financed transfers of real estate.9

Furthermore, open-source investigative 

reports have demonstrated that criminal 

actors frequently employ legal entities, 

such as limited liability companies 

(LLCs), to launder money, including 

through real estate. In August 2021, 

Global Financial Integrity (GFI), a nongovernmental organization, published a 

study estimating that at least $2.3 

billion had been laundered through the 

U.S. real estate market from 2015 to 

2020 and the ‘‘use of anonymous shell 

companies and complex corporate 

structures continue[d] to be the number 

one money laundering typology’’ 

involving real estate.10 Additionally, 

over 50 percent (30 of the 56 cases the 

study examined) involved politically 

exposed persons (PEPs), which the 

FATF has found ‘‘may be able to use 

their political influence for profit 

illegally [and] . . . thus may present a 

risk higher than other customers.’’ 11 GFI 

also highlighted that legal entities and 

trusts are frequently used to make such 

purchases, and that purchases are rarely 

made in the name of the PEP. For 

example, a 2020 forfeiture complaint 

filed by the Department of Justice (DOJ) 

alleged that a former president of a 

country in Africa and his spouse used 

funds derived from corruption to 

purchase U.S. residential properties 

worth millions of dollars via a trust.12

Such crimes undermine the national 

security goals of the United States, one 

pillar of which is countering 

corruption.13 FinCEN’s own December 

2022 analysis revealed that between 

March and October 2022—the eight 

months following the invasion of 

Ukraine—Russian oligarchs sent 

millions of dollars to their children to 

purchase residential real estate in the 


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12426 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

14See FinCEN, Financial Trend Analysis—Trends 

in Bank Secrecy Act Data: Financial Activity by 

Russian Oligarchs in 2022 (Dec. 2022). 

15See, e.g., U.S. v. Delgado, 653 F.3d 729 (8th Cir. 

2011) (drug trafficking, money laundering); U.S. v. 

Fernandez, 559 F.3d 303 (5th Cir. 2009) (drug 

trafficking, money laundering); Complaint for 

Forfeiture, U.S. v. All the Lot or Parcel of Land 

Located at 19 Duck Pond Lane Southampton, New 

York 11968, Case No. 1:23–cv–01545 (S.D.N.Y. Feb. 

24, 2023) (sanctions evasion); Indictment and 

Forfeiture, U.S. v. Maikel Jose Moreno Perez, Case 

No. 1:23–cr–20035–RNS (S.D. Fla. Jan. 26, 2023) 

(bribery, money laundering, conspiracy); Motion for 

Preliminary Order of Forfeiture and Preliminary 

Order of Forfeiture, U.S. v. Colon, Case No. 1:17– 

cr–47–SB (D. Del. Nov. 18, 2022) (drug trafficking, 

money laundering); U.S. v. Andrii Derkach, Cr. No. 

22–432 (E.D.N.Y. Sept. 26, 2022) (sanctions evasion, 

money laundering, bank fraud); Doc. No. 10 at p. 

1, U.S. vs. Ralph Steinmann and Luis Fernando 

Vuiz, Case No. 22–2–306–CR–Gayles/Torres (S.D. 

Fla. July 12, 2022) (bribery, money laundering); U.S. 

v. Jimenez, 2022 U.S. Dist. LEXIS 77685, 2022 WL 

1261738 (S.D.N.Y. Apr. 28, 2022) (Case No. 1:18– 

cr–00879) (false claim fraud, wire fraud, money 

laundering, identity theft); Complaint for Forfeiture, 

U.S. v. Real Property Located in Potomac, 

Maryland, Commonly Known as 9908 Bentcross 

Drive, Potomac, MD 20854, Case No. 20–cv–02071 

(D. Md. July 15, 2020) (public corruption, money 

laundering); Final Order of Forfeiture, U.S. v. Raul 

Torres, Case No. 1:19–cr–390 (N.D. Ohio Mar. 30, 

2020) (operating an animal fighting venture, 

operating an unlicensed money services business, 

money laundering); U.S. v. Bradley, 2019 U.S. Dist. 

LEXIS 141157, 2019 WL 3934684 (M.D. Tenn. Aug. 

20, 2019) (Case No. 3:15–cr–00037–2) (drug 

trafficking, money laundering); Indictment, U.S. v. 

Patrick Ifediba, et al., Case No. 2:18–cr–00103– 

RDP–JEO, Doc. 1 (N.D. Ala. Mar. 29, 2018) (health 

care fraud); Redacted Indictment, U.S. v. Paul 

Manafort, Case 1:18–cr–00083–TSE (E.D. Va. Feb. 

26, 2018) (money laundering, acting as an 

unregistered foreign agent); U.S. v. Miller, 295 F. 

Supp. 3d 690 (E.D. Va. 2018) (wire fraud); U.S. v. 

Coffman, 859 F. Supp. 2d 871 (E.D. Ky. 2012) (mail, 

wire, and securities fraud); U.S. v. 10.10 Acres 

Located on Squires Rd., 386 F. Supp. 2d 613 

(M.D.N.C. 2005) (drug trafficking); Atty. Griev. 

Comm’n of Md. v. Blair, 188 A.3d 1009 (Md. Ct. 

App. 2018) (money laundering drug trafficking 

proceeds); State v. Harris, 861 A.2d 165 (NJ Super. 

Ct. App. Div. 2004) (money laundering, theft); see 

also U.S. Department of Justice, Press Release, 

United States Reaches Settlement to Recover More 

Than $700 Million in Assets Allegedly Traceable to 

Corruption Involving Malaysian Sovereign Wealth 

Fund (Oct. 30, 2019), available at https://

www.justice.gov/opa/pr/united-states-reachessettlement-recover-more-700-million-assetsallegedly-traceable; U.S. Department of Justice, 

Press Release, Acting Manhattan U.S. Attorney 

Announces $5.9 Million Settlement of Civil Money 

Laundering And Forfeiture Claims Against Real 

Estate Corporations Alleged to Have Laundered 

Proceeds of Russian Tax Fraud (May 12, 2017), 

available at https://www.justice.gov/usao-sdny/pr/ 

acting-manhattan-us-attorney-announces-59- 

million-settlement-civil-money-laundering-and; 

U.S. Department of Justice, Press Release, Associate 

of Sanctioned Oligarch Indicted for Sanctions 

Evasion and Money Laundering: Fugitive Vladimir 

Vorontchenko Aided in Concealing Luxury Real 

Estate Owned by Viktor Vekselberg (Feb. 7, 2023), 

available at https://www.justice.gov/usao-sdny/pr/ 

associate-sanctioned-oligarch-indicted-sanctionsevasion-and-money-laundering. Moreover, as the 

FATF noted in July 2022, ‘‘[d]isparities with rules 

surrounding legal structures across countries means 

property can often be acquired abroad by shell 

companies or trusts based in secrecy jurisdictions, 

exacerbating the risk of money laundering.’’ 

International bodies, such as the FATF have found 

that ‘‘[s]uccessful AML/CFT supervision of the real 

estate sector must contend with the obfuscation of 

true ownership provided by legal entities or 

arrangements[.]’’ Financial Action Task Force, 

Guidance for a Risk Based Approach: Real Estate 

Sector (July 2022), p. 17, available at https://

www.fatf-gafi.org/content/dam/fatf-gafi/guidance/ 

RBA-Real-Estate-Sector.pdf.coredownload.pdf. 

16See, e.g., Richard Vanderford, ‘‘Fraudulent 

Covid Aid Drove Up U.S. House Prices, Report 

Says,’’ The Wall Street Journal (June 22, 2023). 

17See The White House, United States Strategy 

for Countering Corruption (Dec. 2021), p. 7, 

available at https://www.whitehouse.gov/wpcontent/uploads/2021/12/United-States-Strategyon-Countering-Corruption.pdf; Financial Action 

Task Force, Guidance for a Risk Based Approach: 

Real Estate Sector (July 2022), p. 19, available at 

https://www.fatf-gafi.org/content/dam/fatf-gafi/ 

guidance/RBA-Real-Estate-Sector.pdf.

coredownload.pdf. 

18See, e.g., FinCEN, Press Release, FinCEN 

Renews and Expands Real Estate Geographic 

Targeting Orders (Apr. 21, 2023), available at 

https://www.fincen.gov/news/news-releases/fincenrenews-and-expands-real-estate-geographictargeting-orders-1 (announcing the renewal of an 

effort to combat illicit finance by collecting 

information on legal entity purchases of real estate); 

FinCEN, FIN–2017–A003, Advisory to Financial 

Institutions and Real Estate Firms and Professionals 

(Aug. 22, 2017), p. 2 (noting that high-value 

residential real estate markets are vulnerable to 

penetration by foreign and domestic criminal 

organizations and corrupt actors, especially those 

misusing otherwise legitimate LLCs or other legal 

entities to shield their identities). 

19 86 FR 69589 (Dec. 8, 2021). 

20See 31 U.S.C. 5311. Certain parts of the 

Currency and Foreign Transactions Reporting Act, 

its amendments, and the other statutes relating to 

the subject matter of that Act, have come to be 

referred to as the BSA. The BSA is codified at 12 

U.S.C. 1829b, 12 U.S.C. 1951–1960, and 31 U.S.C. 

5311–5314 and 5316–5336, and includes notes 

thereto, with implementing regulations at 31 CFR 

Chapter X. The Anti-Money Laundering Act of 

2020, Section 6003(1) (Definitions), defines the BSA 

as section 21 of the Federal Deposit Insurance Act 

(12 U.S.C. 1829b), Chapter 2 of Title I of Public Law 

91–508 (12 U.S.C. 1951 et seq.), and 31 U.S.C. 

chapter 53, subchapter II. 

United States, often via legal entities, 

demonstrating the appeal of residential 

real estate even to the potential targets 

of U.S. sanctions.14

As numerous public law enforcement 

actions illustrate, non-financed 

purchases of residential real estate by 

certain legal entities and trusts are 

acutely vulnerable to exploitation by 

illicit actors, due to a general lack of 

AML regulations covering or applicable 

to transfers conducted in this manner.15

While many non-financed residential 

real estate transfers may involve no 

illicit funds, a substantial proportion of 

such non-financed transactions are 

conducted by persons also engaged in 

activity characterized by other financial 

institutions as suspicious, and reporting 

on such non-financed residential real 

estate transactions is of significant value 

to law enforcement. For example, the 

individuals and entities identified in 

Residential Real Estate GTO reports 

correlate with traditional SAR filings by 

financial institutions: FinCEN has found 

that approximately 42 percent of nonfinanced real estate transfers captured 

by the Residential Real Estate GTOs are 

conducted by individuals or legal 

entities on which a SAR has been filed. 

In other words, persons of potential 

interest to law enforcement due to their 

engagement in suspicious activity are 

also engaging in a type of transaction 

known to be used as a method of 

money-laundering: the non-financed 

purchase of residential real estate 

through a legal entity. 

In addition to the law enforcement 

and national security concerns 

regarding abuse of the residential real 

estate sector, money laundering through 

residential real estate can distort real 

estate prices and potentially make it 

more difficult for legitimate buyers and 

sellers to participate in the market. In 

particular, the presence of illicit funds 

in the real estate sector can affect 

housing prices.16 Legitimate buyers are 

also adversely affected by illicit actors’ 

preference to avoid financing, as sellers 

generally favor such ‘‘all-cash’’ offers 

due to the speed with which a sale can 

be closed.17

Due to the illicit finance risks 

presented and the attendant economic 

burdens of market abuse, FinCEN’s 

public efforts to counter money 

laundering in the real estate sector have 

focused on the use of legal entities by 

illicit actors to obfuscate ownership of 

residential real property.18 The 

reasoning behind this focus on legal 

entities is discussed extensively in 

FinCEN’s December 2021 Anti-Money 

Laundering Regulations for Real Estate 

Transactions ANPRM (2021 ANPRM), 

which highlighted how, as evidenced by 

open source investigative articles, law 

enforcement actions, and feedback from 

FinCEN’s Residential Real Estate GTOs 

program, individuals intent on 

laundering money through residential 

real estate frequently take advantage of 

the opacity of shell companies or other 

legal entity structures to mask true 

beneficial ownership of a property and 

their involvement in real estate 

transfers.19

B. FinCEN’s Prior Regulation of the Real 

Estate Sector 

1. Current Law 

Enacted in 1970, the Currency and 

Foreign Transactions Reporting Act, 

generally referred to as the BSA, is 

designed to combat money laundering, 

the financing of terrorism, and other 

illicit financial activity.20 The Secretary 

is authorized to administer the BSA and 

to require financial institutions to keep 


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21 31 U.S.C. 5311(1). 

22Treasury Order 180–01, Paragraph 3(a) (Jan. 14, 

2020), available at https://home.treasury.gov/about/ 

general-information/orders-and-directives/treasuryorder-180-01. 

23 31 U.S.C. 5318(h)(1)(A)–(D). 

24 31 U.S.C. 5318(g). 

25 31 U.S.C. 5312(a)(2)(U). 

26 31 CFR parts 1020, 1029, 1030. 

27 31 CFR 1010.205(b)(1)(v). 

28 67 FR 21110, 21111 (Apr. 29, 2002). 

29 Id. FinCEN initially exempted persons 

involved in closings and settlements for six months, 

and then subsequently extended the temporary 

exemption indefinitely. Id.; 67 FR 67547, 67548 

(Nov. 6, 2002). 

30 67 FR 21110, 21112 (Apr. 29, 2002). 

31 68 FR 17569 (Apr. 10, 2003). 

32See FinCEN’s website to review comments 

submitted, available at https://www.fincen.gov/ 

comments-advance-notice-proposed-rule-antimoney-laundering-programs-persons-involved-realestate. 

33 77 FR 8148 (Feb. 14, 2012) (codified at 31 CFR 

part 1029). 

34 79 FR 10365 (Feb. 25, 2014) (codified at 31 CFR 

part 1030). 

35 85 FR 57129 (Sept. 15, 2020) (codified at 31 

CFR 1020.210). 

36See 31 U.S.C. 5326; 31 CFR 1010.370; Treasury 

Order 180–01 (Jan. 14, 2020), available at https:// 

home.treasury.gov/about/general-information/ 

orders-and-directives/treasury-order-180-01. In 

general, a GTO is an order administered by FinCEN 

which for a finite period of time imposes additional 

recordkeeping or reporting requirements on 

domestic financial institutions or other businesses 

in a given geographic area, based on a finding that 

the additional requirements are necessary to carry 

out the purposes of, or to prevent evasion of, the 

BSA. The statutory maximum duration of a GTO is 

180 days, though it may be renewed. 

records and file reports that ‘‘are highly 

useful in criminal, tax, or regulatory 

investigations or proceedings’’ or in the 

conduct of ‘‘intelligence or 

counterintelligence activities, including 

analysis, to protect against international 

terrorism.’’ 21 The Secretary delegated 

the authority to implement, administer, 

and enforce compliance with the BSA 

and its implementing regulations to the 

Director of FinCEN.22

The BSA requires each covered 

financial institution to establish an 

AML/CFT program, which must 

include, at a minimum, ‘‘(A) the 

development of internal policies, 

procedures, and controls; (B) the 

designation of a compliance officer; (C) 

an ongoing employee training program; 

and (D) an independent audit function 

to test programs.’’ 23 The BSA also 

authorizes the Secretary to require 

covered financial institutions to report 

any suspicious transaction relevant to a 

possible violation of law or regulation (a 

‘‘suspicious activity report’’ or 

‘‘SAR’’).24 Among the financial 

institutions subject to those 

requirements under the BSA are 

‘‘persons involved in real estate closings 

and settlements.’’ 25

FinCEN’s regulations implementing 

the BSA require banks, non-bank 

residential mortgage lenders and 

originators (RMLOs), and housingrelated Government Sponsored 

Enterprises (GSEs) to file SARs and 

establish AML/CFT programs.26

However, FinCEN’s regulations exempt 

other persons involved in real estate 

closings and settlements from the 

requirement to establish AML/CFT 

programs, and the regulations do not 

impose a SAR filing requirement on 

such persons.27

2. FinCEN’s Real Estate Exemption 

In 2002, FinCEN temporarily 

exempted certain financial institutions, 

including ‘‘persons involved in real 

estate closings and settlements’’ and 

‘‘loan and finance companies,’’ from the 

requirement to establish an AML/CFT 

program. FinCEN explained that it 

would ‘‘continue studying the money 

laundering risks posed by these 

institutions in order to develop 

appropriate AML program 

requirements.’’ 28 That additional time 

was needed to consider the businesses 

that would be subject to such 

requirements, as well as the nature and 

scope of the AML/CFT risks associated 

with those businesses.29 FinCEN also 

explained its concern that many of these 

financial institutions were sole 

proprietors or small businesses, and 

FinCEN intended to avoid imposing 

‘‘unreasonable regulatory burdens with 

little or no corresponding anti-money 

laundering benefits.’’ 30

In 2003, FinCEN issued an ANPRM 

regarding the AML/CFT program 

requirement for ‘‘persons involved in 

real estate closings and settlements’’ 

(2003 ANPRM). The 2003 ANPRM 

solicited comments on the money 

laundering risks in real estate closings 

and settlements, how to define ‘‘persons 

involved in real estate closings and 

settlements,’’ whether any persons 

involved in real estate closings and 

settlements should be exempted from 

the AML/CFT program requirement, and 

how to structure the requirement in 

light of the size, location, and activities 

of persons in the real estate industry.31

FinCEN received 52 comments on the 

2003 ANPRM from individuals, various 

institutions and associations of 

interested parties, law firms, state bar 

associations, an office within DOJ, and 

an office within the Internal Revenue 

Service (IRS).32 Many comments 

suggested that the threat of money 

laundering through real estate 

warranted appropriate regulation, but 

commenters disagreed over the specific 

businesses that should be covered. 

FinCEN did not propose regulations in 

response to these comments, and 

persons involved in real estate closings 

and settlements continue to be exempt 

from the AML/CFT program 

requirement. 

3. FinCEN’s Targeted Actions in the 

Real Estate Sector 

While maintaining the exemption for 

persons involved in real estate closings 

and settlements, FinCEN has taken 

targeted action to address certain 

vulnerabilities in the real estate sector. 

In a 2012 final rule, FinCEN eliminated 

an exemption for ‘‘loan and finance 

companies,’’ and required such 

companies—defined as RMLOs—to file 

SARs and comply with AML/CFT 

program obligations.33 In a 2014 final 

rule, FinCEN extended similar 

requirements to the housing-related 

GSEs—Fannie Mae, Freddie Mac, and 

the Federal Home Loan Banks.34 In a 

2020 final rule, FinCEN also imposed 

additional AML/CFT obligations on 

banks lacking a federal functional 

regulator, ensuring that such entities 

would be subject to requirements to 

have an AML/CFT program and meet 

Customer Identification Program (CIP) 

and Customer Due Diligence (CDD) 

requirements, including the verification 

of beneficial owners of legal entity 

accounts, in addition to their existing 

SAR obligations (which would include 

reporting on transactions involving 

suspicious real estate transactions).35

To address non-financed transfers of 

residential real estate that do not 

involve a bank or other lender, FinCEN 

also began to issue Residential Real 

Estate GTOs in 2016.36 The Residential 

Real Estate GTOs require title insurance 

companies to file reports and maintain 

records concerning non-financed 

purchases of residential real estate 

above a certain price threshold by 

certain legal entities in select 

metropolitan areas of the United States. 

Information received in response to 

the Residential Real Estate GTOs has 

confirmed the money laundering risks 

involved in non-financed transfers of 

residential real estate and provided 

FinCEN and its law enforcement 

partners with additional data about that 

money laundering typology. The data 

obtained through the Residential Real 

Estate GTOs has connected nonfinanced residential real property 

purchases by certain legal entities with 

the true beneficial owners making the 

purchases, thereby decreasing the 

ability of criminals to hide their 

identities while laundering money 

through real estate. FinCEN regularly 

receives feedback from law enforcement 


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37FinCEN found that money laundering risks 

existed at lower price thresholds, and thus the 

current Residential Real Estate GTOs set a $300,000 

threshold for all covered jurisdictions, except for 

the City and County of Baltimore, for which the 

threshold is $50,000. 

38See supra note 36. 

39See 86 FR 69589 (Dec. 8, 2021). 

40National Association of Realtors, ANPRM 

Comment (Feb. 18, 2022), pp. 1, 14, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0128. 41See Transparency International U.S., ANPRM 

Comment (Feb. 18, 2022), p. 9, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0115; The FACT Coalition, ANPRM Comment (Feb. 

18, 2022), p. 3, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; California Reinvestment Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 2, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0126; Coalition for Integrity, ANPRM Comment 

(Feb. 21, 2022), pp. 3–4, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0127; Louise Shelley and Ross Delston, ANPRM 

Comment (Feb. 21, 2022), p. 2, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0151. 

42American Escrow Association, ANPRM 

Comment (Feb. 18, 2022), pp. 13–17, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0124. 

43See Prosperus Title, ANPRM Comment (Feb. 

18, 2022), p. 1, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0125; Marisa N. Bocci, ANPRM Comment (Feb. 21, 

2022), p. 3, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0150; RESPRO, ANPRM Comment (Feb. 21, 2022), 

p. 2, available at https://www.regulations.gov/ 

comment/FINCEN-2021-0007-0152. 

44See 67 FR 21110 (Apr. 29, 2002). 

45 31 U.S.C. 5318(g)(1)(A). 

partners that they use the information to 

generate new investigative leads, 

identify new and related subjects in 

ongoing cases, and support prosecution 

and asset forfeiture efforts. Taking that 

input into account, FinCEN has 

renewed the time-limited Residential 

Real Estate GTOs multiple times and 

has expanded them to cover additional 

metropolitan areas and methods of 

payment, yielding additional insight 

into the risks in both the luxury and 

non-luxury residential real estate 

markets.37 The information on real 

estate purchases thus enables 

investigators to connect real estate 

transactions with other suspicious 

financial activity. Although the 

Residential Real Estate GTOs have been 

effective, they were intended to be a 

temporary information collection 

measure that is limited in duration, not 

a permanent solution to a nationwide 

problem.38 The proposed nationwide 

reporting framework for certain 

residential real estate transfers, if 

finalized, would replace the current 

Residential Real Estate GTOs. 

4. The 2021 Real Estate ANPRM 

On December 8, 2021, FinCEN 

published an ANPRM requesting 

comment on potential AML regulations 

for certain real estate professionals.39

The 2021 ANPRM solicited public 

comment on whether and how to 

address money laundering 

vulnerabilities in the U.S. real estate 

market, including whether a 

transactional reporting requirement, 

triggered when a real estate purchase 

meets certain conditions, should be 

imposed on real estate professionals 

under the BSA. The 2021 ANPRM also 

solicited comment on whether, in lieu 

of a transactional reporting requirement, 

FinCEN should promulgate AML/CFT 

program requirements and SAR filing 

requirements for persons involved in 

real estate closings and settlements, 

similar to those that are in place for 

banks and other financial institutions. 

The 2021 ANPRM further sought 

comment concerning many aspects of 

real estate transfers, including: views on 

the scope of potential regulation of nonfinanced residential and commercial 

real estate transfers by legal entities and 

legal arrangements such as trusts; the 

sector’s vulnerability to money 

laundering; differences in residential 

and commercial real estate transfers; 

due diligence best practices present in 

the industry; and the costs of any 

potential regulations. 

In response to the 2021 ANPRM, 

FinCEN received 151 public comments 

from a wide variety of stakeholders, 

including real estate industry 

associations, law firms and associations, 

non-governmental organizations, credit 

unions, Members of Congress, 

academics, and members of the public. 

Approximately 41 were unique 

comments and 110 were uniform 

statements submitted by members of the 

title insurance industry. 

In general, commenters were split in 

their opinions on whether FinCEN 

should require transactional reports 40

or require persons involved in real 

estate closings and settlements to have 

full AML/CFT program obligations.41

One commenter wrote that if FinCEN 

were to apply new reporting measures, 

it should work with the IRS to amend 

IRS Form 1099–S to include buyer-side 

information, along with the seller-side 

information it already collects.42 Still 

other commenters suggested expanding 

the Residential Real Estate GTOs 

program to cover the entire nation either 

all at once or incrementally.43 FinCEN 

has considered all the comments that it 

received in response to the 2021 

ANPRM in drafting this proposed rule. 

III. FinCEN’s Proposed Approach to a 

Real Estate Reporting Requirement 

A. Streamlined SAR Requirement 

FinCEN has considered the extent to 

which non-financed residential real 

estate transactions should be subject to 

the standard AML program and SARfiling requirements that the BSA applies 

to other financial institutions. By 

subjecting financial institutions to those 

requirements and expressly including 

‘‘persons involved in real estate closings 

and settlements’’ among the types of 

financial institutions specified in the 

statute, the BSA appears to indicate an 

expectation that such persons comply 

with the same AML/CFT rules currently 

applicable to other types of financial 

institutions. Although FinCEN 

originally issued an exemption in 2002 

that relieved persons involved in real 

estate closings and settlements from that 

obligation, that exemption was intended 

to be only temporary while FinCEN 

continued to study money laundering 

risks in the real estate sector.44

After many years of study and several 

targeted and temporary actions to 

enhance transparency in the real estate 

sector, FinCEN is of the view that the 

money laundering risks for nonfinanced residential real estate 

transactions warrant comprehensive 

AML/CFT regulations. As explained 

above, such transactions can be used to 

facilitate and obscure illicit activity. 

And, as several commenters on the 

ANPRM have urged, AML programs and 

SAR-filing obligations would provide 

highly useful information to law 

enforcement about those transactions. 

FinCEN recognizes, however, that the 

standard AML program and SAR-filing 

requirements may be especially 

burdensome to persons involved in real 

estate transactions, as many of them 

may be small businesses or individuals 

who cannot easily implement an AML 

program designed to identify and report 

suspicious activity. Such programs, 

which require financial institutions to 

make risk-based judgments about 

transactions and suspicious activity, 

may also be ineffective if small 

businesses and individuals in the real 

estate sector have difficulty 

implementing them. 

For these reasons, FinCEN is 

proposing a streamlined reporting 

requirement that differs from the 

requirements typically imposed on 

other financial institutions. In 

particular, section 5318(g) of the BSA 

authorizes the Secretary to require 

financial institutions to report, via 

SARs, any ‘‘suspicious transactions 

relevant to a possible violation of law or 

regulation.’’ 45 But the BSA affords the 

Secretary flexibility in implementing 

that requirement, and indeed directs the 

Secretary to consider ‘‘the means by or 


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46 31 U.S.C. 5318(g)(5)(B)(i)–(iii). 

47See AML Act, section 6202 (codified at 31 

U.S.C. 5318(g)(D)(i)(1)). Section 6102(c) of the AML 

Act also amended 31 U.S.C. 5318(a)(2) to give the 

Secretary the authority to ‘‘require a class of 

domestic financial institutions or nonfinancial 

trades or businesses to maintain appropriate 

procedures, including the collection and reporting 

of certain information as the Secretary of the 

Treasury may prescribe by regulation, to . . . guard 

against money laundering, the financing of 

terrorism, or other forms of illicit finance.’’ FinCEN 

believes this authority also provides an additional 

basis for the reporting requirement proposed in this 

NPRM. 

48Under the BSA and its implementing 

regulations, ‘‘each financial institution other than a 

casino shall file a [CTR] of each deposit, 

withdrawal, exchange of currency or other payment 

or transfer, by, through, or to such financial 

institution which involves a transaction in currency 

of more than $10,000[.]’’ 31 CFR 1010.311; see also 

31 U.S.C. 5313. Under the BSA, relevant IRS 

statutes, and associated implementing regulations, 

‘‘[a]ny [individual, trust, estate, partnership, 

association, company or corporation] who, in the 

course of a trade or business . . . receives currency 

in excess of $10,000 in 1 transaction (or 2 or more 

related transactions) shall . . . [file a Form 8300] 

with respect to the receipt of currency.’’ 31 CFR 

1010.330(a)(1)(i); see also 31 U.S.C 5331; 26 U.S.C. 

7701(a)(1). 

49See 31 U.S.C. 5318(g)(5)(C). 

50See 31 CFR 1010.205(b)(v). 

51See 31 U.S.C. 5318(g)(2). 

52 31 U.S.C. 5318(a)(7). 

53The BOI Reporting Rule implements the CTA’s 

reporting provisions. In recognition of the fact that 

illicit actors frequently use corporate structures to 

obfuscate their identities and launder ill-gotten 

gains, the BOI Reporting Rule requires certain legal 

entities to file reports with FinCEN that identify 

their beneficial owners. See 87 FR 59498 (Sept. 30, 

2022). Access by authorized recipients to BOI 

collected under the CTA are governed by other 

FinCEN regulations. See 88 FR 88732 (Dec. 22, 

2023). 

form in which the Secretary shall 

receive such reporting,’’ including 

relevant ‘‘burdens,’’ ‘‘efficiency,’’ and 

‘‘benefits.’’ 46 A new provision added to 

the BSA by section 6202 of the AntiMoney Laundering Act of 2020 (AML 

Act) further directs FinCEN to 

‘‘establish streamlined . . . processes to, 

as appropriate, permit the filing of 

noncomplex categories of reports of 

suspicious activity.’’ In assessing 

whether streamlined filing is 

appropriate, FinCEN must determine, 

among other things, that such reports 

would ‘‘reduce burdens imposed on 

persons required to report[,]’’ while at 

the same time ‘‘not diminish[ing] the 

usefulness of the reporting to Federal 

law enforcement agencies, national 

security officials, and the intelligence 

community in combating financial 

crime, including the financing of 

terrorism[.]’’ 47

Based on that authority, FinCEN is 

proposing to streamline the SAR 

reporting requirement for purposes of 

this rule and to create a new form—the 

Real Estate Report—to reflect this 

streamlined approach. FinCEN believes 

that a streamlined reporting 

requirement, without an accompanying 

AML/CFT program, is appropriate, as 

the proposed rule would impose a 

requirement to report basic, 

standardized information about all 

relevant transactions, nationwide. 

FinCEN believes the proposed 

streamlined reporting requirement 

would enhance the usefulness of BSA 

reporting to Federal law enforcement 

agencies, national security officials, and 

the intelligence community for 

combating financial crimes. The 

information collected would contain 

crucial details about a typology of real 

estate transfers that present acute illicit 

finance risks and for which there is 

broad consensus that regulation is 

needed—information that would not 

otherwise be routinely identified and 

reported in a traditional SAR. 

FinCEN also believes that a 

streamlined filing requirement would 

reduce the potential burden on 

reporting persons. The filing 

requirement would be triggered when 

the conditions set forth in the proposed 

rule are met, which FinCEN believes 

will reduce the overall burden for most 

filers, compared to those that would be 

required when implementing a 

traditional AML program. The 

streamlined filing requirement, unlike 

the requirements for filing a traditional 

SAR, would entail no risk-based 

judgment about when to file and no 

narrative assessment. Thus, similar to a 

Currency Transaction Report (CTR), 

Form 8300, or report filed under the 

Residential Real Estate GTOs, the 

proposed Real Estate Report would not 

require filers to make discretionary 

decisions.48 Because of this, while 

FinCEN’s traditional SAR authority 

mandates that SARs be guided by a 

financial institution’s AML/CFT 

program designed to ensure that those 

discretionary decisions are made 

appropriately, FinCEN believes that an 

AML/CFT program is not necessary for 

reporting persons to accurately prepare 

and file useful reports under the 

proposed rule.49 For this reason, the 

proposed rule would exempt persons 

involved in real estate closings and 

settlements from the BSA’s requirement 

to establish AML/CFT programs— 

effectively maintaining the current 

exemption for such persons under 31 

U.S.C. 5318(h)(1), in light of the new 

reporting requirement.50

The proposed rule would also exempt 

reporting persons from the 

confidentiality provisions that the BSA 

applies to suspicious activity 

reporting.51 These confidentiality 

provisions typically serve to ensure that 

banks and other such financial 

institutions do not alert SAR subjects to 

the fact that a SAR is being filed based 

on a suspicion with respect to the 

subject, potentially inducing a behavior 

change and reducing the utility of the 

SAR. However, as the triggering criteria 

for the filing of the proposed 

streamlined filing (a non-financed 

transfer to certain legal entities and 

trusts) would be known by all parties to 

the transfer, including those whose 

information will be collected and 

reported to FinCEN, the same 

confidentiality considerations do not 

apply.52

B. The Corporate Transparency Act 

FinCEN notes that certain information 

collected under this proposed rule— 

most notably the beneficial ownership 

information of certain legal entities— 

will be collected and available to law 

enforcement in certain instances by 

virtue of the new beneficial ownership 

reporting requirements imposed by the 

CTA and implemented through the 

Beneficial Ownership Information 

Reporting Requirements Rule (BOI 

Reporting Rule).53 However, the CTA’s 

reporting regime and this proposed rule 

would serve different purposes. This 

proposed rule is designed as a tailored 

reporting requirement that would 

capture a particular class of activity that 

Treasury deems high-risk—namely, 

non-financed residential real estate 

transfers to certain legal entities and 

trusts—and that, given the risk, warrants 

reporting on a transaction-specific basis. 

The resulting reports could readily alert 

law enforcement to the persons 

involved in a transfer of assets that 

carries significant illicit finance risk. 

Indeed, as with traditional SARs, 

reports under this proposed rule would 

require reporting on specific real estate 

transactions and allow Treasury and law 

enforcement to connect money 

laundering through real estate with 

other types of potentially illicit 

activities and to conduct broad money 

laundering trend analysis. In contrast, 

the BOI Reporting Rule requires 

companies to file reports about the 

beneficial ownership of certain legal 

entities; however, this information is 

unlikely to shed light on purchases of 

real estate by criminal actors or allow 

law enforcement to map out purchases 

of residential real estate by individual 

criminals and money launderers as well 

as their networks. Although some 

information about real estate purchases 

may in some cases be separately 

available through other sources such as 

state land registries (as discussed 


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54For example, the CTA reporting regime will 

only indirectly require trusts to report their 

beneficial owners if an individual indirectly owns 

or controls a reporting company through a trust. 

55See generally Sarah Mancini, Kate Lang, and 

Chi Wu, ‘‘Mismatched and Mistaken: How the Use 

of an Inaccurate Private Database Results in SSI 

Recipients Unjustly Losing Benefits,’’ National 

Consumer Law Center (Apr. 2021), available at 

https://www.nclc.org/wp-content/uploads/2022/08/

RptMismatchedFINAL041421.pdf. 

56See National Association of Realtors, 2022 

International Transactions in U.S. Residential Real 

Estate (July 2022), pp. 4–5, available at https://

cdn.nar.realtor/sites/default/files/documents/2022- 

international-transactions-in-us-residential-realestate-07-18-2022.pdf?_gl=1*3orrzx*_gcl_

au*MTc4MTk3NTgzOS4xNjg3OTg1MTYy. The 

overall dollar value of international investment in 

residential real estate was comparatively low from 

2021–2022 compared to the prior ten years due, in 

part, to investment and travel restrictions 

accompanying the COVID–19 pandemic. FinCEN 

believes this dollar value, in the absence of 

pandemic conditions, may therefore experience 

some mean reversion. 57See 31 CFR 1010.430(d). 

below), the inclusion of both beneficial 

ownership information and real estate 

transaction information in a single 

report as proposed in this NPRM will 

enable law enforcement to access 

information about potential criminal 

activity in a more timely and efficient 

manner. 

In addition, the information to be 

reported under this proposed rule 

would differ from the information to be 

reported under the CTA in several ways. 

For instance, the proposed rule would 

require reporting of certain information 

about beneficial owners that is not 

required to be reported under the CTA 

reporting regime.54 A discussion of the 

content of the proposed Real Estate 

Report is included in Section IV.E. 

Furthermore, reports filed pursuant to 

the BOI Reporting Rule—Beneficial 

Ownership Information Reports—and 

reports filed pursuant to this proposed 

rule—Real Estate Reports—would be 

housed in different databases with 

differing access privileges. The 

proposed Real Estate Reports would be 

stored electronically in the same 

database as traditional SAR and other 

BSA reports, in keeping with the nature, 

purposes, and use of those reports. 

Nevertheless, although they serve 

different purposes, the proposed rule 

adopts or adapts certain definitions 

from the BOI Reporting Rule where 

appropriate. These definitions are 

discussed in more detail in Section 

IV.B. 

C. Lack of Alternative Sources of 

Relevant Information 

While other investigative methods 

and databases may be available to law 

enforcement seeking information on 

persons involved in non-financed 

transfers of residential real property, 

such sources of information are often 

incomplete, unreliable, and diffuse, 

resulting in a misalignment between 

these sources and the potential risks 

posed by the transfers.55 Furthermore, 

the non-uniformity of the title transfer 

processes across states and the fact that 

the recording of title information is 

largely done at the local level 

complicates and hinders investigative 

efforts. An investigator could spend 

months or even years going through the 

electronic or physical property records 

databases of the over 3,000 counties in 

the United States, only some of which 

have digitized their records. 

Furthermore, although certain data 

about non-financed transfer could be 

obtained through the Residential Real 

Estate GTOs, those GTOs currently 

cover only 68 cities and counties are 

currently covered by the Residential 

Real Estate GTOs. In order to verify how 

many non-financed purchases of 

residential real estate a known illicit 

actor has made, law enforcement may 

have to issue subpoenas to each 

jurisdiction and potentially travel inperson to many counties to find the 

relevant information. Law enforcement 

is also likely to experience difficulty in 

finding beneficial ownership 

information for non-financed transfers 

of residential real estate to legal entities 

or trusts not registered in the United 

States. This is particularly key as 

international buyers contributed 

approximately $59 billion to the 

existing-home U.S. residential real 

estate market from April 2021 to March 

2022 and 44 percent of international 

purchases were non-financed, compared 

to 24 percent for all existing-home 

buyers.56

The disjointed nature of existing local 

databases also poses a significant 

obstacle to a common investigative 

methodology employed by law 

enforcement when it searches for 

perpetrators of money laundering and 

other criminal activity—namely, 

identifying networks of individuals that 

have potentially engaged in suspicious 

activity. A search of the proposed Real 

Estate Reports would be far more 

efficient than searching incomplete 

commercial databases or potentially 

visiting thousands of county-level deed 

offices. FinCEN assesses that law 

enforcement would benefit from access 

to information about transfers that 

reflect an identified money laundering 

typology in one central location 

managed and hosted by the U.S. 

government. Finally, existing 

commercial databases do not collect 

important information that is the focus 

of this rule, including funds transfer 

information. 

IV. Section-by-Section Analysis 

The proposed rule would impose 

reporting and recordkeeping 

requirements related to certain transfers 

of residential real property (reportable 

transfers). The reporting and 

recordkeeping obligations would 

primarily apply to ‘‘reporting persons,’’ 

who are certain persons involved in real 

estate closings and settlements. 

Generally, the reporting person would 

be identified on the basis of their order 

in a ‘‘cascade’’ of specific functions 

performed by various persons involved 

in facilitating the closing or settlement 

of a real estate transaction. The 

proposed rule would also allow persons 

in the cascade to designate the reporting 

person amongst themselves. 

The reporting person would be 

required to report information 

identifying the transferee entity or trust, 

the beneficial owners of the transferee 

entity or trust, and certain individuals 

signing documents on behalf of the 

transferee entity or transferee trust 

(signing individual), as well as 

information concerning the reporting 

person, the transferor, the real estate 

transferred, and certain payment 

information. The reporting person 

would be required to file a Real Estate 

Report with FinCEN and maintain a 

copy of that report, along with a 

certification by the transferee’s 

representative as to the identities of the 

beneficial owner(s) of the transferee, for 

a period of five years. If the persons 

involved in facilitating the closing or 

settlement enter into a designation 

agreement with regard to the reporting 

person, then the parties to the 

agreement would also be required to 

retain that agreement for a period of five 

years.57

A. Residential Real Property in 

Reportable Transfers 

1. Reportable Residential Real Property 

The proposed rule is meant to broadly 

capture residential real property such as 

single-family houses, townhouses, 

condominiums, and cooperatives, as 

well as apartment buildings designed 

for one to four families. These 

properties would be captured even if 

there is also a commercial element to 

the property, such as a single-family 

residence that is located above a 

commercial enterprise. The proposed 

rule would also include certain types of 

land on which a residence is not yet 

built. The criteria for whether property 

falls within the parameters of the rule 

can be met in one of three ways: (1) it 

is real property that includes a structure 


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58 31 CFR 1010.100(hhh). 

59For example, as discussed further below, 

individuals and trusts (outside of statutory trusts) 

are excepted from the definition of ‘‘transferee 

entity.’’ In addition, certain types of legal entities 

that are exempt from the requirement to report 

beneficial ownership information under the CTA 

are also excepted. Trusts are considered ‘‘transferee 

trusts’’ rather than ‘‘transferee entities’’ to ensure 

the proposed rule differentiates between legal 

entities and legal arrangements. 

60See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), pp. 10, 24, 30, 39, 

available at https://www.regulations.gov/comment/ 

FINCEN-2021-0007-0102; American Land Title 

Association, ANPRM Comment (Feb. 17, 2022), p. 

1, available at https://www.regulations.gov/ 

comment/FINCEN-2021-0007-0020; Transparency 

International U.S., ANPRM Comment (Feb. 18, 

2022), pp. 3, 5, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0115; The FACT Coalition, ANPRM Comment (Feb. 

18, 2022), pp. 2, 4, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; California Reinvestment Coalition, ANPRM 

Comment (Feb. 18, 2022), pp. 2–3, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0126; Coalition for Integrity, ANPRM 

Comment (Feb. 21, 2022), p. 4, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0127; Anti-Corruption Data Collective, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0153. 

61See American Land Title Association, ANPRM 

Comment (Feb. 17, 2022), p. 2, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0020. 

62Financial & International Business Association, 

ANPRM Comment (Feb. 21, 2022), p. 2, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0142. 

designed principally for occupancy by 

one to four families; (2) it is land that 

is vacant or unimproved, and that is 

zoned, or for which a permit has been 

issued, for occupancy by one to four 

families; or (3) it is a share in a 

cooperative housing corporation. This 

definition modifies and expands the 

definition of ‘‘residential real property’’ 

used in the Residential Real Estate 

GTOs. 

Although shares of a cooperative are 

generally treated under state law as 

personal property rather than real 

property, FinCEN believes that the 

money laundering risks for residential 

cooperatives are similar to those of 

condominiums and other residential 

real property. A cooperative is a 

corporation, and the owners of the 

cooperative are the corporation’s 

shareholders. Receiving ownership of 

shares in a cooperative therefore differs 

from receiving ownership of real 

property, as it does not include the 

filing of a deed specifying that 

ownership of a piece of real property 

has been transferred. However, the 

fundamental purpose of owning shares 

in a cooperative is to possess a piece of 

real property—generally a unit in an 

apartment owned by the cooperative. As 

the primary purpose for owning shares 

in a cooperative is to occupy real 

property, and because the market for 

cooperatives overlaps with the market 

for condominiums and other types of 

real property, FinCEN believes that it is 

appropriate to treat shares of a 

cooperative as residential real property 

for purposes of this rule. Without this 

treatment, money laundering risks may 

be unduly incentivized to shift 

investments to this segment of the real 

estate market. 

The proposed rule also makes clear 

that reportable residential real property 

includes property located in the United 

States, which is defined in the BSA 

implementing regulations to mean any 

State, the District of Columbia, the 

Indian lands (as that term is defined in 

the Indian Gaming Regulatory Act), and 

territory or possession of the United 

States.58 FinCEN believes this 

geographical scope is appropriate and 

that more limited coverage would likely 

push illicit activity into non-covered 

areas. Furthermore, a uniform national 

approach will provide consistency and 

predictability for businesses required to 

maintain records and make reports 

under this proposed rule. 

2. Ownership Interests in Reportable 

Residential Real Property 

For purposes of the proposed rule, a 

person may hold an ownership interest 

in residential real property if the person 

has rights to the property that are 

demonstrated through a deed or, for an 

interest in a cooperative housing 

corporation, through stock, shares, 

membership, a certificate, or other 

contractual agreement evidencing 

ownership. 

Deeds are documents demonstrating 

title over property and recording 

changes in ownership and are effective 

when signed by the transferor and 

delivered to the transferee. They are 

generally publicly recorded, and 

although not all deeds are filed as such, 

the majority are, and there are benefits 

to doing so, such as preempting 

disputes over ownership and effecting 

the ability to sell the property. 

The ownership interests of a 

cooperative housing corporation are not 

reflected on a deed and are instead 

typically demonstrated through stock or 

shares. The holder of each ownership 

interest has the right to dispose of that 

stock or share, the value of which 

primarily reflects the value of the 

residence attached to the interest. 

B. Transferees in Reportable Transfers 

1. Transferee Entities 

The proposed regulation would 

require reporting only if a transferee of 

an ownership interest in residential real 

property is a transferee entity or a 

transferee trust, as those terms are 

defined. Such a transfer would be 

reportable even if one or more other 

transferees (i.e., those that are neither a 

transferee entity nor transferee trust) 

also receive an ownership interest in the 

same property as part of the same 

transaction. Generally, the proposed 

rule provides that a ‘‘transferee entity’’ 

is any person other than a transferee 

trust or an individual. For example, a 

transferee entity may be a corporation, 

partnership, estate, association, or 

limited liability company. However, the 

definition of a ‘‘transferee entity’’ 

contains exceptions for certain highly 

regulated entities.59

The proposed definition is informed 

by comments submitted in response to 

the 2021 ANPRM. In general, the 2021 

ANPRM commenters recognized the 

money laundering risks presented by 

transfers of residential real estate to 

certain legal entities and supported 

coverage of them in any potential 

regulation.60 Some commenters stated 

that only legal entities that are not 

covered by the CTA should be covered 

by any potential regulation of the real 

estate sector, as their beneficial 

ownership information will not be 

collected under the BOI Reporting 

Rule.61 However, as discussed below, 

FinCEN believes that this would leave a 

serious regulatory gap that would 

prevent the proposed rule from 

achieving its purpose of addressing 

illicit finance risk in the residential real 

estate sector. One commenter suggested 

that FinCEN use the definition of ‘‘legal 

entity’’ that appears in FinCEN’s 2020 

CDD Rule.62

a. Regulated Entities 

Although this rule does not rely on 

the CTA for its legal authority, FinCEN 

is proposing to adopt many of the CTA’s 

exemptions for purposes of this 

proposed definition, insofar as the 

policy rationales for those exemptions 

align with the goals of this proposed 

rule. The exemptions that FinCEN 

proposes to adopt would apply to legal 

entities that FinCEN believes have 

sufficient AML/CFT compliance 

obligations in the real estate context, 

and which are already subject to more 

government supervision, or have 

disclosure requirements that obviate the 

need for inclusion in this proposed rule. 


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63See 31 U.S.C. 5336(a)(11)(B)(xxi). 

64See 15 U.S.C. 78m(d)(1), (g)(1); 17 CFR 

240.13d–1. 

65See U.S. Securities and Exchange Commission, 

‘‘Officers, Directors, and 10% Shareholders,’’ 

available at https://www.sec.gov/education/ 

smallbusiness/goingpublic/officersanddirectors. 

66Under U.S. tax law, non-profit organizations 

include tax-exempt organizations: charitable 

organizations, churches and religious organizations, 

private foundations, and other non-profits such as 

civic leagues, social clubs, labor organizations, and 

business leagues, under Internal Revenue Code 

Section 501(c)(3), as well as political organizations 

subject to Section 527 to the Internal Revenue Code. 

See IRS, ‘‘Exempt Organization Types,’’ available at 

https://www.irs.gov/charities-non-profits/exemptorganization-types. 

67Board of Governors of the Federal Reserve 

System, Federal Deposit Insurance Corporation, 

FINCEN, National Credit Union Administration, 

and Office of the Comptroller of the Currency, Joint 

Fact Sheet on Bank Secrecy Act Due Diligence 

Requirements for Charities and Non-Profit 

Organizations (Nov. 19, 2020), available at https:// 

www.fincen.gov/sites/default/files/shared/

Charities%20Fact%20Sheet%2011_19_20.pdf. 

68Financial Action Task Force, Risk of Terrorist 

Abuse of Non-Profit Organisations (June 2014), p. 

8, available at https://www.fatf-gafi.org/content/ 

dam/fatf-gafi/reports/Risk-of-terrorist-abuse-in-nonprofit-organisations.pdf.coredownload.pdf. 

69See U.S. Department of the Treasury, 

‘‘Protecting Charitable Organizations,’’ available at 

https://home.treasury.gov/policy-issues/terrorismand-illicit-finance/protecting-charitableorganizations (noting that ‘‘terrorists have exploited 

the charitable sector to raise and move funds, 

provide logistical support, encourage terrorist 

recruitment, or otherwise support terrorist 

organizations and operations’’); U.S. Department of 

Justice, Press Release, Charity Founders Sentenced 

to Prison for Using Non-Profit to Steal from Donors 

and Cheat on Their Taxes (Nov. 6, 2020), available 

at https://www.justice.gov/usao-sdca/pr/charityfounders-sentenced-prison-using-non-profit-stealdonors-and-cheat-their-taxes; see generally 

Organization for Economic Cooperation and 

Development, Report on Abuse of Charities for 

Money-Laundering and Tax Evasion (Feb. 2009), 

available at https://www.oecd.org/tax/exchange-oftax-information/42232037.pdf; World Bank, 

Combatting the Abuse of Non-Profit Organizations 

(June 2015), available at https://elibrary.

worldbank.org/doi/pdf/10.1596/978-0-8213-8547-0; 

Financial Action Task Force, Combating the 

Terrorist Financing Abuse of Non-Profit 

Organisations (Nov. 2023), available at https://

www.fatf-gafi.org/content/dam/fatf-gafi/guidance/ 

BPP-Combating-TF-Abuse-NPO-R8.pdf.

coredownload.inline.pdf. 

70See U.S. v. Lyons, 472 F.3d 1055, 1061–1065 

(9th Cir. 2007); Dhafir v. U.S., 2015 U.S. Dist. LEXIS 

197346, 2015 WL 13727329 (N.D.N.Y. June 25, 

2015). 

71See generally U.S. v. Hairston, 46 F.3d 361 (4th 

Cir. 1995). 

72See generally U.S. v. Chi Ping Patrick Ho, 984 

F.3d 191 (2d Cir. 2020) (in which a Chinese think 

tank registered in Hong Kong and in the United 

States as a public charity exploited a charity in 

Uganda to engage in money laundering and bribery 

under the Foreign Corrupt Practices Act). 

73See Sotloff v. Qatar Charity, 2023 U.S. Dist. 

LEXIS 93911, 2023 WL 3721683 (S.D. Fla. May 30, 

2023) (financial support for Hamas, Al Qaeda, and 

ISIS); In re Terrorist Attacks on September 11, 2001, 

U.S. Dist. LEXIS 247199*, *344 (S.D.N.Y. Apr. 27, 

2020) (financial support for Al Qaeda); Strauss v. 

Credit Lyonnais, S.A., 925 F. Supp. 2d 414, 415 

(E.D.N.Y. 2013) (financial support for Hamas); U.S. 

Department of the Treasury, Press Release, Treasury 

Targets Hizballah Finance Official and Shadow 

Bankers in Lebanon (May 11, 2021), available at 

https://home.treasury.gov/news/press-releases/ 

jy0170 (highlighting a non-profit providing funding 

for Hizballah). 

74U.S. v. Masino, 2021 U.S. App. LEXIS 22615, 

2021 WL 3235301 (11th Cir. July 30, 2021); U.S. v. 

Masino, 2019 U.S. Dist. LEXIS 34862, 2019 WL 

1045179 (N.D. Fla. Mar. 5, 2019). 

75U.S. v. Masino, 2021 U.S. App. LEXIS 22615, 

2021 WL 3235301 (11th Cir. July 30, 2021). 

76U.S. v. Masino, 2019 U.S. Dist. LEXIS 34862, 

2019 WL 1045179 (N.D. Fla. Mar. 5, 2019), aff’d 

U.S. v. Masino, 2021 U.S. App. LEXIS 22615, 2021 

WL 3235301 (11th Cir. July 30, 2021). 

The exclusions in the proposed rule that 

align with the CTA’s exemptions largely 

turn on whether the entity in question 

is supervised by a government agency, 

is a government agency, or has 

disclosure requirements that may 

diminish illicit finance risk in the 

context of residential real property.63

Specifically, the proposed rule would 

exclude U.S. governmental authorities, 

securities reporting issuers, and certain 

banks, credit unions, depository 

institution holding companies, money 

service businesses, brokers or dealers in 

securities, securities exchange or 

clearing agencies, other Exchange Act 

registered entities, insurance 

companies, state-licensed insurance 

producers, Commodity Exchange Act 

registered entities, public utilities, 

financial market utilities, and registered 

investment companies, as well as any 

legal entity whose ownership interests 

are controlled or wholly owned, directly 

or indirectly, by any of the above. 

For example, in the residential real 

estate context, FinCEN assesses that the 

illicit finance risk of non-financed 

transfers is adequately diminished when 

a business must register its securities 

with the Securities and Exchange 

Commission (SEC) under Section 12 of 

the Securities Exchange Act of 1934 or 

must file Forms 10–K or other 

supplementary and periodic 

information under section 15(d) of the 

Securities Exchange Act of 1934. 

Persons who beneficially own more 

than five percent of a covered class of 

equity securities for these businesses 

must publicly file with the SEC certain 

information relating to such beneficial 

ownership.64 Persons who are a director 

or an officer or who beneficially own 

more than 10 percent of such registered 

equity security (insiders) also must 

publicly report their ownership and 

transactions.65

b. Non-Profit Organizations 

The definition of transferee entity in 

the proposed rule should be read to 

include non-profit organizations.66

FinCEN and at least four major federal 

financial institution regulators (the 

Federal Reserve Board of Governors, the 

Federal Deposit Insurance Corporation, 

the National Credit Union 

Administration, and the Office of the 

Comptroller of the Currency have made 

clear that the U.S. government does not 

view the charitable sector as a whole as 

presenting a uniform or unacceptably 

high risk of being used or exploited for 

money laundering, terrorist financing, 

or sanctions violations. The agencies 

have also recognized that the vast 

majority of charities and other nonprofit organizations comply with the 

law and properly support charitable and 

humanitarian causes.67 The FATF also 

has made clear that only a small subset 

of non-profits sending funds crossborder should be considered high risk as 

it relates to serving as potential vehicles 

of terrorist financing.68

However, non-profit organizations (a 

subset of which are often referred to as 

charities), have proven vulnerable to 

abuse by certain illicit actors and have 

been implicated in illicit finance 

schemes, including fraud, money 

laundering, tax evasion, and terrorist 

financing.69 FinCEN’s consultations 

with law enforcement indicate that 

charities are routinely the subjects of 

investigations involving fraud and 

money laundering, and a review of 

criminal cases involving illicit finance 

crimes and non-profit organizations 

shows that such organizations are 

vulnerable to exploitation by illicit 

actors. Indeed, charities purporting to 

support such causes as AIDS research, 

police and firefighters, disabled youth, 

childhood hunger, and veterans’ issues 

have been investigated and prosecuted 

for fraud and money laundering.70

Further, non-profit organizations have 

been used by corrupt governmental 

officials to extort money from 

individuals seeking zoning approvals 

and permits; 71 manipulated to engage in 

bribery of corrupt foreign officials; 72

and exploited to finance terrorism.73

Illicit funds funneled through nonprofit organizations are often invested in 

residential real estate. For instance, in 

July 2021, the 11th Circuit affirmed the 

conviction and forfeiture judgments 

involving multiple non-profit 

organizations in Florida.74 The 

defendants that exploited the nonprofits were convicted of conspiracy to 

commit wire fraud, operation of an 

illegal gambling business, conspiracy to 

commit money laundering, and money 

laundering.75 The court found that 

funds laundered through the non-profits 

were used to purchase three residential 

real estate properties in Florida, which 

were subsequently forfeited.76

One 2021 ANPRM commenter 

specifically stated that FinCEN should 


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77See The FACT Coalition, ANPRM Comment 

(Feb. 18, 2022), p. 4, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0122. 

78See Kirton McConkie, ANPRM Comment (Feb. 

7, 2022), pp. 1–8, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0017. 

79The term ‘‘pooled investment vehicle’’ has a 

particular definition in Rule 206(4)–8 under the 

Investment Advisers Act of 1940. See 17 CFR 

275.206(4)–8. However, the term is used more 

broadly in this NPRM. For information on private 

funds, see U.S. Securities and Exchange 

Commission, ‘‘Private Fund Adviser Overview,’’ 

available at https://www.sec.gov/divisions/ 

investment/guidance/private-fund-adviserresources. Section 202(a)(29) of the Advisers Act 

defines the term ‘‘private fund’’ as an issuer that 

would be an investment company, as defined in 

section 3 of the Investment Company Act of 1940 

(15 U.S.C. 80a–3), but for section 3(c)(1) or 3(c)(7) 

of that Act. Section 3(c)(1) excludes a privatelyoffered issuer having fewer than a certain number 

of beneficial owners. Section 3(c)(7) excludes a 

privately-offered issuer the securities of which are 

owned exclusively by ‘‘qualified purchasers’’ 

(generally, persons and institutions owning a 

specific amount of investments). See U.S. Securities 

and Exchange Commission, ‘‘Investment Company 

Registration and Regulation Package,’’ available at 

https://www.sec.gov/investment/fast-answers/

divisionsinvestmentinvcoreg121504#P84_14584. 

80 Id. 

81See U.S. Securities and Exchange Commission, 

‘‘Private Fund Statistics,’’ available at https://

www.sec.gov/divisions/investment/private-fundsstatistics. This figure reflects the assets of private 

funds managed by registered investment advisers 

only. Form PF is filed by certain investment 

advisers registered with the SEC to report 

confidential information about the private funds 

they advise. Form PF is not filed by investment 

advisers that advise private funds but that are not 

registered with the SEC. Form PF provides the SEC 

and Financial Stability Oversight Council (FSOC) 

with important information about the basic 

operations and strategies of private funds and has 

helped establish a baseline picture of the private 

fund industry for assessing systemic risk. 

82Peter Grant, ‘‘1MDB probe may be good news 

for Park Lane Hotel Investors,’’ The Wall Street 

Journal (July 26, 2016), available at https://

www.wsj.com/articles/1mdb-probe-may-be-goodnews-for-park-lane-hotel-investors-1469554543. 

83See generally Criminal Complaint, U.S. v. 

Guruceaga, Case No. 1:18–cr–20685 (S.D. Fla. July 

23, 2018). 

84U.S. Department of Justice, Press Release, 

Former Partner of Locke Lord LLP Convicted in 

Manhattan Federal Court Of Conspiracy To Commit 

Money Laundering And Bank Fraud In Connection 

with Scheme To Launder $400 Million Of OneCoin 

Fraud Proceeds (Nov. 21, 2019), available athttps:// 

www.justice.gov/usao-sdny/pr/former-partnerlocke-lord-llp-convicted-manhattan-federal-courtconspiracy-commit-money#:∼:text=

SCOTT%2C%20a%20former%20equity

%20partner,and%20operated%20for%20that

%20purpose. 

85See, e.g., Peter Grant, ‘‘1MDB probe may be 

good news for Park Lane Hotel Investors,’’ The Wall 

Street Journal (July 6, 2016), available at https://

www.wsj.com/articles/1mdb-probe-may-be-goodnews-for-park-lane-hotel-investors-1469554543; 

Complaint, U.S. v. ‘‘The Wolf of Wall Street’’ 

Motion Picture, Case No. 2:16–cv–05362–DSF–PLA 

(C.D. Cal. 2016); Will Parker, ‘‘Meet the secretive 

Kazakh company backing the Upper West Side’s 

latest skyscraper,’’ The Real Deal: Real Estate News 

(Apr. 14, 2018), available at https://thereal

deal.com/new-york/2018/04/13/meet-the-secretivekazakh-company-backing-the-upper-west-sideslatest-skyscraper/; Miranda Patrucic, Vlad Lavrov, 

and Ilya Lozovsky, ‘‘Kazakhstan’s Secret 

Billionaires,’’ OCCRP (Nov. 5, 2017), available at 

https://www.occrp.org/en/paradisepapers/ 

kazakhstans-secret-billionaires. 

86See., e.g., U.S. Department of Justice, Press 

Release, Acting Manhattan U.S. Attorney 

Announces Settlement of Civil Forfeiture Claims 

Against Over $50 Million Laundered Through Black 

Market Peso Exchange (Nov. 12, 2020), available at 

https://www.justice.gov/usao-sdny/pr/actingmanhattan-us-attorney-announces-settlement-civilforfeiture-claims-against-over. 

87Cory Bennett and Bryan Bender, ‘‘How China 

acquires ‘The Crown Jewels’ of U.S. technology,’’ 

Politico (May 22, 2018), available at https://

www.politico.com/story/2018/05/22/china-us-techcompanies-cfius-572413. 

88Michael Brown and Pavneet Singh, ‘‘China’s 

Technology Transfer Strategy: How Chinese 

Investments in Emerging Technology Enable A 

Strategic Competitor to Access the Crown Jewels of 

U.S. Innovation,’’ Defense Innovation Unit 

Experimental (Jan. 2018), available at https://

nationalsecurity.gmu.edu/wp-content/uploads/ 

2020/02/DIUX-China-Tech-Transfer-StudySelected-Readings.pdf; Paul Mozur and Jane Perlez, 

‘‘China Tech investment flying under the radar, 

Pentagon warns,’’ The New York Times (Apr. 7, 

2017). 

cover purchases by non-profits.77

Another commenter detailed the 

regulations that cover non-profits and 

advocated against covering them.78

Having considered the circumstances 

and comments in totality, FinCEN 

believes that non-profit organizations 

are vulnerable to abuse by illicit actors 

seeking to launder illicit proceeds 

through residential real estate. 

Accordingly, they would be captured 

under the proposed definition of 

transferee entity. 

c. Unregistered Pooled Investment 

Vehicles 

Pooled investment vehicles (PIVs) 

that are not registered with the SEC may 

be transferee entities for purposes of the 

proposed rule. Broadly, PIVs can 

include investment companies 

registered with the SEC, such as mutual 

funds and exchange-traded funds, as 

well as unregistered investment 

companies, such as private real estate 

investment trusts, certain real estate 

funds, special purpose financing 

vehicles, and private funds (which are 

usually categorized by their sponsors 

according to the investment strategy 

they pursue, and include funds such as 

hedge funds, private equity funds, and 

venture capital funds).79 Under the 

proposed rule, PIVs that are investment 

companies and are registered with the 

SEC would be exempt from the 

definition of a transferee entity. The 

difference between registered and 

unregistered PIVs turns in part on 

whether the PIV is or is not excluded 

from registration requirements as an 

investment company under the 

Investment Company Act of 1940.80

PIVs that meet these exclusion 

requirements, and are therefore not 

registered with the SEC, do not have 

disclosure and reporting requirements 

that govern similar but public PIVs, 

such as mutual funds or exchangetraded funds. 

Furthermore, unregistered PIVs are 

not subject to comprehensive AML/CFT 

regulation and are therefore vulnerable 

to abuse by illicit actors. The risks they 

present may be significant—the private 

fund sector, for example, holds 

approximately $20 trillion assets under 

management—a number that has more 

than doubled over the past decade and 

is comparable to the holdings of highly 

regulated U.S. banks.81 In recent years, 

private funds have been used by 

sanctioned persons, corrupt officials, tax 

evaders, and other criminal actors as a 

gateway to the U.S. financial system. 

This includes funds stolen from 

Malaysia’s sovereign wealth fund, 

1MDB; 82 Venezuela’s state-owned oil 

and natural gas company, PDVSA; 83

and funds from a large-scale 

cryptocurrency fraud scam.84

Unregistered PIVs have also been 

used to hide criminal proceeds in real 

estate. In one particular example, a 

criminal actor had a substantial 

ownership interest in a private fund and 

used it to both obfuscate and provide a 

veneer of legitimacy to illicit funds to 

make U.S. real estate purchases.85 Illicit 

actors may also hold a minority, noncontrolling interest in an unregistered 

PIV, resulting in the unregistered PIV 

channeling that investor’s illicit funds 

into real estate, as unregistered PIVs are 

not generally required to establish the 

identities of investors or look into the 

investor’s source of funds.86

Outside of the real estate sector, the 

lack of comprehensive AML/CFT 

coverage for unregistered PIVs has 

posed major national security 

challenges, enabling U.S. adversaries to 

invest in, and thereby gain access to, 

sensitive and emerging U.S. 

technologies.87 In fact, according to a 

2018 Department of Defense report, 

unregistered PIVs such as private funds 

and special purpose vehicles have 

allowed jurisdictions whose interests 

compete with the United States to 

‘‘access the crown jewels of U.S. 

innovation,’’ including in the realms of 

artificial intelligence, sensors, virtual 

reality, self-driving vehicles, robotics, 

microchips, and facial and other image 

recognition technologies, without such 

activity being reviewed by the 

Committee on Foreign Investment in the 

United States or other relevant 

government authority, where required.88


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89Private funds often are excluded from the 

definition of ‘‘investment company’’ under 15 

U.S.C. 80a–3(c)(1) and/or 15 U.S.C. 80a–3(c)(7). 

90Certain market intermediaries are excluded 

from the definition of ‘‘investment company’’ under 

15 U.S.C. 80a–3(c)(2). 

91Certain investment vehicles that are primarily 

engaged in ‘‘purchasing or otherwise acquiring 

mortgages and other liens on and interests in real 

estate’’ are excluded from the definition of 

‘‘investment company’’ under 15 U.S.C. 80a– 

3(c)(5)(C). 

92Certain investment vehicles maintained by 

certain charitable organizations are excluded from 

the definition of ‘‘investment company’’ under 15 

U.S.C. 80a–3(c)(10). 

93Certain church plans are excluded from the 

definition of ‘‘investment company’’ under 15 

U.S.C. 80a–3(c)(14). 

94 31 U.S.C. 5336(a)(11)(B)(xxi). 

95Senator Sherrod Brown, ‘‘National Defense 

Authorization Act,’’ Congressional Record 166: 208, 

p. S7311 (Dec. 9, 2020), available at https://

www.congress.gov/116/crec/2020/12/09/CREC2020-12-09-pt1-PgS7296.pdf. 96 Id. 

97See, Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), pp. 3, 30, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0102; Coalition for Integrity, ANPRM 

Comment (Feb. 21, 2022), p. 4, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0127; The FACT Coalition, ANPRM Comment (Feb. 

18, 2022), p. 4, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; Transparency International U.S., ANPRM 

Comment (Feb. 18, 2022), pp. 3, 8, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0115; American College of Trust and 

Estate Counsel, ANPRM Comment (Feb. 4, 2022), 

pp. 1–22, available at https://www.regulations.gov/ 

comment/FINCEN-2021-0007-0013; AntiCorruption Data Collective, ANPRM Comment (Feb. 

18, 2022), p. 3, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0153; California Reinvestment Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 1, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0126. 

98See American College of Trust and Estate 

Counsel, ANPRM Comment (Feb. 4, 2022), pp. 1– 

22, available at https://www.regulations.gov/ 

docket/FINCEN-2021-0007/comments?

filter=ACTEC; National Association of Realtors, 

ANPRM Comment (Feb. 18, 2022), p. 13, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0128. 

FinCEN therefore believes that 

unregistered PIVs generally present 

sufficient illicit finance risk to warrant 

inclusion in the definition of a 

transferee entity. These unregistered PIV 

may include entities such as private 

funds,89 certain market 

intermediaries,90 certain companies that 

primarily engage in the business of 

acquiring mortgages,91 certain funds 

maintained by charitable 

organizations,92 and certain church 

plans.93

d. Large Operating Companies 

The proposed definition would 

capture certain legal entities that are 

known as ‘‘large operating companies’’ 

in the CTA and BOI Reporting Rule 

context. Within that framework, a large 

operating company is an entity that: 

‘‘employs more than 20 employees on a 

full-time basis in the United States;’’ 

‘‘filed in the previous year Federal 

income tax returns in the United States 

demonstrating more than $5,000,000 in 

gross receipts or sales in the aggregate;’’ 

and ‘‘has an operating presence at a 

physical office within the United 

States[.]’’ 94 When explaining why this 

exemption was added to the CTA, 

Senator Sherrod Brown noted: 

The justification for the exemption of 

entities that have both physical operations 

and at least 20 employees in the United 

States is that those entities’ physical U.S. 

presence will make it easy for U.S. law 

enforcement to discover those entities’ true 

owners. Like other exemptions in the bill, 

this exemption should be narrowly construed 

to exclude entities that do not have an easily 

located physical presence in the United 

States, do not have multiple employees 

physically present on an ongoing basis in the 

United States, or use strategies that make it 

difficult for U.S. law enforcement to contact 

their workforce or discover the names of their 

beneficial owners.95

Senator Brown cautioned however, 

that ‘‘[t]his exemption should be subject 

to continuous, careful review by 

Treasury . . . to detect and prevent its 

misuse.’’ 96

One of the primary purposes of the 

proposed rule is to identify transferee 

entities that engage in non-financed 

residential real estate transfers. While it 

may be easier for law enforcement to 

identify beneficial owners behind large 

operating companies in comparison to 

shell companies, the very fact that a 

legal entity has engaged in activity that 

FinCEN has identified as presenting an 

illicit finance risk—the use of identity 

obfuscating vehicles in a non-financed 

residential real estate transfer—is 

valuable information for law 

enforcement, both to support individual 

investigations and to allow for 

aggregated analysis of money laundering 

in the U.S. real estate sector. 

However, certain large operating 

companies may fall within other 

exclusions provided for in the proposed 

rule. For example, a company required 

to register its securities with the SEC 

under section 12 of the Securities 

Exchange Act of 1934 would be 

excluded. 

2. Transferee Trusts 

The proposed rule defines ‘‘transferee 

trust’’ as any legal arrangement created 

when a person (generally known as a 

settlor or grantor) places assets under 

the control of a trustee for the benefit of 

one or more persons (each generally 

known as a beneficiary) or for a 

specified purpose, as well as any legal 

arrangement similar in structure or 

function to the above, whether formed 

under the laws of the United States or 

a foreign jurisdiction. The proposed rule 

further notes that a trust is deemed to 

be the transferee trust regardless of 

whether residential real property is 

titled in the name of the trust itself or 

in the name of the trustee in their 

capacity as the trustee of the trust. 

However, the proposed rule excludes 

trusts that are securities reporting 

issuers, which includes companies that 

must register securities with the SEC 

and become subject to periodic 

reporting and disclosure requirements. 

FinCEN considers these trusts to be 

more tightly supervised and, because 

they are required to make certain public 

disclosures, they present a lower illicit 

finance risk. For similar reasons, trusts 

that have a trustee that is a securities 

reporting issuer are not covered by the 

proposed rule. Furthermore, the 

proposed rule excludes statutory trusts 

from being transferee trusts; instead, a 

statutory trust could be considered to be 

a transferee entity, unless one of the 

exemptions to the definition of 

‘‘transferee entity’’ applies. 

Multiple 2021 ANPRM commenters 

highlighted the use of trusts to facilitate 

exploitation of the real estate market for 

the purpose of laundering money, were 

largely supportive of including them in 

any regulation, and suggested that 

transfers to trusts be covered, 

particularly since the CTA did not 

explicitly provide for reporting of 

beneficial ownership information from 

trusts.97 Other commenters recognized 

that trusts can present illicit finance 

risks but were only supportive of 

covering certain types.98 As discussed 

in detail above, FinCEN believes that 

non-financed residential real estate 

transfers to trusts present a high risk for 

money laundering. The reporting of all 

non-financed transfers of residential real 

estate in which the transferee is a trust 

would provide data relevant to a 

possible violation of law or regulation. 

3. Beneficial Owners of Transferee 

Entities and Transferee Trusts 

The proposed Real Estate Report 

would collect information about the 

beneficial owners of transferee entities 

and transferee trusts. Where possible, 

FinCEN has aligned the proposed rule’s 

definitions of beneficial ownership with 

those contained in the CTA and its 

implementing regulations. 

a. Determining the Beneficial Owners of 

Transferee Entities 

Consistent with the CTA, the 

proposed rule provides that a beneficial 

owner of a transferee entity is ‘‘any 


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Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 12435 

99A trust protector is a person given power 

within the trust to take certain types of significant 

actions, such as the right to oversee the trustee’s 

decisions, to remove the trustee, or to amend or 

terminate the trust. See section 808 of the Uniform 

Trust Code (2003), available at https://

www.uniformlaws.org/viewdocument/committeearchive-76?CommunityKey=193ff839-7955-4846- 

8f3c-ce74ac23938d&tab=librarydocuments; Andrew 

T. Huber, ‘‘Trust Protectors: The Role Continues to 

Evolve,’’ American Bar Association (Jan.–Feb. 

2017), available at https://www.americanbar.org/ 

groups/real_property_trust_estate/publications/ 

probate-property-magazine/2017/january_february_

2017/2017_aba_rpte_pp_v31_1_article_huber_trust_

protectors/. 

100See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), p. 15, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0102; Transparency International U.S., ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

Continued 

individual who, directly or indirectly, 

either exercises substantial control over 

the transferee entity or owns or controls 

at least 25 percent of the ownership 

interests of the transferee entity.’’ 

However, as the owners or directors of 

tax-exempt organizations do not hold a 

direct ownership stake in the 

organization, the reportable beneficial 

owners would be limited only to the 

individuals who exercise substantial 

control. 

Comments on the 2021 ANPRM were 

generally supportive of using the CTA’s 

definition of the beneficial owner in any 

potential regulation. However, one 

commenter suggested FinCEN use the 

definition of beneficial owner set out in 

the Residential Real Estate GTOs. 

FinCEN considered that definition as 

well as other definitions for beneficial 

ownership for transferee entities. 

However, FinCEN believes that the BOI 

Reporting Rule’s definition would be 

best suited to capture potentially 

obfuscated ownership of residential real 

property in high-risk non-financed 

transfers, particularly since it will 

always result in the identification of at 

least one beneficial owner via the 

‘‘substantial control’’ component of the 

definition, even if no individual meets 

the 25 percent ‘‘ownership interests’’ 

threshold. In addition, the use of 

consistent definitions of beneficial 

ownership across regulations would 

reduce the potential for confusion. 

b. Determining the Beneficial Owners of 

Transferee Trusts 

The proposed rule would collect 

information about the beneficial owners 

of trusts, defined as any individual who, 

at the time of the real estate transfer to 

the trust: (1) is a trustee; (2) otherwise 

has authority to dispose of transferee 

trust assets, such as may be the case 

with a trust protector; 99 (3) is a 

beneficiary who is the sole permissible 

recipient of income and principal from 

the transferee trust or who has the right 

to demand a distribution of, or to 

withdraw, substantially all of the assets 

of the transferee trust; (4) is a grantor or 

settlor of a revocable transferee trust; or 

(5) is the beneficial owner of a legal 

entity or trust that holds one of the 

positions described in (1)–(4), taking 

into account the exceptions that apply 

to transferee entities and transferee 

trusts. 

This proposed definition leverages the 

BOI Reporting Rule’s approach to 

ascertaining the beneficial owners of a 

trust. Although the BOI Reporting Rule 

does not require reporting of beneficial 

ownership information by most trusts, 

as most trusts are not ‘‘reporting 

companies’’ for purposes of the CTA, 

the rule does require certain information 

to be reported about the beneficial 

owners of trusts when an individual is 

considered to own or control a reporting 

company through a trust. In line with 

that approach, each of the defined 

beneficial owners of a transferee trust 

has either ownership or control over 

trust assets, including over any real 

property transferred to the trust. For 

example, an individual who is the sole 

permissible recipient of both income 

and principal from the trust, or has the 

right to demand a distribution of, or 

withdraw, substantially all of the assets 

from the trust, has an ownership or 

controlling interest in the assets held in 

trust. Other individuals with authority 

to dispose of trust assets, such as 

trustees and grantors or settlors that 

have retained the right to revoke the 

trust, will be considered as controlling 

the assets held in trust. In the case of 

legal entities or trusts with ownership or 

control of trust assets, the beneficial 

owners of those legal entities or trusts 

also would be beneficial owners of the 

trust. 

c. Beneficial Ownership as a 

Transactional Reporting Requirement 

The proposed rule would not require 

reporting persons to report changes to 

beneficial ownership of a transferee 

entity or transferee trust on an ongoing 

basis. The proposed rule is concerned 

only with real estate transfers, and it is 

not within the scope or intention of 

these regulations to require reporting 

persons to conduct ongoing monitoring 

of ownership of residential real 

property. While at least one 2021 

ANPRM commenter supported the 

introduction of ongoing monitoring for 

change of ownership, most commenters 

did not address this issue. FinCEN 

assesses that it would likely represent a 

large and impractical burden to place an 

obligation on reporting persons that 

would require them to investigate 

changes to beneficial ownership of 

residential real estate that continues to 

be owned by a client transferee entity or 

trust, or to require transferee entities or 

transferee trusts to report changes in 

beneficial ownership to a real estate 

professional involved in their transfer of 

residential real property after the 

transfer has been concluded. 

C. Reportable Transfers 

The proposed rule would define a 

reportable transfer as a transfer of any 

ownership interest in residential real 

property to a transferee entity or 

transferee trust, with certain exceptions. 

These proposed exceptions are meant to 

reflect FinCEN’s intent to capture only 

higher risk transfers and therefore the 

definition exempts most financed 

transfers, as well as certain types of 

other low-risk transfers. Under the 

proposed rule, transfers would be 

reportable irrespective of the value of 

the property or the dollar value of the 

transaction; there is no dollar threshold 

for a reportable transfer. As such, gifts 

and other similar transfers of property 

may be reportable. Importantly, 

transfers would only be reportable if a 

reporting person is involved in the 

transfer and if the transferee is either a 

legal entity or trust. Transfers between 

individuals would not be reportable. 

1. Exception for Financed Transfers 

First, certain financed transfers would 

be excepted. Specifically, the exception 

would apply to transfers involving an 

extension of credit to the transferee, but 

only if the credit is secured by the 

transferred residential real property and 

is extended by a financial institution 

that has both an obligation to maintain 

an AML program and a requirement to 

file SARs. Transfers financed by a 

private lender or the seller, neither of 

which are likely to have AML/CFT 

compliance programs and SAR filing 

obligations, would not fall within this 

exception. The purpose of the exception 

is to avoid duplication of required due 

diligence, as banks and other financial 

institutions subject to AML/CFT 

program requirements and SAR filing 

obligations must already extend them to 

any mortgages offered in a financed 

residential real estate transfer. Unlike in 

the non-financed space, these due 

diligence obligations of covered 

financial institutions mitigate the risks 

of money laundering through real estate 

for financed transactions and lead to 

reporting on suspicious transactions. 

Some commenters on the 2021 

ANPRM highlighted that non-financed 

purchases make up a significant portion 

of the residential real estate market.100


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12436 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

www.regulations.gov/comment/FINCEN-2021-0007- 

0115. 

101See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), p. 15, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0102; Transparency International U.S., ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0115; League of Southeastern Credit Unions & 

Affiliates, ANPRM Comment (Feb. 7, 2022), pp. 1– 

4, available at https://www.regulations.gov/ 

comment/FINCEN-2021-0007-0011; Illinois Credit 

Union League, ANPRM Comment (Feb. 21, 2022), 

p. 1, available at https://www.regulations.gov/ 

comment/FINCEN-2021-0007-0137. 

102See Louise Shelley and Ross Delston, ANPRM 

Comment (Feb. 21, 2022), p. 1, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0151; Anti-Corruption Data Collective, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0153. 

103See Morgan, Lewis, & Bockius, ANPRM 

Comment (Feb. 18, 2022), pp. 2–3, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0123; Prosperus Title, ANPRM Comment 

(Feb. 18, 2022), 1–2, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0125. 

104For example, whereas the Residential Real 

Estate GTOs utilize a $300,000 threshold for most 

covered jurisdictions, a $50,000 threshold applies 

for the City and County of Baltimore to take into 

account local money laundering trends. 

105U.S. Census Bureau, ‘‘Table Q1. New Houses 

Sold by Sales Price: United States,’’ available at 

https://www.census.gov/construction/nrs/pdf/

quarterly_sales.pdf. 

106See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), p. 24, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0102; The FACT Coalition, ANPRM Comment (Feb. 

18, 2022), p. 3, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; California Reinvestment Coalition, ANPRM 

Comment (Feb. 18, 2022), pp. 2–3, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0126; Coalition for Integrity, ANPRM 

Comment (Feb. 21, 2022), p. 4, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0127; Anti-Corruption Data Collective, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0153. 

107See National Federation of Independent 

Business, ANPRM Comment (Dec. 22, 2021), p. 1, 

available at https://www.regulations.gov/comment/ 

FINCEN-2021-0007-0007; American Land Title 

Association, ANPRM Comment (Feb. 17, 2022), p. 

2–5, available at https://www.regulations.gov/ 

comment/FINCEN-2021-0007-0020. 

Most commenters who addressed the 

issue were supportive of FinCEN 

covering non-financed transfers.101

Some explicitly stated that only nonfinanced transfers should be covered, 

but two comments stated that FinCEN 

should cover both non-financed and 

financed transfers.102 Two commenters 

were not supportive of covering nonfinanced transactions, either because 

they believe real estate professionals are 

already reporting on potential financial 

crimes through other FinCEN forms, 

such as the Form 8300, or because they 

believe most settlement agents already 

force funds through financial 

institutions that have traditional AML/ 

CFT program requirements.103 However, 

FinCEN believes that further regulation 

is needed and its experience with the 

Residential Real Estate GTOs program 

has shown that existing reporting 

through Form 8300s and the minimal 

involvement of financial institutions 

subject to AML/CFT program 

requirements are not sufficient to 

obviate the illicit finance threat posed 

by non-financed transfers of residential 

real property. 

2. Exceptions for Low-Risk Transfers 

Exceptions also would exist for 

transfers that are the result of a grant, 

transfer, or revocation of an easement; 

transfers that occur as a result of the 

death of an owner of the residential real 

property; transfers that are the result of 

divorce or dissolution of marriage; or 

transfers to a bankruptcy estate. FinCEN 

views easements, which involve rights 

to use land for a specified purpose, as 

presenting little illicit finance risk. 

Transfers incidental to death, divorce, 

or bankruptcy are governed by 

preexisting legal documents, such as 

wills, or generally involve the court 

system through probate, divorce, or 

bankruptcy proceedings. FinCEN 

believes these circumstances present a 

relatively low risk for purposes of 

laundering money. 

3. No Exceptions Based on the 

Property’s Value or Purchase Price 

Residential real properties with a 

wide range of values are used by illicit 

actors to launder money, including 

residential real properties transferred for 

no consideration.104 Criminal networks 

interested in cleaning funds do not 

exclusively invest in luxury or highvalue property, but also launder money 

through low-value real estate. FinCEN 

believes that any dollar threshold would 

enable money launderers to structure 

payments to avoid reporting 

requirements. Accordingly, the 

proposed rule does not provide 

exceptions for transfers above or below 

a set dollar value. Furthermore, it is 

meant to capture both sales and nonsale transfers, such as gifts and transfers 

to trusts. The transfer of residential real 

property to a trust by the settlor or 

grantor may therefore be reportable, 

although FinCEN expects that such 

reporting will be significantly limited by 

the exception for transfers of financed 

residential real property and by the 

exception for transfers occurring as a 

result of death. The latter, in particular, 

would exempt transfers by an executor 

of the grantor or settlor’s property to a 

testamentary trust. 

FinCEN believes that the inclusion of 

low dollar value transfers in the 

proposed rule is unlikely to 

significantly increase the burden on 

potential reporting persons versus a 

scenario in which a dollar threshold is 

imposed. For example, according to the 

U.S. Census Bureau, residences costing 

less than $125,000 accounted for less 

than 0.5 percent of all new residences 

sold in 2022, and residences costing less 

than $300,000 accounted for 7 percent 

of all new residences sold in 2022.105

The American Land Title Association 

(ALTA) has indicated to FinCEN that a 

uniform reporting threshold, regardless 

of what the threshold is, would decrease 

compliance burdens for industry 

compared to thresholds that vary across 

jurisdictions. With respect to non-sale 

transfers made for no consideration, 

such as transfers made to a trust, 

FinCEN notes that the proposed rule 

provides the previously discussed 

exception for transfers that most often 

involve no consideration, such as those 

that occur due to death or divorce, 

which substantially narrows the scope 

of coverage. However, FinCEN 

welcomes comments on the potential 

burdens related to the reporting of nonsale transfers. 

4. No Application to Transfers Without 

a Reporting Person 

FinCEN believes that the proposed 

rule would capture the majority of sale 

and non-sale transfers of residential real 

estate. However, transfers that do not 

involve a typical real estate-related 

professional as reflected in the cascade 

of potential reporting persons would not 

be captured. 

5. No Application to Transfers to 

Natural Persons 

Transfers made directly to individuals 

would not be reportable under this 

regulation. Therefore, if the transferred 

property’s title is in the name of one or 

more individuals, with no ownership 

interests held by a transferee entity or a 

transferee trust, the transfer would not 

be reportable under the rule. 

Some 2021 ANPRM commenters 

recognized that non-financed transfers 

of residential real estate to individuals 

present money laundering risk and 

supported their coverage by any 

potential regulation.106 Other 

commenters, however, stated that the 

burden of covering natural person 

purchases would be too large for the 

industry to bear and expressed privacy 

concerns.107

All non-financed transfers of 

residential real estate are less regulated 

than financed transfers and are 

inherently more vulnerable to money 


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108See, e.g., U.S. Department of the Treasury, 

National Strategy for Combatting Terrorist and 

Other Illicit Financing (2020), pp. 17–18, available 

at https://home.treasury.gov/system/files/136/ 

National-Strategy-to-Counter-Illicit-Financev2.pdf. 

109The types of businesses involved in a real 

estate closing or settlement vary depending on the 

type of transaction and on the jurisdiction. As such, 

the reporting cascade (see Proposed amendments 

infra 31 CFR 1031.320(c)) is itemized to capture a 

broad array of potential businesses. However, 

FinCEN believes that, for any transaction, the 

functions described in first three tiers of the 

reporting cascade would be performed by only one 

business, with no other separate business 

performing the other two functions. FinCEN 

therefore treats the reporting cascade as having five 

functional groupings. 

110The U.S. title insurance market is 

concentrated, with four national underwriters 

accounting for approximately 81 percent of total 

industry premiums as September 2022. Fitch 

Rating, U.S. Title Insurance Outlook 2023 (Dec. 2, 

2022), available at https://www.fitchratings.com/ 

research/insurance/us-title-insurance-outlook-2023- 

02-12-2022. 

laundering. However, FinCEN has not 

yet conducted a review of residential 

real estate purchases by natural persons 

sufficient to conclude that those 

transactions present a high risk for 

money laundering. To be sure, illicit 

actors often use natural person 

nominees or straw purchasers—such as 

a spouse, relative, or employee—to 

acquire real estate while obscuring 

beneficial ownership.108 Such nominees 

or straw purchasers are unlikely to 

disclose that they are receiving 

ownership of real estate on behalf of the 

illicit actor. Requiring the reporting of 

information about transfers to 

individuals would significantly increase 

the number of reports filed and 

significantly increase burden on 

industry. Although the BSA would 

provide privacy protections for reports 

filed under the proposed rule, for the 

reasons stated above, FinCEN is not 

proposing to cover residential real estate 

purchases by natural persons at this 

time. 

D. Reporting Persons 

The proposed rule would impose a 

filing and recordkeeping obligation on 

certain persons involved in real estate 

closings and settlements. The proposed 

rule would designate only one reporting 

person for any given reportable transfer. 

The reporting person would be 

identified in one of two ways: by way 

of a cascading reporting order or by way 

of a written agreement between the real 

estate professionals described in the 

cascading reporting order. 

1. The Reporting Cascade 

Through the cascade, a real estate 

professional would be a reporting 

person required to file a report and keep 

records for a given transfer if the person 

performs a function described in the 

cascade and no other person performs a 

function described higher in the 

cascade. For example, if no person is 

involved in the transfer as described in 

the first tier of potential reporting 

persons, the reporting obligation would 

fall to the person involved in the 

transfer as described in the second tier 

of potential reporting persons, if any, 

and so on. The cascade includes only 

persons engaged as a business in the 

provision of real estate closing and 

settlement services within the United 

States. 

For any reportable transfer, a potential 

reporting person would need to 

determine whether there is another 

potential reporting person involved in 

the transfer who sits higher in the 

cascade. Although potential reporting 

persons will likely communicate with 

each other regarding the need to file a 

report, there would be no requirement 

to verify that any other potential 

reporting person in fact filed it. 

The proposed cascade is as 

follows: 109

First, real estate professionals 

providing certain settlement services in 

the settlement process—In the first 

instance, the reporting obligation would 

rest with real estate professionals 

providing certain settlement services at 

the termination of the settlement 

process. Specifically, the cascade first 

designates as a reporting person the 

person listed as the closing or 

settlement agent on a settlement (or 

closing) statement, which is common to 

the vast majority of residential real 

property transfers. This ensures that a 

potential reporting person familiar with 

the intricacies of the transfer, including 

transactional information and details 

about the parties involved, will be the 

most frequent reporting person. This, in 

turn, will ensure that the reports are 

more accurate and useful to law 

enforcement and will lessen the burden 

on reporting persons. In the event that 

no person is directly identified as a 

closing or settlement agent on the 

statement, the reporting obligation 

would fall on the person that prepared 

the closing or settlement statement. If no 

person prepared a closing or settlement 

statement, the reporting obligation falls 

to the person that files the deed or other 

instrument that transfers ownership of 

the residential real property. 

Second, the person that underwrites 

an owner’s title insurance policy for the 

transferee—If no person executes the 

specific settlement functions in the first 

tier of the cascade, the reporting 

obligation would then fall upon the 

person that underwrites the title 

insurance policy associated with the 

real property transfer. Such policies are 

typically underwritten by large title 

insurance companies that issue policies 

providing indemnity in the event the 

title of the transferred property is later 

determined to have a defect or 

encumbrance.110 Title insurance 

companies have been the reporting 

persons for the Residential Real Estate 

GTOs since 2016 and have 

demonstrated the ability to gather 

information and file reports containing 

information similar to that which would 

be collected under the proposed rule. 

Given that the underwriting function is 

further removed from the termination of 

the settlement process than the 

settlement services described in the first 

tier of the cascade, and so further 

removed from information to be 

collected, FinCEN assesses that persons 

underwriting such policies should be 

second line reporting persons. Title 

insurance agents may serve as 

settlement agents and if serving such a 

first-tier function, would have easier 

access to the necessary information in 

that capacity. 

Third, the person that disburses the 

greatest amount of funds in connection 

with the reportable transfer—In the 

event that no person executes the 

specific settlement functions in the first 

tier of the cascade, and no person 

underwrites a title insurance policy, the 

third tier of the cascade would require 

reporting by the person that disburses 

the greatest amount of funds in 

connection with residential real 

property transfer. The proposed rule 

notes that such disbursement may be in 

any form, including from an escrow 

account (which is frequently used to 

settle real estate transfers), from a trust 

account, or from a lawyer’s trust 

account. Such reporting persons will 

have visibility into funds transfer 

information associated with the 

residential real property transfer and 

FinCEN believes that, by virtue of this, 

they should be able to obtain the 

information this proposed rule would 

collect with relatively little burden. 

However, this tier of the cascade would 

only cover persons involved in real 

estate settlements and closings who are 

disbursing funds via third-party 

accounts and excludes direct transfers 

from transferees to transferors and 

disbursements coming directly from 

banks. 

Fourth, the person that prepares an 

evaluation of the title status—In the 

event that no person participates in the 

transfer who falls within the first three 

tiers of the cascade, the reporting person 

would be the person who prepares an 


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111 ‘‘Escrow is [a] transaction in which an 

impartial third-party acts in a fiduciary capacity for 

all or some of the parties . . . in performing 

[s]ettlement services according to local practice and 

custom.’’ American Land Title Association, ALTA 

Best Practices 4.0 (May 23, 2023), p. 4, available at 

https://www.alta.org/best-practices/download.

cfm?bestPracID=97&type=pdf. 112 DarrowEverett LLP, ‘‘Are Attorney Opinion 

Letters a Viable Alternative to Title Insurance’’ 

(Feb. 23, 2023), available at https://

www.darroweverett.com/attorney-opinion-letteradvantages-risks-title-insurance/; Fannie Mae, B7– 

2–06, Attorney Title Opinion Letter Requirements: 

Attorney Title Letter Opinion Requirements (Dec. 

13, 2023), available at https://sellingguide.fanniemae.com/Selling-Guide/Originationthru-Closing/Subpart-B7-Insurance/Chapter-B7-2- 

Title-Insurance/2522435591/B7-2-06-AttorneyTitle-Opinion-Letter-Requirements-04-06-2022.htm. 

113American Land Title Association, ALTA Best 

Practices 4.0 (May 23, 2023), p. 4, available at 

https://www.alta.org/best-practices/download.

cfm?bestPracID=97&type=pdf. 

114 ‘‘The title agent and settlement agent are often 

the same entity that performs two separate 

functions in a real estate transaction. The terms title 

agent and settlement agent are often used 

interchangeably.’’ American Land Title Association, 

‘‘ALTA Urges CFPB to Preserve Role of 

Independent Third-party Settlement Agents’’ (Nov. 

8, 2012), p. 26, available at https://www.alta.org/ 

news/news.cfm?20121108-ALTA-Urges-CFPB-toPreserve-Role-of-Independent-Third-partySettlement-Agents; see, e.g., American Land Title 

Association, ‘‘ALTA Model Settlement Statements,’’ 

available at https://www.alta.org/trid/#statements; 

Consumer Finance Protection Bureau, What is a 

HUD–1 Settlement Statement? (Sept. 4, 2020), 

available at https://www.consumerfinance.gov/askcfpb/what-is-a-hud-1-settlement-statement-en-178/. 

115See Redfin.com, ‘‘Steps to closing on a house,’’ 

available at https://www.redfin.com/guides/stepsto-closing-on-a-house; American Land Title 

Association, ALTA Best Practices 4.0 (May 23, 

2023), p. 4, available at https://www.alta.org/bestpractices/download.cfm?bestPracID=97&type=pdf; 

see generally American Land Title Association, 

‘‘ALTA Urges CFPB to Preserve Role of 

Independent Third-party Settlement Agents’’ (Nov. 

8, 2012), available at https://www.alta.org/news/ 

news.cfm?20121108-ALTA-Urges-CFPB-to-PreserveRole-of-Independent-Third-party-SettlementAgents. 

evaluation of the status of the title. Such 

an evaluation may take the form of a 

title check, which is typically performed 

by title insurance companies in lieu of 

providing actual insurance or an 

opinion letter, which is rendered by 

attorneys. 

Fifth, the person who prepares the 

deed—Finally, should no person 

identified in the first four tiers of the 

cascade participate in the real property 

transfer, the reporting obligation would 

fall to the preparer of the deed 

associated with the transfer. A deed is 

typically prepared by an attorney, but it 

may also be prepared by a non-attorney 

settlement or closing agent or by the 

transferee itself. 

2. Capturing Both Sale and Non-Sale 

Transfers 

The reporting cascade is designed to 

capture both sales of residential real 

estate and non-sale transfers of 

residential real estate. It assigns a 

reporting obligation based on the 

functions fulfilled by the various real 

estate professionals involved in the 

closing and settlement process, 

regardless of whether the transfer is a 

sale or non-sale. FinCEN believes that it 

is necessary to capture non-sale 

transfers to ensure uniform coverage of 

non-financed transfers and to ensure 

that nominees do not purchase homes 

for criminal actors and then transfer the 

title on free of charge to a legal entity 

or trust. 

During a typical closing and 

settlement for a non-financed transfer of 

residential real estate, a transferee will 

offer to purchase a residential real 

property for a given price. This offer can 

occur through a representative, such as 

a real estate agent, attorney, or 

registered agent, or it may come directly 

from the transferee itself. If the 

transferor accepts the offered price, 

either directly or through a 

representative, the parties can proceed 

toward the settlement process, normally 

through a sales contract. It is at this 

point that title agencies or companies 

and escrow agents or companies 

typically become involved in the 

process. Title agencies will conduct an 

examination of the title to ensure it is 

free from defects, such as liens or other 

encumbrances. Escrow companies may 

at this point hold a deposit or ‘‘earnest 

money’’ from the transferee that the 

transferee would forfeit should it be 

responsible for breaking the purchase 

contract.111 A transferee may also, and 

usually does, purchase a title insurance 

policy, which ensures that the title of 

the property is free from defects and 

indemnifies the transferee should a title 

defect later come to light. As noted 

above, a transferee may opt, in lieu of 

title insurance, to obtain a title check 

from the title insurance company or an 

opinion letter from an attorney.112

However, neither title insurance nor a 

title check is required to close or settle 

non-financed transfers of residential real 

property. 

The transfer can then move toward 

settlement, which is also sometimes 

referred to as ‘‘closing.’’ According to 

ALTA, settlement is ‘‘[t]he process of 

completing a real estate transaction in 

accordance with written instructions 

during which deeds, mortgages, leases, 

and other required instruments are 

executed and/or delivered, an 

accounting between the parties is made, 

the funds are disbursed, and the 

appropriate documents are recorded in 

the public record.’’ 113 At settlement, a 

closing or settlement agent—which is 

most often a title agent but can be a 

representative of an escrow company or 

an attorney—will prepare a ‘‘settlement 

statement,’’ which normally contains an 

itemized list of all of the fees or charges 

that the buyer and seller will pay during 

the settlement portion of the transfer.114

At settlement, the settlement statement 

and other closing documents are signed 

by the parties to the transfer and, if 

applicable, funds are disbursed to the 

transferor. This typically occurs via an 

escrow account, but also occurs at times 

via a trust account or attorney trust 

account or via a direct transfer of funds 

between the transferee and transferor 

(though, due to its risky nature, this 

practice is not common). Following the 

execution of the settlement statement 

and other closing documents and the 

disbursal of funds, the settlement agent 

will file the deed (the instrument which 

effects the transfer of ownership of the 

property) with the relevant local land 

registry or recordation office. Deeds are 

typically prepared by attorneys, but may 

be prepared by the settlement agent, 

escrow officer, or the transferee itself.115

A transfer of residential real estate 

that does not involve a purchase, such 

as a transfer that is a gift or that is made 

to a trust, involves a closing and 

settlement process that is distinct from 

the process described above that exists 

for typical sales of residential real 

estate. For example, such non-sale 

transfers would not involve a settlement 

agent or settlement statement or the 

transfer of funds through escrow. They 

may, however, involve an attorney or 

other real estate professional who 

prepares or files the deed, provides title 

insurance, or provides a title evaluation. 

3. Designation Agreements 

Although the reporting cascade would 

identify the real estate professional who 

would be primarily responsible for 

filing a Real Estate Report, the real 

estate professionals described in the 

reporting cascade may enter into a 

written agreement to designate another 

person in the reporting cascade as the 

reporting person. For example, if a real 

estate professional involved in the 

transfer provides certain settlement 

services in the settlement process, as 

described in the first tier of the cascade, 

that person may enter into a written 

designation agreement with a title 

insurance company underwriting the 

transfer as described in the second tier 

of the cascade, through which the two 

parties agree that the title insurance 

company would be the designated 

reporting person with respect to that 

transfer. The person who would 

otherwise be the reporting person must 


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116See 29 CFR 1.6045–4 (Information reporting 

on real estate transactions with dates of closing on 

or after January 1, 1991). 

117See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), p. 11, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0102; Transparency International U.S., ANPRM 

Comment (Feb. 18, 2022), p. 10, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0115; Senator Sheldon Whitehouse, ANPRM 

Comment (Feb. 18, 2022), p. 4, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0118; The FACT Coalition, ANPRM Comment (Feb. 

18, 2022), p. 3, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; California Reinvestment Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0126; National Association of Realtors, ANPRM 

Comment (Feb. 18, 2022), p. 15, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0128. 

118See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), p. 11, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0102; League of Southeastern Credit Unions & 

Affiliates, ANPRM Comment (Feb. 7, 2022), pp. 3– 

4, available at https://www.regulations.gov/ 

comment/FINCEN-2021-0007-0011; American Land 

Title Association, ANPRM Comment (Feb. 17, 

2022), p. 3, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0020; Transparency International U.S., ANPRM 

Comment (Feb. 18, 2022), p. 10, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0115; The FACT Coalition, ANPRM Comment (Feb. 

18, 2022), p. 3, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; American Escrow Association, ANPRM 

Comment (Feb. 18, 2022), pp. 13–17, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0124; California Reinvestment Coalition, 

ANPRM Comment (Feb. 18, 2022), p. 3, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0126; Illinois Credit Union League, 

ANPRM Comment (Feb. 21, 2022), p. 1, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0137; Palmera Consulting, ANPRM 

Comment (Feb. 21, 2022), p. 4, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0141; Louise Shelley and Ross Delston, ANPRM 

Comment (Feb. 21, 2022), p. 2, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0151. 

119See Prosperus Title, ANPRM Comment (Feb. 

18, 2022), p. 1, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0125. 

120See Morgan, Lewis, & Bockius, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0123. 121See Anti-Corruption Data Collective, ANPRM 

Comment (Feb. 18, 2022), p. 1, 4, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0153; National Association of Realtors, 

ANPRM Comment (Feb. 18, 2022), p. 14, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0128. 122See Joint Editorial Board for Uniform Real 

Property Acts, ANPRM Comment (Feb. 5, 2022), pp. 

1–2, available at https://www.regulations.gov/ 

comment/FINCEN-2021-0007-0014; American Bar 

Association, ANPRM Comment (Feb. 7, 2022), pp. 

1–12, available at https://www.regulations.gov/ 

comment/FINCEN-2021-0007-0018; Marisa N. 

Bocci, ANPRM Comment (Feb. 21, 2022), p. 5, 

available at https://www.regulations.gov/comment/ 

FINCEN-2021-0007-0150. 

be a party to the agreement; however, it 

is not necessary that all persons 

involved in the transfer who are 

described in the reporting cascade be 

parties to the agreement. 

While the agreement must be in 

writing and must identify the date of the 

agreement, the name and address of the 

transferor, the name and address of the 

transferee entity or transferee trust, the 

property, the name and address of the 

designated reporting person, and the 

name and address of all other parties to 

the agreement, there is no required 

format for the designation agreement. 

All parties to the agreement would be 

required to retain a copy for a period of 

five years. 

4. Employees, Agents, and Partners 

If an employee, agent, or partner 

acting within the scope of such 

individual’s employment, agency, or 

partnership would be the reporting 

person in a reportable property transfer, 

then the individual’s employer, 

principal, or partnership is deemed to 

be the reporting person. In that case, it 

is the responsibility of the reporting 

person (i.e., the employer, principal, or 

partnership) to ensure that a report is 

filed. Accordingly, FinCEN expects that, 

in most cases, individuals will not be 

reporting persons. However, there may 

be certain cases (e.g., sole 

proprietorships) where the 

responsibility to file a report rests with 

an individual. 

5. Consultations With Real Estate 

Professionals 

The cascade is designed to both 

prevent an increased burden on 

reporting persons by ensuring that 

multiple real estate professionals do not 

have to collect information and file a 

report about the same transfer, while at 

the same time minimizing opportunities 

for reporting evasion by ensuring a 

report is filed for most reportable 

transfers. In the course of developing 

this cascading reporting order, FinCEN 

held extensive discussions with real 

estate professionals and the IRS, which 

employs a somewhat similar cascading 

reporting structure for its Form 1099– 

S.116 These discussions suggest that 

potential reporting persons involved in 

a real estate closing or settlement would 

be aware of one another’s presence or 

absence in the process at the time of 

closing, and that the reporting chain 

would be easily interpreted by persons 

involved in real estate closings and 

settlements. 

Several 2021 ANPRM commenters 

suggested the use of a reporting 

cascade.117 Some commenters 

recommended that title and escrow 

companies and agents, real estate agents 

and brokers, real estate attorneys, and 

other real estate professionals be the 

reporting persons in any potential 

regulation, to ensure that a broad swath 

of real estate professionals are included 

and to prevent reporting loopholes.118

One commenter suggested that title 

insurance companies that are already 

affiliated with heavily regulated 

financial institutions, such as banks, 

should not be required to report; 

FinCEN is not proposing this path 

because it is unclear who would decide 

this or how it would be determined.119

Another commenter stated that FinCEN 

should place any compliance 

obligations on the seller, but FinCEN 

believes this would place too much 

burden on individuals who are not real 

estate professionals.120 Two 

commenters suggested requiring only 

title insurance companies to report in 

the residential context, and only 

secondarily requiring escrow agents to 

report if title insurance is not 

purchased.121

Rather than to include or exclude any 

particular persons involved in real 

estate settlements and closings based on 

the titles they hold, FinCEN decided to 

design a reporting cascade based on the 

functions performed in a closing or 

settlement. This functional approach 

will ensure that the professional closest 

to the proposed information to be 

reported is most often the reporting 

person, thereby increasing efficiency 

and lessening overall burden. FinCEN 

notes that, as a result of this functional 

approach, specific real estate 

professionals such as real estate agents, 

brokers, and attorneys are not directly 

subject to obligations in the reporting 

cascade. They acquire reporting 

obligations only if they perform the 

specified functions. 

Several commenters on the 2021 

ANPRM argued against inclusion of 

attorneys, claiming that attorney-client 

privilege should prevent attorneys 

involved in real estate closings and 

settlements from reporting information, 

including beneficial ownership 

information.122 In this proposed rule, 

FinCEN would require reporting by 

attorneys only when they perform 

certain functions—functions that 

generally may be performed by nonattorneys. Although some jurisdictions 

in the United States require a licensed 

attorney to perform certain closing or 

settlement functions, FinCEN believes 

that the functions described in the 

cascade may generally be performed by 

both attorneys and non-attorneys. 

Indeed, FinCEN believes that the same 

reporting obligations should apply to 


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123See FinCEN, FIN–2023–Alert002, FinCEN 

Alert on Potential U.S. Commercial Real Estate 

Investments by Sanctioned Russian Elites, 

Oligarchs, and their Proxies (Jan. 25, 2023), 

available at https://www.fincen.gov/sites/default/ 

files/shared/FinCEN%20Alert%20Real%20

Estate%20FINAL%20508_1-25- 

23%20FINAL%20FINAL.pdf; FinCEN, FIN–2022– 

Alert002, FinCEN Alert on Real Estate, Luxury 

Goods, and Other High-Value Assets Involving 

Russian Elites, Oligarchs, and their Family 

Members (Mar. 16, 2022), available at https://

www.fincen.gov/sites/default/files/2022-03/

FinCEN%20Alert%20Russian%20Elites%20High

%20Value%20Assets_508%20FINAL.pdf. 

124FinCEN, FinCEN Suspicious Activity Report 

(FinCEN SAR) Electronic Filing Requirements (Aug. 

2021), p. 62, available at https://bsaefiling.

fincen.treas.gov/docs/XMLUserGuide_

FinCENSAR.pdf; see also FinCEN, Report of Cash 

Payments Over $10,000 Received in a Trade or 

Business (FinCEN Form 8300) Electronic Filing 

Requirements (Aug. 2021), p. 28, available at 

https://bsaefiling.fincen.treas.gov/docs/ 

XMLUserGuide_FinCEN8300.pdf (indicating Form8300s require TINs to be reported); FinCEN, 

FinCEN Currency Transaction Report (CTR) 

Electronic Filing Requirements (Aug. 2021), p. 27, 

available at https://bsaefiling.fincen.treas.gov/docs/ 

XMLUserGuide_FinCENCTR.pdf (indicating CTRs 

required TINs to be reported); FinCEN, FinCEN 

Report of Foreign Bank and Financial Accounts 

(FBAR) Electronic Filing Requirements (Aug. 2021), 

p. 29, available at https://bsaefiling.

fincen.treas.gov/docs/XMLUserGuide_

FinCENFBAR.pdf (indicating FBARs require TINs to 

be reported). 

attorneys and non-attorneys alike when 

they perform the same functions in 

reportable transfers of residential real 

property. Furthermore, FinCEN expects 

that reporting of factual information 

about a real estate transfer would not 

implicate attorney-client privilege, in 

most cases. Also, the proposed rule 

provides that potential reporting 

persons, including attorneys, may enter 

into designation agreements with other 

real estate professionals described in the 

cascade, thereby passing the reporting 

obligation to another professional. 

E. Information To Be Reported 

1. Description of Information 

The proposed rule requires reporting 

persons to report and maintain records 

of certain information regarding 

reportable transfers. This includes 

certain information about any reporting 

persons, transferee entities, transferee 

trusts, signing individuals, transferors, 

the residential real property, and 

reportable payments. To a large degree, 

this information is similar to the 

transactional information required to be 

reported through traditional SARs. 

FinCEN emphasizes that Real Estate 

Reports, like SARs, would be housed in 

FinCEN’s secure BSA Portal and would 

not be accessible to the general public; 

FinCEN imposes strict limits on the use 

and re-dissemination of the data it 

provides to its law enforcement and 

other agency partners. 

The following discussion addresses in 

more detail some of the types of 

information the rule proposes to collect. 

1. Name and address: The proposed 

rule would collect the name and address 

of the principal place of business for 

reporting persons, transferee entities 

and transferee trusts, and transferors 

that are entities. For legal entities that 

are trustees of transferor trusts, the 

proposed rule would collect the place of 

trust administration. It would collect the 

name and a residential address for each 

individual who signed documents on 

behalf of the transferee (signing 

individuals), all beneficial owners of a 

transferee entity or transferee trust, 

individual transferors, and individuals 

who are trustees of transferor trusts. 

2. Citizenship: The proposed rule 

would collect citizenship information 

for all beneficial owners of a transferee 

entity or transferee trust. FinCEN 

proposes to collect this information to 

better analyze the volume of illicit funds 

entering the United States via entities or 

trusts beneficially owned by non-U.S. 

persons. FinCEN cannot do this type of 

broad analysis without collecting 

citizenship information. For instance, 

traditional SARs already collect this 

type of information and FinCEN was 

able to analyze SARs in aggregate to 

identify Russian investment in the U.S. 

economy, including the real estate 

sector, after the invasion of Ukraine.123

3. Unique identifying number: The 

proposed rule would collect a unique 

identifying number for each person 

(whether an individual or entity) whose 

name and address are required to be 

reported. For any individual for whom 

a unique identifying number would be 

collected, a unique identifying number 

can be an IRS Taxpayer Identification 

Number (TIN) or, if they do not have 

one, a foreign equivalent or a foreign 

passport number. For an entity, a 

unique identifying number can be an 

IRS TIN or, if the entity does not have 

one, a foreign equivalent or a foreign 

registration number. FinCEN chose to 

include the collection of TINs, such as 

Social Security Numbers (SSNs) or 

Employer Identification Numbers 

(EINs), for transferee entities, transferee 

trusts, beneficial owners of transferee 

entities and trusts, as well as for certain 

individuals signing documents on 

behalf of the transferee entity or trust 

during the residential real estate 

transfer, for a number of reasons. 

Reporting TINs provides law 

enforcement with the most efficient 

means to identify potential individuals 

involved in illicit activity and connect 

those persons to other transactions 

during investigations. Unlike names, 

addresses, and dates of birth, which can 

be common across multiple individuals, 

TINs are unique to a given individual, 

entity, or trust. Consequently, 

collections of TINs would cut down on 

flagging of individuals, entities, and 

trusts that are not the intended subject 

of an investigation, which will allow 

law enforcement to more efficiently 

pursue leads, conduct investigations, 

and identify illicitly acquired assets. 

FinCEN’s consultations with law 

enforcement have confirmed that law 

enforcement views access to TIN 

information as extremely helpful for 

streamlining investigative work. Law 

enforcement officials also indicated to 

FinCEN that it is relatively easy for 

illicit actors to create a false identity 

using a combination of name, address, 

and date of birth, and often do so, 

thereby impeding an investigation from 

the outset. However, law enforcement 

noted that obtaining a false TIN was 

orders of magnitude more difficult and 

that collection of such information was 

therefore crucial to their investigations. 

Moreover, TINs are routinely collected 

in other BSA reports, including 

SARs.124 Accordingly, the proposed rule 

would collect TINs for certain persons 

involved in covered residential real 

estate transfers. 

4. Representative capacity of signing 

individual: For any signing individual, 

the proposed rule would collect a 

description of the capacity in which the 

individual is authorized to act as the 

signing individual for the transferee 

entity or transferee trust, such as 

whether the signing individual is a legal 

representative. Additionally, if the 

signing individual is acting in that 

capacity as an employee, agent, or 

partner, the proposed rule would collect 

the name of the employer, principal, or 

partnership. 

5. Information concerning payments: 

The proposed rule would collect the 

total consideration paid by all 

transferees regarding the residential real 

property, as well as the total amount 

paid by the transferee entity or trust, the 

method of each payment made by the 

transferee entity or transferee trust, the 

accounts and financial institutions used 

for each such payment, and, if the payor 

is anyone other than the transferee 

entity or transferee trust, the name of 

the payor on the payment form. With 

respect to the reporting of payments 

made by the transferee entity or 

transferee trust, the proposed rule seeks 

only to capture transactions where the 

greatest risk for money laundering is 

present—the movement of funds from 

accounts held or controlled by the 

transferee—and therefore exempts 

payments made from escrow or trust 


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125See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), pp. 27–28, 44–45, 

available at https://www.regulations.gov/comment/ 

FINCEN-2021-0007-0102; Transparency 

International U.S., ANPRM Comment (Feb. 18, 

2022), pp. 8–9, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0115; The FACT Coalition, ANPRM Comment (Feb. 

18, 2022), p. 4, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; California Reinvestment Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0126. 

126See American Land Title Association, ANPRM 

Comment (Feb. 17, 2022), pp. 2–4, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0020; American Escrow Association, 

ANPRM Comment (Feb. 18, 2022), pp. 13–17, 

available at https://www.regulations.gov/comment/ 

FINCEN-2021-0007-0124. 

127See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), pp. 27–28, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0102; Senator Sheldon Whitehouse, 

ANPRM Comment (Feb. 18, 2022), p. 4, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0118; The FACT Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 4, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; California Reinvestment Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0126; Coalition for Integrity, ANPRM Comment 

(Feb. 21, 2022), p. 4, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0127. 

128See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), pp. 27–28, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0102; Transparency International U.S., 

ANPRM Comment (Feb. 18, 2022), p. 9, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0115; Senator Sheldon Whitehouse, 

ANPRM Comment (Feb. 18, 2022), p. 4, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0118; The FACT Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 4, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; California Reinvestment Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0126; Coalition for Integrity, ANPRM Comment 

(Feb. 21, 2022), p. 4, available at https://

www.regulations.gov/comment/FINCEN-2021-0007- 

0127; Anti-Corruption Data Collective, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0153. 

129See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), pp. 27–28, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0102; Transparency International U.S., 

ANPRM Comment (Feb. 18, 2022), p. 9, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0115; The FACT Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 4, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0122; California Reinvestment Coalition, ANPRM 

Comment (Feb. 18, 2022), p. 3, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0126. 

130See Transparency International U.S., ANPRM 

Comment (Feb. 18, 2022), p. 9, available at https:// 

www.regulations.gov/comment/FINCEN-2021-0007- 

0115. 

131See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), pp. 44–45, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0102; American Land Title Association, 

ANPRM Comment (Feb. 17, 2022), p. 6, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0020; Anti-Corruption Data Collective, 

ANPRM Comment (Feb. 18, 2022), p. 3, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0153. 

132See Global Financial Integrity, ANPRM 

Comment (Feb. 17, 2022), pp. 44–45, available at 

https://www.regulations.gov/comment/FINCEN2021-0007-0102; American Escrow Association, 

ANPRM Comment (Feb. 18, 2022), p. 16, available 

at https://www.regulations.gov/comment/FINCEN2021-0007-0124. 

accounts held by the reporting person. 

Accordingly, the rule would require the 

reporting of payments made from other 

escrow or trust accounts, payments 

made into any escrow or trust accounts 

(to prevent illicit actors from trying to 

circumvent the reporting requirement), 

and payments sent directly from the 

transferee to the transferor. For example, 

if the payment path is (1) from the 

transferee’s bank account to a trust 

account, (2) from that trust account to 

an escrow account held by the reporting 

person, and then (3) from that escrow 

account to the transferor, the reporting 

person would need to provide the 

payment details of the first leg of the 

payment path. FinCEN notes that the 

reporting requirement would include 

the reporting of payments that the 

reporting person may consider as being 

paid outside of closing, such as a 

payment made between a buyer and 

seller through bank accounts located 

outside of the United States. FinCEN 

proposes to collect payment information 

because financial information is key to 

ensuring that the reports meet the 

threshold for being highly valuable to 

law enforcement. The payment 

information behind real estate transfers 

conducted in a manner that has been 

identified as high risk for money 

laundering would help support law 

enforcement investigations, as it can 

help connect beneficial owners to 

suspicious activity or funding sources. 

The collection of this information may 

also serve as a deterrent to those 

thinking about attempting to launder 

money through the U.S. residential real 

estate sector. 

6. Information concerning the 

residential real property: The proposed 

rule would require the address of the 

relevant property, if applicable, and a 

legal description, such as the section, 

lot, and block. This information would 

be reported for each property involved 

in the transfer. For example, if a fourunit town home is transferred to a 

transferee entity, all four addresses 

would be reported. 

Commenters on the 2021 ANPRM had 

diverse views on what information 

should or should not be collected under 

any potential regulation. Most 

commenters who thought that 

information should be collected were in 

favor of collecting transferee side 

information, including beneficial 

ownership information.125 However, 

other commenters said that only basic 

information that is already collected in 

the course of a closing about the 

transferee should be collected, and that 

requiring real estate professionals to 

collect beneficial ownership 

information would be too 

burdensome.126 FinCEN recognizes that 

while most of the information that 

would be collected under this proposed 

rule is provided to the most frequent 

reporters in the normal course of a 

closing, beneficial ownership 

information is not. FinCEN addressed 

concerns about the burden of collecting 

beneficial ownership information in this 

proposed rule by making sure that 

reporting persons can collect this 

information through a form, which is 

then certified by the transferee as being 

accurate, as will be discussed further 

below. 

Some commenters advocated for the 

collection of transferor information as 

well.127 FinCEN opted to collect only 

minimal transferor information, as the 

primary party of interest to law 

enforcement is the new owner of 

property that has been transferred in a 

manner that presents money laundering 

concerns. 

Commenters also mentioned 

collecting certain funds payment 

information,128 identifying PEPs 

involved in the transfer,129 beneficial 

ownership verification,130 information 

about the property being transferred,131

and any representatives of the transferee 

in the transfer.132 Elements of each of 

these are included in the proposed rule, 

except for PEP identification and 

beneficial owner verification, which 

FinCEN believes would require 

reporting persons to undertake 

independent research that would 

represent a dramatically increased 

burden, compared to collecting 

information from the transferee. 

2. Collection of Information 

FinCEN expects that the reporting 

person will have access to some, but not 

all, of the reportable information in the 

normal course of business. In particular, 

the reporting person may not have on 

hand the identifying information for the 

beneficial owners of the transferee 

entity or trust. The proposed rule 

therefore includes guidelines for how 

the reporting person should collect this 

information. 

The reporting person may collect the 

information directly from a transferee or 

a representative of the transferee, so 

long as the person certifies that the 


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133See 31 CFR 1010.230. 

134 31 U.S.C. 5318(a)(7) (which allows the 

Secretary to prescribe appropriate exemptions). 

135 31 CFR 1010.205(b)(1)(v). 

information is correct to the best of their 

knowledge. The certification may be 

collected using a form that may be 

provided by FinCEN, similar to the one 

provided with respect to the CDD Rule, 

which requires certain financial 

institutions collect beneficial ownership 

information from legal entity customers, 

or the reporting person may incorporate 

a certification into a document of their 

own design, including existing closing 

documents used by the reporting 

person.133

FinCEN could have proposed that 

reporting persons must personally 

conduct extensive research to verify 

beneficial ownership and other 

information provided to them, but is 

proposing the use of a certification due 

to its comparative lesser burden on 

filers. The use of certifications will also 

ensure uniform information collection 

standards are met across reportable 

transfers. Any certification form signed 

in the course of a transfer must be 

retained by the reporting person for five 

years. Although the reporting person 

may rely on the information collected 

from other parties as described above, 

the reporting person may not report 

information that the reporting person 

knows, suspects, or has reason to 

suspect is inaccurate or incomplete. As 

an alternative, FinCEN considered 

requiring reporting persons to undertake 

the verification of the information to be 

reported. However, FinCEN is instead 

proposing the use of a written 

certification form because this approach 

would present a lower burden on 

reporting persons when compared with 

a scenario in which they would 

independently verify information 

through their own research. Allowing 

parties to the transfer and their 

representatives to provide information 

directly, while attesting to its accuracy, 

will reduce time and resources 

expended by reporting persons while 

ensuring that the most accurate 

information is provided to law 

enforcement and that compliance can be 

monitored more effectively. The 

proposed rule would also allow the 

flexibility of the reporting person 

collecting the information by any other 

means, so long as the transferee’s 

representative (whether a signing 

individual or other type of 

representative) attests to its accuracy. 

F. Filing Procedures 

A reporting person must 

electronically file a Real Estate Report 

with FinCEN, following the reporting 

form’s instructions, no later than 30 

calendar days after the date on which 

the transferee entity or transferee trust 

receives the ownership interest in the 

residential real property. This is to 

ensure that reporting of time sensitive 

information about residential real estate 

closings and settlements is not unduly 

delayed. 

G. Records Retention 

Reporting persons must maintain a 

copy of any Real Estate Report they have 

filed and any certifications as to the 

identities of the beneficial owner(s) of a 

transferee entity or transferee trust for 

five years from the date of filing and 

keep them available at all times for 

inspection as authorized by law. 

All parties to a designation must 

similarly retain a copy of the agreement 

for five years from the date of signing 

and keep it available at all times for 

inspection as authorized by law. 

H. Exemptions 

The proposed rule would exempt 

reporting persons and Federal, State, 

local, or Tribal government authorities 

from the confidentiality provision in 31 

U.S.C. 5318(g)(2) prohibiting the 

disclosure to any person involved in the 

transaction that the transaction has been 

reported.134 As noted above, FinCEN 

recognizes that financial institutions 

who file SARs are subject to restrictions 

prohibiting the disclosure of the 

existence of the SAR to any of its 

subjects. However, this would not be 

feasible with the proposed Real Estate 

Report, as reporting persons would need 

to collect information directly from the 

subjects of the Report. Moreover, all 

parties to a non-financed residential real 

estate transfer that is subject to the 

proposed rule would already be aware 

that a report would be filed, given that 

such filing is non-discretionary, 

rendering confidentiality unnecessary. 

Furthermore, persons involved in real 

estate closings and settlements are 

exempt from the requirement to 

maintain an AML program 

requirement.135 For the reasons 

discussed earlier, that exemption will 

continue to apply to persons involved in 

real estate closings and settlements 

under the proposed rule. However, the 

exemption does not apply to reporting 

persons who are financial institutions 

otherwise required to establish an AML/ 

CFT program under FinCEN’s 

regulations. 

V. Final Rule Effective Date 

FinCEN is proposing an effective date 

of one year from the date the final rule 

is issued. A one-year effective date is 

intended to provide real estate 

professionals with sufficient time to 

review and prepare for implementation 

of the rule. FinCEN solicits comment on 

the proposed effective date for this rule. 

VI. Request for Comment 

FinCEN seeks comments on the 

questions listed below, but invites any 

other relevant comments as well. 

FinCEN encourages commenters to 

reference specific question numbers to 

facilitate FinCEN’s review of comments. 

1. What would the cost and hour 

burden of filing reports as detailed by 

this NPRM be for your profession? 

Please quantify, if possible, the 

anticipated burden this proposed rule 

would represent for the designated 

reporting persons. 

2. What percentage of residential real 

property transfers involve transfers to 

the types of entities described in the 

regulation as ‘‘transferee entities’’ and 

‘‘transferee trusts’’? 

3. What are the benefits and 

drawbacks to having a cascading 

hierarchy of reporting persons, as 

proposed? 

4. Will real estate professionals know 

or be able to discover the other real 

estate professionals performing 

functions in the closing process as laid 

out by the reporting cascade? 

5. Please provide feedback on the 

order of the proposed cascading 

reporting hierarchy. Does it include 

those real estate professionals who are 

most able to obtain and report the 

required information? Should any 

person involved in real estate closings 

and settlements present in the proposed 

cascade be removed? Added? Why? 

6. Are there potential loopholes in the 

proposed cascading reporting order? If 

so, how might they be overcome? For 

example, would specifically adding real 

estate agents and brokers close any 

reporting gaps? 

7. How likely are potential reporting 

persons to enter into designation 

agreements? Are there any particular 

challenges associated with entering into 

such an agreement? With documenting 

that such an agreement has been made? 

8. What are typical costs to close a 

residential real estate deal? What 

percentage of the sale price do these 

costs typically represent? 

9. What sort of due diligence is 

normally conducted, before or at closing 

for residential properties, regarding (i) 

the parties to a transfer; (ii) the source 

of funds for any transfer; and (iii) other 

key aspects of the transfer? 

10. What sort of existing 

recordkeeping or reporting 

requirements, unrelated to BSA 


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compliance, exist for non-financed 

residential real estate transfers? If any, 

what information must be recorded or 

reported, to whom, and for how long? 

What entity provides oversight? 

11. Should FinCEN limit the scope of 

any final rule to only non-financed 

transfers? What are the benefits and 

drawbacks to doing so? 

12. What adjustments, if any, should 

be made to the proposed definition of a 

reportable transfer? 

13. Should the rule except transfers 

that involve a qualified extension of 

credit to ‘‘all’’ transferees or to ‘‘any’’ 

transferee? 

14. What percentage of residential real 

estate transfers are non-financed? 

15. What adjustments, if any, should 

be made to the proposed definition of 

‘‘residential real property’’? Is the 

description of such property as 

‘‘designed principally for occupancy by 

one to four families’’ a clear industry 

standard? 

16. Are the beneficial owners of 

transferee entities or transferee trusts 

routinely identified by some participant 

in the transfer? 

17. What information, if any, should 

be reported about transfers involving 

tax-exempt organizations? 

18. What do persons involved in real 

estate closings and settlements do if 

they have any suspicions about a 

transfer of residential real property, 

customer, or the payments supporting 

the transfer? 

19. What roles do attorneys play in 

non-financed sales and non-sale 

transfers of residential real estate? Are 

there attorney-client privilege concerns 

with reporting these transfers, as 

proposed in the rule? If so, what is the 

basis for these concerns? 

20. Please describe the purpose of the 

use of an escrow account, trust account, 

or lawyers’ trust account in a real estate 

transfer. Do these accounts present 

money laundering concerns? Is the use 

of these accounts sufficiently captured 

in the proposed rule? Are there 

attorney-client privilege concerns 

around the use of lawyer’s trust 

accounts, and if so, what is the basis for 

these concerns? 

21. How are opinion letters used in 

the real estate closing and settlement 

process? Are there attorney-client 

privilege concerns around the use of 

opinion letters? If so, what is the basis 

for those concerns? 

22. Are there other attorney-client 

privilege concerns, such as around 

attorneys acting as settlement agents, 

drafting or filing deeds, or reporting any 

of the required information? What is the 

basis for those concerns? 

23. How do factors related to parties 

to the transfer, the payments related to 

the transfer, and the property itself bear 

on money laundering risk assessment? 

What kinds of transfers and customers 

are highest and lowest risk? How are 

those risks mitigated and what are the 

associated costs of that mitigation? 

24. Is it possible to estimate the extent 

to which residential real property values 

are affected by money laundering 

through real estate? 

25. Please provide comments on the 

proposed definition of transferee entity. 

26. Please provide comments on the 

proposed definition of transferee trust. 

27. Please provide comments on the 

proposed definition of beneficial owners 

of transferee entities. 

28. Please provide comments on the 

proposed definition of beneficial owners 

of transferee trusts. 

29. Please provide comments on any 

other definition in the proposed rule. 

30. Please provide comments on the 

proposed coverage of transfers of 

residential real estate to transferee 

entities and transferee trusts, including 

the benefits and drawbacks to covering 

each. 

31. Are there any areas within the 

geographic scope of this proposed rule 

that have unique customs or 

requirements that should be taken into 

account? 

32. Please comment on how aware 

real estate professionals involved in 

residential real property transfers are of 

other categories of real estate 

professionals that may be involved in a 

given closing or settlement. 

33. What are the benefits of the rule 

as proposed? 

34. Is the information FinCEN 

proposes to be reported regarding nonfinanced residential real estate transfers 

to transferee entities and transferee 

trusts sufficient, over- or underinclusive? What information should be 

added or removed and why? 

35. Should FinCEN ask for citizenship 

information of beneficial owners of 

transferee entities and transferee trusts? 

Why or why not? 

36. Is the information FinCEN 

proposes to be reported regarding 

reporting persons sufficient, over- or 

under-inclusive? What information 

should be added or removed and why? 

37. Please provide comments on the 

proposed collection of TINs for 

transferors and transferees and their 

beneficial owners. 

38. Is the information FinCEN 

proposes to be reported regarding 

signing individuals sufficient, over- or 

under-inclusive? What information 

should be added or removed and why? 

39. Is the information FinCEN 

proposes to be reported regarding 

transferors sufficient, over- or underinclusive? What information should be 

added or removed and why? 

40. Is the information FinCEN 

proposes to be reported regarding the 

description of the transferred property 

sufficient, over- or under-inclusive? 

What information should be added or 

removed and why? 

41. Is the information FinCEN 

proposes to be reported regarding 

payments sufficient, over- or underinclusive? What information should be 

added or removed and why? Would it 

be useful to reporting persons to have 

space on the reporting form to explain 

or discuss suspected or observed 

suspicious activity? 

42. Should FinCEN require 

information regarding additional 

information about the source of funds 

for covered residential real estate 

transfers? How would or should 

reporting persons go about ascertaining 

source of funds information? 

43. How should FinCEN consider real 

estate transfers to foreign trusts and 

charitable trusts? Foreign non-profits? 

Do these present sufficient money 

laundering risk that they should be 

covered by any final rule? Why or why 

not? 

44. If program or other requirements 

were limited to purchases above a 

certain price threshold, how would this 

affect: (i) the burden of implementing 

such potential rules; and (ii) the utility 

of such potential rules for addressing 

money laundering issues in the real 

estate market? 

45. What are the key benefits for a 

reporting person, if any, assuming 

issuance of the rules? 

46. Please list any legislative, 

regulatory, judicial, corporate, or 

market-related developments that have 

transpired since FinCEN issued the 

2021 ANPRM that you view as relevant 

to FinCEN’s current proposed issuance 

of AML regulations. 

47. Are there particular concerns that 

small businesses may have regarding the 

implementation of this proposed rule? 

48. What would be the value of 

covering partially non-financed 

residential real estate transfers? What 

level of financing would be sufficient to 

alleviate that concern? 

49. FinCEN understands that for 

certain residential real estate transfers 

involving multiple investors, such as 

with unregistered PIVs, or large 

operating companies, there may be 

multiple financing methods involved in 

a single residential transfer. Please 

detail in the context of the proposed 

rule how due diligence checks on 

partially financed residential real estate 

transfers involving multiple entities 


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12444 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

136See infra Section VII.B. 

137Pursuant to its UMRA-related analysis, 

FinCEN has not anticipated material changes in 

expenditures for State, local, and Tribal 

governments, but because the proposed rule would 

impose new reporting and recordkeeping 

requirements on select entities in the private sector 

in connection with certain residential property 

transfers, FinCEN considers expenditures these 

private entities may incur as part of the regulatory 

impact in its assessment below. 

138See The White House, United States Strategy 

on Countering Corruption (Dec. 6, 2021), available 

at https://www.whitehouse.gov/wp-content/ 

uploads/2021/12/United-States-Strategy-onCountering-Corruption.pdf. 

139See Financial Action Task Force, The FATF 

Recommendations (Feb. 2012; last updated Nov. 

2023), available at https://www.fatf-gafi.org/en/ 

publications/Fatfrecommendations/Fatfrecommendations.html; see also Financial Action 

Task Force, United States Mutual Evaluation Report 

(Dec. 2016), p.1., available at https://www.fatfgafi.org/content/dam/fatf-gafi/mer/MER-UnitedStates-2016.pdf.coredownload.inline.pdf. 

140See Section VII.A. 141See Section VII.B. 142See Section VII.C. 143See Section VII.D. 144See Section VII.E. 145See Section VII.F. 146Executive Order 12866 (Sept. 30, 1993), 

section 3(f)(1); see also Section VII.A.4. 147Broadly, the anticipated economic value of a 

proposed rule can be measured by the extent to 

which it might reasonably be expected to resolve or 

mitigate the economic problems identified by such 

review. 

148Organization for Economic Co-Operation and 

Development (OECD), Report on Tax Fraud and 

Money Laundering Vulnerabilities in the Real 

Estate Sector (2007), available at https://

www.oecd.org/ctp/exchange-of-tax-information/ 

42223621.pdf (finding that real estate is a preferred 

choice of criminals for hiding ill-gotten gains and 

that tax fraud schemes are often closely linked with 

these activities). 

may differ from due diligence checks on 

fully financed residential real estate 

transfers multiple entities. 

50. This NPRM is focused on 

residential real estate. Do the same 

considerations for type of purchaser 

covered and professionals required to 

report apply to the commercial real 

estate sector? 

VII. Regulatory Analysis 

This regulatory impact analysis (RIA) 

evaluates the anticipated effects of the 

proposed rule in terms of its expected 

costs and benefits to affected parties, 

among other economic considerations, 

as required by Executive Orders 12866, 

13563, and 14094 (E.O. 12866 and its 

amendments).136 This RIA also includes 

assessments of the potential economic 

impact on small entities pursuant to the 

Regulatory Flexibility Act (RFA) and 

reporting and recordkeeping burdens 

under the Paperwork Reduction Act of 

1995 (PRA), as well as analysis required 

under the Unfunded Mandates Reform 

Act of 1995 (UMRA).137

As discussed in greater detail below, 

the proposed rule is expected to 

promote national security objectives 138

and enhance compliance with 

international standards 139 by improving 

law enforcement’s ability to identify the 

natural persons associated with 

transactions conducted in the U.S. 

residential real estate sector and thereby 

diminish the ability of corrupt and other 

illicit actors to launder their proceeds 

through real estate purchases in the 

United States. More specifically, the 

collection of the proposed streamlined 

SARs, Real Estate Reports, in a 

repository that would be readily 

accessible to law enforcement is 

expected to increase the efficiency with 

which resources can be utilized to 

identify such natural persons, or 

beneficial owners, when they have 

conducted non-financed purchases of 

residential real property using legal 

entities or trusts. 

The following RIA first describes the 

economic analysis FinCEN undertook to 

inform its expectations of the proposed 

rule’s impact and burden.140 This is 

followed by certain pieces of additional 

and, in some cases, more specifically 

tailored analysis as required by E.O. 

12866 and its amendments,141 the 

RFA,142 the UMRA,143 and the PRA,144

respectively. Requests for comment 

related to the RIA—regarding specific 

findings, assumptions, or expectations, 

or with respect to the analysis in its 

entirety—can be found in the final 

subsection 145 and have been previewed 

and cross-referenced throughout the 

RIA. 

A. Assessment of Impact 

This proposed rule has been 

determined to be a ‘‘significant 

regulatory action’’ under Section 3(f) of 

Executive Order 12866 because it may 

raise legal or policy issues. The 

following assessment indicates that the 

proposed rule may also be considered 

significant under Section 3(f)(1), as the 

proposed rule is expected to have an 

annual effect on the economy of $200 

million or more.146 Consistent with 

certain identified best practices in 

regulatory analysis, the economic 

analysis conducted in this section 

begins with a review of FinCEN’s broad 

economic considerations, identifying 

the relevant market failures (or 

fundamental economic problems) that 

demonstrate the need or otherwise 

animate the impetus for the policy 

intervention as proposed.147 Next, the 

analysis turns to details of the current 

regulatory requirements and the 

background of market practices against 

which the proposed rule would 

introduce changes and establishes 

baseline estimates of the number of 

entities and residential real property 

transactions FinCEN expects could be 

affected in a given year. The analysis 

then briefly reviews the content of the 

proposed rules with a focus on the 

specifically relevant elements of the 

proposed definitions and requirements 

that most directly inform how FinCEN 

contemplates compliance with the 

proposed requirements would be 

operationalized. Next, the analysis 

proceeds to outline the estimated costs 

to the respective affected parties that 

would be associated with such 

operationalization. Finally, the analysis 

concludes with a brief discussion of 

certain alternative policies FinCEN 

considered and could have proposed, 

including an evaluation of the relative 

economic merits of each against the 

expected value of the rule as proposed. 

1. Broad Economic Considerations 

The proposed rule principally 

addresses two broad problems. First, is 

the problematic use of the United States’ 

residential real estate market to facilitate 

money laundering and illicit activity. 

Second, and related, is the difficulty of 

determining who beneficially owns 

legal entities or trusts that may engage 

in non-financed transactions, either 

because this data is not available to law 

enforcement or access is not sufficiently 

centralized to be meaningfully usable 

for purposes of market level riskmonitoring or swift investigation and 

prosecution. The second problem 

contributes to the first, making money 

laundering and illicit activity through 

residential real property more difficult 

to detect and prosecute, and thus more 

likely to occur. Although FinCEN is 

unable to quantify the economic 

benefits of the proposed rule, FinCEN 

expects that the proposed rule would 

generate benefits by mitigating those 

two problems. In other words, FinCEN 

expects that the proposed rule could 

make law enforcement investigations of 

illicit activity and money laundering in 

residential real estate less costly and 

more effective, and it would thereby 

generate value in the reduction of social 

costs associated with such activity. 

a. The Problem of Money Laundering 

and Illicit Activity via Residential Real 

Property 

First, and most significantly, real 

estate money laundering can facilitate a 

broad range of illicit activity, and such 

activity entails significant social costs. 

For example, crimes such as tax evasion 

deprive governments of funds that could 

otherwise be used for public services or 

infrastructure investment.148 Other 

crimes such as financial fraud deprive 


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149See, e.g., John McDowell and Gary Novis, 

‘‘The Consequences of Money Laundering and 

Financial Crime,’’ Economic Perspectives: An 

Electronic Journal of the U.S. Department of State,’’ 

Focus (May 2001), available at https://

www.google.com/url?sa=t&rct=j&q=&esrc=s&

source=web&cd=&ved=2ahUKEwi24f3B5d6AA

xUvhIkEHcC4DpIQFnoECBMQAQ&url=

https%3A%2F%2Fwww.hsdl.org%2

F%3Fview%26did%3D3549&usg=AOvVaw2pg7gw

7lpKPhWiw1Nq9mgF&opi=89978449. 

150U.S. Department of Justice, Bureau of Justice 

Statistics, ‘‘Costs of Crime,’’ available at https://

bjs.ojp.gov/costs-crime. 151For an example in the context of money 

laundering via commercial real estate, see, e.g., 

Casey Michel, ‘‘A Ukrainian Oligarch Bought a 

Midwestern Factory and Let it Rot. What Was 

Really Going On?’’ Politico (Oct. 17, 2021), 

available at https://www.politico.com/news/ 

magazine/2021/10/17/ukrainian-oligarchmidwestern-factory-town-dirty-money-americanheartland-michel-kleptocracy-515948 (detailing 

how a corrupt Ukrainian tycoon laundered 

hundreds of millions of dollars by purchasing vast 

stretches of property in an economically depressed 

community in rural Illinois); see also U.S. 

Department of Justice, Press Release, Justice 

Department Seeks Forfeiture of Two Commercial 

Properties Purchased with Funds Misappropriated 

from PrivatBank in Ukraine (Aug. 6, 2020), 

available at https://www.justice.gov/opa/pr/justicedepartment-seeks-forfeiture-two-commercialproperties-purchased-funds-misappropriated 

(announcing forfeiture actions involving the same 

Ukrainian oligarch who, the DOJ alleged, purchased 

hundreds of millions of dollars in real estate and 

businesses across the country). 

152For an example of this principle applied to 

capital asset pricing, see, e.g., Eugene F. Fama, 

‘‘Efficient Capital Markets: A Review of Theory and 

Empirical Work,’’ The Journal of Finance, vol. 25, 

no. 2 (1970), pp. 383–417, available at https://

doi.org/10.2307/2325486. 

153See e.g., European Parliamentary Research 

Service, ‘‘Understanding money laundering through 

real estate transactions’’ (Feb. 2019), p. 7, available 

at https://www.europarl.europa.eu/RegData/etudes/ 

BRIE/2019/633154/EPRS_BRI(2019)633154_EN.pdf 

(finding that ‘‘[d]istortions of real estate prices and 

the concentration on limited sectors may have an 

impact beyond those areas and lead to increases in 

real estate prices, thus pricing people with legal 

sources of funds out of the market and reduc[ing] 

housing affordability, something that has been 

witnessed in several cities in both developed and 

developing countries . . . resulting in . . . 

displacement of less affluent households’’). 

154For a general description and examples of 

product bundling, see, e.g., William James Adams 

and Janet L. Yellen, ‘‘Commodity Bundling and the 

Burden of Monopoly,’’ The Quarterly Journal of 

Economics, vol. 90, no. 3 (1976), pp. 475–98; see 

also Yongmin Chen, ‘‘Equilibrium Product 

Bundling,’’ The Journal of Business, vol. 70, no. 1 

(1997), pp. 85–103. 

155See U.S. Department of the Treasury, National 

Money Laundering Risk Assessment (Feb. 2022), p. 

58, available at https://home.treasury.gov/system/ 

files/136/2022-National-Money-Laundering-RiskAssessment.pdf. Treasury explained in its 2022 

National Money Laundering Risk Assessment, 

‘‘[g]iven the relative stability of the real estate sector 

as a store of value, the opacity of the real estate 

market, and gaps in industry regulation, the U.S. 

real estate market continues to be used as a vehicle 

for money laundering and can involve businesses 

and professions that facilitate (even if unwittingly) 

acquisitions of real estate in the money laundering 

process’’ (emphasis added). 

victims of their property, chilling 

legitimate investment and business 

activity that can yield economic 

benefits. Crimes involving various forms 

of corruption can hinder economic 

development and discourage legitimate 

businesses from operating in affected 

areas.149 More generally, certain direct 

and indirect costs of crime include: 150

• funding that must be provided by 

local, state, tribal, territorial, and 

Federal Governments to support law 

enforcement, the judiciary, and 

correctional services; 

• financial losses sustained by crime 

victims, such as lost money and stolen 

or damaged property; 

• physical, psychological, and longterm financial harm incurred by crime 

victims and their families, lost 

productivity and wages, and lower 

quality of life as a result of 

victimization; and 

• heightened fear of crime, reduced 

ability to stem blight, loss of commercial 

and other investment, and increased 

burden on social service organizations 

in local communities.151

In addition to facilitating crime and 

its associated costs, money laundering 

creates distinct economic problems in 

the real estate markets in which it 

occurs. When a market is economically 

efficient, the public may rely upon the 

price(s) at which transactions occur to 

convey meaningful information,152 in 

some cases including information about 

buyers’ and sellers’ valuations. Such 

information enables people to make 

optimal allocation choices—whether to 

participate in a given market, what 

investments to make, or how much to 

produce, for example. In this setting, 

money laundering creates price 

distortion by adding noise to the price 

signal. When price distortion occurs, the 

information necessary to make optimal 

decisions may become difficult or 

impossible to decipher from observable 

market behavior. Misallocations of 

goods and services that harm both 

producers and consumers may ensue 

and, in the extreme, markets can break 

down. Some evidence that this occurs in 

the real estate market has been 

documented.153

One way to think about how this 

noise is introduced in the residential 

real property market is to consider a 

property transaction by which money is 

laundered as a bundled good.154 This 

would imply that the observable price at 

which the residential real property is 

transferred does not reflect simply the 

buyer’s private valuation of the 

property, but their willingness to pay for 

money laundering services as well. This 

implicit bundling can lead to economic 

inefficiencies in both the number of and 

counterparties with whom trades occur 

and the prices at which they occur. 

For example, if a residential real 

property seller is unaware that they are 

being compensated for both the transfer 

of their property as well as for their 

provision of money laundering services, 

the price at which they agree to the 

transfer will be inefficiently low.155 In 

the case where such a seller is unwilling 

to provide money laundering services at 

any price, this would have caused the 

bundled price reflecting their private 

valuations to be infinite, and as such no 

transaction would have occurred. 

Another kind of allocative inefficiency 

could occur if the seller is unable to 

distinguish between a buyer’s price that 

reflects a bundled value versus one that 

does not. Allocative efficiency requires 

that a good be traded with the 

counterparty whose willingness and 

ability to pay is highest. Therefore, in a 

case where a buyer with money 

laundering intent and a buyer with none 

both offer to transact at the same price, 

allocative efficiency would require the 

seller to trade their residential real 

property with the buyer without money 

laundering intent (because their private 

valuation of the property exceeds that of 

the money launderer by the proportion 

of the money launderer’s bid that 

reflects their willingness to pay for 

money laundering services instead). In 

cases where this inability to distinguish 

between buyers of a bundled product 

versus genuine homebuyers leads to 

extreme allocative inefficiency, buyers 

without money laundering intent can be 

‘‘crowded out’’ of the residential real 

property market to deleterious effect. 

As a consequence of transactions 

occurring that inefficiently allocate 

housing, or transactions occurring at 

prices that are misaligned with 

equilibrium market prices, money 

laundering through residential real 

property purchases can have disparate 

effects on regional economic conditions 

depending on the nature of pre-existing 

housing supply-demand imbalances in a 

specific geographic market. For 

example, by creating additional demand 

in markets where the quantity of 

housing demanded already exceeds 

local supply, transactions for purposes 

of money laundering can exert 

additional upward pressure on home 

prices. 

While money laundering may appear 

to be concentrated in high-end real 

estate properties and luxury markets, its 

spillover effects, if left unchecked, 

could in some instances 

disproportionately affect low-income 

and otherwise high-risk communities, 

undermining other economic policy 

objectives aimed at helping these 


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156See, e.g., Money Laundering in Real Estate, 

Conference Report by the Terrorism, Transnational 

Crime and Corruption Center at George Mason 

University (Mar. 25, 2018), available at 

traccc.gmu.edu/wp-content/uploads/2020/09/2018- 

MLRE-Report_0.pdf. 157 ‘‘Anti Money Laundering and Economic 

Stability,’’ International Monetary Fund Finance & 

Development Magazine (Dec. 2018), availability at 

https://www.imf.org/en/Publications/fandd/issues/ 

2018/12/imf-anti-money-laundering-and-economicstability-straight. 158See, e.g., Final Report: Commission of Inquiry 

into Money Laundering in British Columbia, Cullen 

Commission (June 2022), p. 772, available at 

https://cullencommission.ca/files/reports/

CullenCommission-FinalReport-Full.pdf. 

(highlighting structural and regulatory factors as 

incentives for using real estate to launder funds, 

including ‘‘minimal reporting of suspicious 

transactions . . . on the part of real estate 

professionals’’), citing Transparency International, 

‘‘Doors Wide Open: Corruption and Real Estate in 

Four Key Markets’’ (2017), pp. 24, available at 

https://images.transparencycdn.org/images/2020- 

Report-Real-estate-data-Shining-a-light-on-thecorrupt.pdf; Mohammed Ahmad Naheem, ‘‘Money 

Laundering and Illicit Flows from China—The Real 

Estate Problem,’’ Journal of Money Laundering 

Control (2017), p. 23, available at https://

www.emerald.com/insight/content/doi/10.1108/ 

JMLC-08-2015-0030/full/html. 

159See Financial Action Task Force, Guidance for 

a Risk Based Approach: Real Estate Sector (July 

2022), pp. 17, 29, available at https://www.fatfgafi.org/content/dam/fatf-gafi/guidance/RBA-RealEstate-Sector.pdf.coredownload.pdf (‘‘[d]isparities 

with rules surrounding legal structures across 

countries means property can often be acquired 

abroad by shell companies or trusts based in 

secrecy jurisdictions, exacerbating the risk of 

money laundering.’’ International bodies, such as 

the FATF, have found that ‘‘[s]uccessful AML/CFT 

supervision of the real estate sector must contend 

with the obfuscation of true ownership provided by 

legal entities or arrangements[.]’’). 

160This activity is consistent with a 

representativeness heuristic bias. See Amos Tversky 

and Daniel Kahneman, ‘‘Judgment under 

Uncertainty: Heuristics and Biases: Biases in 

judgments reveal some heuristics of thinking under 

uncertainty,’’ Science, Vol. 185, no. 4157 (1974), 

pp. 1124–1131. 

161Louise Shelley, ‘‘Money Laundering into Real 

Estate,’’ in Convergence: Illicit Networks and 

National Security in the Age of Globalization, 

(Michael Miklaucic and Jacqueline Brewer eds., 

National Defense University Press 2013), p. 140 

(noting how property purchased by money 

launderers that is left vacant may be allowed to 

decay so ‘‘criminal investors can subsequently buy 

neighboring properties at depressed costs, thereby 

increasing their territorial influence’’); see also 

Final Report: Commission of Inquiry into Money 

Laundering in British Columbia, Cullen 

Commission (June 2022), p. 774, available at 

https://cullencommission.ca/files/reports/

CullenCommission-FinalReport-Full.pdf (noting the 

ability of criminal actors to develop influence and 

power at a local level, such as in cases where a large 

real estate portfolio is owned in a small town or 

neighborhood). 

162Office of Management and Budget, Circular A– 

4 (Nov. 9, 2023), available at https://

www.whitehouse.gov/wp-content/uploads/2023/11/ 

CircularA-4.pdf. 

163 5 U.S.C. 603(b)(5). 

communities.156 As such, money 

laundering through real estate—though 

it represents only a relatively small 

percentage of GDP and takes place in a 

minority of real estate transfers—can 

catalyze significant market failures 

when concentrated in areas that are 

economically distressed or with low 

housing volume. In some cases, this 

distortion can contribute to housing 

bubbles in affected areas, which may 

eventually burst and lead to economic 

instability in impacted regions.157

b. The Problem of High Search Costs 

The U.S. real estate sector is 

considered an attractive target for 

money laundering due to several factors 

that make it conducive to stashing and 

obscuring the origin of illicit funds.158

One significant factor is the opacity of 

beneficial ownership in non-financed 

real estate transfers to legal entities and 

trusts. Because these transfers can serve 

to obscure the identities of beneficial 

owners, they are acutely vulnerable to 

exploitation by illicit actors.159 This 

mechanism to obfuscate the origin of 

funds and associated natural persons 

can effectively incentivize the marginal 

bad actor to seek new sources of illicit 

gain or exploit current sources with 

greater impunity. Opaque ownership in 

non-financed real estate transactions 

can be thought of in economic terms as 

effectively enhancing the liquidity of illgotten funds, thereby increasing the 

overall profitability of the original 

activity that engendered a need for 

money laundering. 

Similar economic problems exist 

when beneficial ownership information 

and real estate transaction information 

is available, but search costs to obtain 

that information to link a bad actor to 

illicit activity are so high as to frustrate 

or prevent investigative use. To the 

extent those costs mean that illicit 

activity is not subsequently investigated 

or prosecuted, this allows the individual 

to update their perceived probability of 

being detected or punished for that 

illicit activity downward. In a model 

where the expected value of illicit 

behavior is a function of both the 

expected payoff and the risk (or 

expected severity) of punishment, the 

problem of high search costs increases 

the expected value by decreasing the 

perceived risk of punishment. In cases 

where the expected value of a certain 

illicit behavior increases because the 

anticipated risk or severity of 

punishment decreased, potential illicit 

actors may be more likely to engage in 

such behavior. This updated belief can 

also lead an individual to mistakenly 

update their expectations about 

punishment risk or severity associated 

with other illegal activities.160 When 

this occurs, the coincidence of money 

laundering and other illicit activity may 

subsequently rise, which in turn may 

exacerbate the depressive effects of the 

original money laundering activities on 

the local economy in a self-reinforcing 

cycle.161

FinCEN assesses that a regulatory 

requirement to ensure consistent 

reporting of non-financed real estate 

transfers made to legal entities and 

trusts on a nationwide basis would 

reduce law enforcement search costs for 

such information, thereby facilitating 

law enforcement and national security 

agency efforts to combat illicit activity. 

In this manner the proposed policy is 

expected to directly address the two 

main problems considered and in so 

doing create economic value. 

2. Baseline and Affected Parties 

To assess the anticipated regulatory 

impact of the proposed rule, FinCEN 

took several factors about the current 

state of the residential real estate market 

into consideration. This is consistent 

with established best practices and 

certain requirements 162 that the 

expected economic effects of a proposed 

rule be measured against the status quo 

as a primary counterfactual. Among 

other factors, FinCEN’s economic 

analysis of regulatory impact considered 

the proposed rule in the context of 

existing regulatory requirements, 

relevant distinctive features of groups 

likely to be affected by the rule, and 

pertinent elements of current residential 

real estate market characteristics and 

common practices. Each of these 

elements is discussed in its respective 

subsection below. 

a. Regulatory Baseline 

While there are no specific Federal 

rules that would directly and fully 

duplicate, overlap, or conflict with the 

proposed rule,163 there are nevertheless 

components of the proposed 

requirements that mirror, or are 

otherwise consistent with, reporting and 

procedural requirements of existing 

FinCEN rules and orders, as well as 

those of other agencies. To the extent 

that a person would have previous 

compliance experience with these 

elements of the regulatory baseline, 

FinCEN expects that some costs 

associated with the proposed rule 

would be lower because the incremental 

changes in behavior from current 

practices would be smaller. FinCEN 

reviews the most proximate components 

from these existing rules and orders in 

greater detail below. 

i. Residential Real Estate GTOs 

Under the Residential Real Estate 

GTOs, title insurance companies are 

required to report: ‘‘(i) The dollar 


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164 85 FR 84104 (Dec. 23, 2020). 

165See discussion of Residential Real Estate 

GTOs, supra Section II.B.3; see also Section III.A. 

166See National Association of Realtors, ‘‘AntiMoney Laundering Voluntary Guidelines for Real 

Estate Professionals’’ (Feb. 16, 2021), p. 3, available 

at https://www.narfocus.com/billdatabase/ 

clientfiles/172/4/1695.pdf. 

167See supra Section III.B, which provides a full 

discussion on the differences between the 

information collected for the CTA and the 

information collected under the proposed rule, both 

in terms of the depth of the information collected 

and the context in which it is collected. 

168Reportable real estate for purposes of IRS 

Form 1099–S includes, for example, commercial 

and industrial buildings (without a residential 

component) and non-contingent interests in 

standing timber, which are not covered under the 

proposed rule. 

amount of the transaction; (ii) the type 

of transaction; (iii) information 

identifying a party to the transaction, 

such as name, address, date of birth, and 

tax identification number; (iv) the role 

of a party in the transaction (i.e., 

originator or beneficiary); and (v) the 

name, address, and contact information 

for the domestic financial institution or 

nonfinancial trade or business.’’ 164

As discussed above,165 FinCEN 

recognizes that the Residential Real 

Estate GTOs collect beneficial 

ownership information on certain nonfinanced purchases of residential real 

property by legal entities that meet or 

exceed certain dollar thresholds in 

select geographic areas. However, the 

Residential Real Estate GTOs are narrow 

in that they are temporary, locationspecific, and limited in the transactions 

they cover. The proposed rule is wider 

in scope of coverage and, if finalized, 

would collect additional useful and 

actionable information previously not 

available through the Residential Real 

Estate GTOs. As such, the proposed 

nationwide reporting framework for 

certain residential real estate transfers, if 

finalized, would replace the current 

Residential Real Estate GTOs. 

Some evidence suggests that, despite 

the restricted scope of reporting persons 

under the existing Residential Real 

Estate GTOs to title insurance carriers 

only, certain additional categories of 

real estate professionals may already be 

familiar—and have experience—with 

gathering the currently required 

reportable information. For example, 

FinCEN observes that in some markets 

presently under a Residential Real 

Estate GTOs, realtors and escrow agents 

often assist Direct Title Insurance 

Carriers with their reporting obligations 

despite not being subject to any formal 

reporting requirements themselves. 

Some may even have multiple years’ 

worth of guidance and informational 

support by the regional or national trade 

association of which they are a member 

in how best to facilitate and enable 

compliance with existing FinCEN 

requirements. For instance, in 2021, the 

National Association of Realtors advised 

that while ‘‘[r]eal estate professionals do 

not have any affirmative duties under 

the Residential Real Estate GTOs,’’ such 

entities should nevertheless expect that 

‘‘a title insurance company may request 

information from real estate 

professionals to help maintain its 

compliance with the Residential Real 

Estate GTOs. Real estate professionals 

are encouraged to cooperate and provide 

information in their possession.’’ 166

Thus, the historical Residential Real 

Estate GTOs’ attempt to limit the 

definition of reporting persons to Direct 

Title Insurance Carriers does not seem 

to have completely forestalled the 

imposition of time, cost, and training 

burdens on other real estate transfer 

related entities. As such, the proposed 

cascade approach might not mark a 

complete departure from current 

practices and the related burdens of 

Residential Real Estate GTO 

requirements, as they may already in 

some ways be functionally applicable to 

multiple prospective reporting persons 

in the proposed cascade. 

ii. BOI Reporting Rule 

Furthermore, following the enactment 

of the CTA, beneficial ownership 

information of certain legal entities is 

required to be submitted to FinCEN. 

However, as set out in the preamble to 

this proposed rule, the information 

needed to ascertain money laundering 

risk in the residential real estate sector 

differs in key aspects from what will be 

collected under the CTA, and, 

accordingly, the information collected 

under this proposed rule differs from 

that collected under the CTA.167

For example, FinCEN believes that a 

critical part of the proposed rule is that 

it would alert law enforcement to the 

fact that a real estate transfer vulnerable 

to a known money laundering typology 

has taken place. While beneficial 

ownership information collected under 

the CTA may be available, that 

information concerns the ownership 

composition of a given entity at a given 

point in time. As such reporting does 

not dynamically extend to include 

information on the market transactions 

of the beneficially owned legal entity, it 

would not alert law enforcement 

officials focused on reducing money 

laundering that any real estate transfer 

has been conducted, which includes 

those particularly vulnerable to money 

laundering such as non-financed 

transfers of residential property. 

Furthermore, the scope of entities that 

are the focus of the real estate rule is 

broader than the CTA, as certain entities 

such as most types of trusts are not 

covered by the CTA. Because legal trusts 

generally do not have an obligation to 

report beneficial ownership under the 

CTA, their incremental burden of 

compliance with the proposed Real 

Estate Report requirements may be 

moderately higher insofar as the 

activities of collecting, presenting, or 

certifying beneficial ownership 

information are less likely to have 

already been performed for other 

purposes. 

iii. CDD Rule 

The CDD Rule’s beneficial ownership 

requirement addressed a regulatory 

weakness that enabled persons looking 

to hide ill-gotten proceeds to potentially 

access the financial system 

anonymously. Among other things, 

covered financial institutions were 

required to identify and verify the 

identity of beneficial owners of legal 

entity customers, subject to certain 

exclusions and exemptions; beneficial 

ownership and identification therefore 

became a component of AML 

requirements. 

FinCEN is also aware that financial 

institutions subject to the CDD Rule are 

required to collect some beneficial 

ownership information from legal 

entities that establish new accounts. 

However, those entities do not 

necessarily also own real estate and 

financial institutions are not required to 

file a report of that beneficial ownership 

information with FinCEN. In addition, 

the proposed rule covers non-financed 

transfers of residential real estate that do 

not involve financial institutions 

covered by the CDD Rule. The rule 

would also collect additional 

information relevant to the real estate 

transfers that is currently not collected 

under the CDD Rule. 

iv. Other 

In the course of current residential 

real estate transactions, some parties 

that under the proposed rule might be 

deemed ‘‘transferors’’ already prepare 

and report portions of the proposed 

requisite information to other regulators. 

For example, the IRS collects taxpayer 

information through Form 1099–S on 

seller-side proceeds from reportable real 

estate transfers for a broader scope of 

reportable real estate transactions than 

the proposed rule.168 This information, 

however, is generally unavailable for 

one of the primary purposes intended 

by FinCEN’s proposed rule, as there are 

significant statutory limitations on the 

ability of the IRS to share such 


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169See generally 26 U.S.C. 6103 (covering 

confidentiality and disclosure of returns and return 

information). 

170 IRS, Instructions for Form 1099–S, available at 

https://www.irs.gov/instructions/i1099s; 26 CFR 

1.6045–4(e). 

171 Id. 

172See Matthew Collin, Florian Hollenbach, and 

David Szakonyi, ‘‘The impact of beneficial 

ownership transparency on illicit purchases of U.S. 

property,’’ Brookings Global Working Paper #170, 

(Mar. 2022), p. 14, available at https://

www.brookings.edu/wp-content/uploads/2022/03/ 

Illicit-purchases-of-US-property.pdf. 

173Zillow, Transaction and Assessment Database 

(ZTRAX), available at https://www.zillow.com/ 

research/ztrax/. 

174See Section IV.B.2; see also infra proposed 

amendment 31 CFR 1031.230. 

175FinCEN notes that while most trusts are not 

reporting companies under the BOI Reporting Rule, 

a reporting company would be required to report a 

beneficial owner that owned or controlled the 

reporting company through a trust. 

176See Section VII.A.2.b.i.1. 

177FinCEN notes that while the U.S. Census 

Bureau does produce annual statistics on the 

population of certain trusts (NAICS 525—Funds, 

Trusts, and Other Financial Vehicles), such trusts 

are unlikely to be affected by the proposed rule and 

thus their population size is not informative for this 

analysis. 

178See, e.g., Cristian Badrinza and Tarun 

Ramadorai, ‘‘Home away from home? Foreign 

demand and London House prices,’’ Journal of 

Financial Economics 130 (3) (2018), pp. 532–555, 

available at https://doi.org/10.1016/j.jfineco.2018.

07.010; see also Caitlan S. Gorback and Benjamin 

J. Keys, ‘‘Global Capital and Local Assets: House 

Prices, Quantities, and Elasticities,’’ Technical 

Report, National Bureau of Economic Research 

(2020), available at https://www.nber.org/papers/ 

w27370. 

information with federal law 

enforcement or other federal 

agencies.169 In addition to these 

statutory limitations on IRS disclosure 

of taxpayer information, details about 

the buyer’s beneficial ownership (the 

focus of the proposed rule) largely fall 

outside the scope of transaction 

information reported on the Form 

1099–S. 

However, IRS Form 1099–S is 

nonetheless relevant to the proposed 

rule’s regulatory baseline, given the 

process by which the filing may be 

prepared and submitted to the IRS. 

Similar to what is proposed for the Real 

Estate Report, the person responsible for 

filing the form IRS Form 1099–S can 

either be determined through a cascade 

of the various parties who may be 

involved in the closing or settlement 

process, or, alternatively, certain 

categories of the involved parties may 

enter into a written agreement at or 

before closing to designate who must 

file Form 1099–S for the transaction. 

The agreement must identify the 

designated person responsible for filing 

the form, but it is not necessary that all 

parties to the transaction, or that more 

than one party even, enter into the 

agreement.170 The agreement must: (1) 

identify by name and address the person 

designated as responsible for filing; (2) 

include the names and addresses of 

each person entering into the agreement; 

(3) be signed and dated by all persons 

entering into the agreement; (4) include 

the names and addresses of the 

transferor and transferee; and (5) 

include the address and any other 

information necessary to identify the 

property.171 The proposed rule’s 

designation agreement requires, and is 

limited to, the same five components 

that may be included in a designation 

agreement accompanying Form 1099–S. 

Therefore, the exercise of designation as 

well as the collection of information and 

signatures it involves, as contemplated 

by the proposed rule, may already occur 

in connection with certain transfers of 

residential real property and in these 

cases be leveraged at minimal additional 

expense. 

b. Baseline of Affected Parties 

i. Transferees 

1. Legal Entities 

According to a recent study 172 that 

analyzed Ztrax data 173 covering 2,777 

U.S. counties and over 39 million 

residential housing market transactions 

from 2015 to 2019, the proportion of 

average county-month non-financed 

residential real estate transactions by 

legal entities was approximately 11 

percent during the five-year period 

analyzed. When the sample is divided 

into counties that, by 2019, were under 

Residential Real Estate GTOs versus 

those that were never under GTOs, the 

proportions of average county-month 

non-financed sales to total purchases are 

approximately 13.6 percent and 11.2 

percent, respectively. 

Legal entities that purchase 

residential real estate vary by size and 

complexity of beneficial ownership 

structure. FinCEN analysis of the 2018 

RHFS data found that micro investors or 

small business landlords who owned 1– 

2 units owned 66 percent of all single 

family and multifamily structures with 

2–4 units. Conversely, investors in the 

residential rental market who owned at 

least 1000 properties owned only 2 

percent of single-family homes and 

multi-family structures. 

2. Legal Trusts 

The proposed rule would extend the 

scope of reportable transactions to 

include non-financed purchases of 

residential real property by legal trusts 

when such a trust falls within the 

definition of ‘‘transferee trust’’ and is 

not exempted.174 Historically, 

residential real property purchases by 

transferee trusts have not been covered 

under the current Residential Real 

Estate GTOs and the entities themselves 

are typically 175 not subject to beneficial 

ownership reporting requirements 

under the CTA. Therefore, FinCEN 

expects that legal trusts would be more 

homogenously newly affected by the 

proposed rule than legal entities, 

discussed above, as a cohort of affected 

parties.176

Establishing a baseline population of 

potentially affected transferee trusts 

based on the existing population of legal 

trusts is challenging for several reasons. 

These reasons include the general lack 

of comprehensive and aggregated data 

on the number,177 value, usage, and 

holdings of trusts formed in the United 

States, which in turn is a result of 

heterogeneous registration and reporting 

requirements, including instances 

where neither requirement currently 

exists. Because domestic trusts are 

created and administered under state 

law, and states have broad authority in 

how they choose to regulate trusts, there 

is variation in both the proportion of 

potential transferee trusts that are 

currently required to register as trusts in 

their respective states as well as the 

amount of information a given legal 

trust is required to report to its state 

about the nature of its assets or its 

structural complexity. Thus, limited 

comparable information may be 

available at a nationwide level besides 

what is reported for federal tax purposes 

and what is available is unlikely to 

represent the full population of 

potentially affected parties that would 

meet the proposed definition of 

transferee trust if undertaking the nonfinanced purchase of residential real 

property. 

International heterogeneity in 

registration and reporting requirements 

for foreign legal trusts creates similar 

difficulties in assessing the population 

of potentially affected parties that are 

not originally registered in the United 

States. Further complicating this 

assessment is the exogeneity and 

unpredictability of changes to foreign 

tax and other financial policies, which 

studies in other, related contexts have 

shown, generally affect foreign demand 

for real estate.178

While it is difficult to know exactly 

how many existing legal trusts there are, 

and within that population, how many 


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179See U.S. Census Bureau, Rental Housing 

Finance Survey (2021), available at https://

www.census.gov/data-tools/demo/rhfs/’’/l‘‘/?s_

tableName=TABLE2. 

180See discussion of SEC-registered operating 

companies, supra Section IV.B.1.a. 181See, e.g., U.S. Securities and Exchange 

Commission, Instructions to Item 2.01 on Form 8– 

K; see also 17 CFR 210.3–14. 

182See description of reporting cascade, supra 

Section IV.D.1; see also proposed 31 CFR 

1031.320(c)(1). 

183 Insofar as the various compliance burdens 

estimated below could be improved by either 

changes to the methodology or the sources of data 

incorporated, FinCEN is soliciting public input. 

184See Nam D. Pham, ‘‘The Economic 

Contributions of the Land Title Industry to the U.S. 

Economy,’’ ndp Consulting (Nov. 2012), p. 6, 

available at https://papers.ssrn.com/sol3/

papers.cfm?abstract_id=2921931. This study was 

included as an appendix to a 2012 American Land 

Title Association comment letter submitted to the 

Consumer Financial Protection Bureau (CFPB) on 

the Real Estate Settlement Procedures Act (RESPA). 

185FinCEN’s RIA assumes that the first three 

functions identified in the proposed waterfall 

(being listed as the closing or settlement agent, 

preparing the closing or settlement statement, and 

filing the deed or other instrument) would be 

performed, if at all, by a single person, such that 

there are five distinct members of the cascade. 

186FinCEN notes that the capacity in which a 

reporting person facilitates a residential real 

property transfer may not always be in the capacity 

of their primary occupation. However, as analysis 

here relies on the U.S. Census Bureau’s annual 

Statistics of U.S. Business Survey, which is 

organized by NAICS code, the following nominal 

primary occupations (NAICS codes) are used for 

grouping and counting purposes: Title Abstract and 

Settlement Offices (541191), Direct Title Insurance 

Carriers (524127), Other Activities Related to Real 

Estate (531390), Offices of Lawyers (541110), and 

Offices of Real Estate Agents and Brokers (531210). 

own residential real estate (as a 

potential indicator of what proportion of 

new trusts might have a view to 

purchase residential real property), 

there is nevertheless a consistency in 

the limited existing empirical evidence 

that would support a conjecture that 

proportionally few of the expected 

reportable transactions would be likely 

to involve a transferee trust. A recent 

study of U.S. single-property residential 

transactions that occurred between 2015 

and 2019 identified a trust as the buyer 

in 3.3 percent of observed transfers. 

FinCEN also conducted additional 

analysis of publicly available data that 

might help to quantify the proportion of 

trust ownership in residential real 

estate. Based on the Department of 

Housing and Urban Development and 

Census Bureau’s Rental Housing 

Finance Survey (RHFS), identifiable 

trusts accounted for approximately 2.5 

percent of rental housing ownership and 

approximately 8.2 percent of nonnatural person ownership of rental 

housing.179

To the extent that trusts’ current 

residential real property holdings are 

linear in the number of housing units 

and current holdings is a reliable proxy 

for future purchasing activity, FinCEN 

does not expect the proportion of nonfinanced residential real property 

transfers in which the transferee is a 

non-excepted legal trust to exceed 5 

percent of potentially affected 

transactions. No further refinements to 

this upper-bound-like estimate, based 

on the number of existing trusts that 

may be affected, would be feasible 

without a number of additional 

assumptions about market behavior that 

FinCEN declines to impose in the 

absence of better/more data. The public 

is invited to provide such data, if 

available. 

3. Excepted Transferees

Exceptions to the general definitions

of transferee entities and transferee 

trusts apply to certain highly regulated 

entities and trusts that are subject to 

BSA program requirements or to other 

significant regulatory reporting 

requirements. 

For example, PIVs that are investment 

companies and registered with the SEC 

under section 8 of the Investment 

Company Act of 1940 would be 

excepted, while unregistered PIVs 

engaging in reportable transfers would 

not. Unregistered PIVs would instead be 

required to provide the transaction’s 

reporting person with the proposed 

specified information, particularly 

including the required information 

regarding their beneficial owners. 

FinCEN analysis of costs below assumes 

that any such unregistered PIV stood up 

for a reportable transfer would generally 

have, or have low-cost access to, the 

proposed information necessary for 

filing the proposed Real Estate Reports. 

FinCEN expects that a PIV that is not 

registered with the SEC—which can 

have at maximum four investors whose 

ownership percent is or exceeds 25 

percent (the threshold for the ownership 

prong of the beneficial ownership test 

for entities)—would likely either (1) be 

an extension of that large investor, or (2) 

have a general partner who actively 

solicited known large investors. In 

either case, the unregistered PIV is 

likely to have most of the beneficial 

ownership information that would be 

required to complete the proposed Real 

Estate Report and access to the 

beneficial owner(s) to request the 

additional components of required 

information not already at hand. 

Operating companies subject to the 

Securities Exchange Act of 1934’s 

current and periodic reporting 

requirements, including certain special 

purpose acquisition companies (SPACs) 

and issuers of penny-stock, would also 

be excepted transferees under the 

proposed rule. FinCEN notes that the 

percent ownership threshold for 

beneficial ownership for SEC regulatory 

purposes is considerably lower than as 

defined in the CTA and related 

Exchange Act beneficial ownershiprelated disclosure obligations usually 

apply to more control persons at such a 

registered operating company.180

Additionally, disclosures about the 

acquisition of real estate, including 

material non-financed purchases of 

residential property, are already 

required in certain periodic reports filed 

with the SEC.181 Therefore, an 

incremental informational benefit from 

not excepting SEC-registered operating 

companies as transferees for the 

purposes of the proposed Real Estate 

Report reporting requirements may 

either not exist or, at best, be very low 

while the costs to operating companies 

of reporting and compliance with an 

additional federal regulatory agency are 

expected to be comparatively high. 

ii. Reporting Entities

Because the proposed reporting

cascade is ordered by function 

performed, or service provided, rather 

than by defined occupations or 

categories of service providers,182

attribution of work to the capacity in 

which a person is primarily employed is 

necessarily imprecise.183 To account for 

the need to map from services provided 

to entities providing such services as a 

prerequisite to estimating the number of 

potentially affected parties, FinCEN 

acknowledges, but abstracts from, the 

common observation that title agents 

and settlement agents are ‘‘often the 

same entity that performs two separate 

functions in a real estate transaction,’’ 

and that ‘‘the terms title agent and 

settlement agent are often used 

interchangeably.’’ 184 For purposes of 

the remaining RIA, FinCEN groups 

potential reporting persons by features 

of their primary occupation and treats 

them as functionally distinct members 

of the cascade.185 In total, FinCEN 

estimates there may be up to 

approximately 172,753 reporting 

persons and 642,508 employees of those 

persons that could be affected by the 

proposed rule. Of this total, the 

distribution of potential reporting 

persons as identified by primary 

occupation 186 is settlement agents (3.6 

percent of potential reporting persons, 

9.8 percent of the potentially affected 

labor force), title insurance companies 

(0.5 percent, 6.6 percent), real estate 

escrow agencies (10.9 percent, 10.5 


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187The estimate of potentially affected attorneys 

is calculated as ten percent of the total SUSB 

population of Offices of Lawyers. This estimate is 

based on the average from FinCEN analysis of U.S. 

legal bar association membership, performed 

primarily at the state level, identifying the 

proportion of (state) bar members that are members 

of the organization’s (state’s) real estate bar 

association. FinCEN considers this proxy more 

likely to overestimate than underestimate the 

number of potentially affected attorneys because, 

while not all members of a real estate bar 

association actively facilitate real estate transfers 

each year, it was considered less likely that an 

attorney would, in a given year, facilitate real estate 

transfers in a way that would make them a 

candidate reporting person for purposes of the 

proposed rule when such an attorney had not 

previously indicated an interest in real estate 

specific practice (by electing to join a real estate 

bar). 

188NAICS Code 531210 (Offices of Real Estate 

Agents and Brokers). 

189See discussion of affected transferees, supra 

Section VII.A.2.b.i. 

190See discussion, supra Section IV.A; see also 

proposed 31 CFR 1031.320(b). 

191 31 CFR 1010.100(h). 

192See National Association of Realtors, ‘‘AllCash Sales are Rising Sharply Amid Intense 

Competition’’ (May 24, 2021), available at https:// 

www.nar.realtor/blogs/economists-outlook/all-cashsales-are-rising-sharply-amid-intense-buyercompetition. 

193See Calculated Risk, ‘‘NAR: Existing-Home 

Sales Decreased to 5.61 million SAAR in April’’ 

(May 19, 2022), available at https://www.calculated

riskblog.com/2022/05/nar-existing-home-salesdecreased-to.html. 

194See U.S. Census Bureau, ‘‘Houses Sold by 

Type of Financing,’’ available at https://census.gov/ 

construction/nrs/xls/soldfinc_cust.xls. 

195 Id. 

196 Id. 

197See Lily Katz and Sheharyar Bokhari, 

‘‘Investors Are Buying Roughly Half as Many 

Homes as They Were a Year Ago,’’ Redfin News 

(Feb. 25, 2023), available at https://

www.redfin.com/news/investor-home-purchases-q4- 

2022/. Note that ‘‘all-cash’’ is the term used by 

Redfin. FinCEN does not know how Redfin defines 

‘‘all-cash.’’ 

198There was a paucity of publicly available 

information regarding the legal entity and trust 

components of overall non-financed residential real 

estate transfers. The Redfin estimate, supra note 

198, was limited to investor purchases of existing 

homes only, and therefore still contains gaps. 

Nonetheless, the Redfin estimate was the most 

recently available data and provided the highest 

bound estimate on the role of non-natural persons 

in residential real estate transfers based on publicly 

available data. 

199See Lalaine C. Delmendo, ‘‘Puerto Rico 

Residential Real Estate Market Analysis 2023,’’ 

Global Property Guide (Apr. 11, 2023), available at 

https://www.globalpropertyguide.com/Caribbean/ 

Puerto-Rico/Price-History. 

200Counties were selected based on the ability to 

search for the above criteria via each county’s 

online database. 

percent), attorneys 187 (9.3 percent, 16.7 

percent), and other real estate 

professionals 188 (75.5 percent, 56.4 

percent). For purposes of cost estimates 

throughout the remaining analysis, 

FinCEN computed the following fully 

loaded average hourly wages by the 

respective primary occupation 

categories: settlement agents, $70.33; 

title insurers, $70.46; real estate escrow 

agencies, $84.15; attorneys, $88.89; and 

other real estate professionals, $84.15. 

c. Market Baseline 

i. Reportable Transfers 

The scope of residential real estate 

transactions that would be affected by 

the proposed rule is jointly defined by 

the (1) the nature of the property 

transferred, (2) the nature of the 

consideration proffered, and (3) the 

legal organization of the party to whom 

the property is transferred.189 For 

purposes of identification, the defining 

attribute for the nature of the property 

is that it is principally designed or 

demonstrably intended to become, the 

residence of one to four families, 

including cooperatives and unimproved 

land.190 Additionally, the property must 

be located in the United States as 

defined in the BSA implementing 

regulations, including U.S. territories.191

Transfers that would be deemed 

reportable exclude all transactions 

where the transferees receive any 

extension of credit from a financial 

institution subject to AML/SAR 

Reporting program requirements that is 

secured by the residential real property 

being transferred. Reportable transfers 

would also generally exclude transfers 

associated with an easement, death, 

divorce, or bankruptcy and transfers for 

which there is no reporting person. 

Because certain transfer characteristics 

that would cause a transfer to be 

excluded are not consistently identified 

across sources of transfer data, FinCEN 

estimates of the number below may 

generally be considered an upper bound 

of the expected affected transactions. 

FinCEN considered several different 

sources of information and a mosaic of 

piecewise informative statistics to 

inform its estimate of the reportable 

transaction baseline. When considering 

existing home sales, FinCEN reviewed 

the National Association of Realtors 

Confidence Index Survey data on allcash residential home sales between 

October 2008 and April 2021. In this 

data, the upper bound of all-cash 

transactions for existing home sales over 

this period was 35 percent,192 which 

totaled to 7,500,000.193 FinCEN also 

used data from the U.S. Census Bureau 

to review the number of new home sales 

between 1988–2022. FinCEN utilized 

peak and trough values for new home 

sales and percent of cash transactions— 

as a proxy for non-financed 

transactions—from the historical range 

provided by the Census Bureau.194 In 

analysis of this data, FinCEN observed 

that the upper bound number of all-cash 

transactions for new home sales was 9.6 

percent,195 which totaled to 1,283,000 

for the analysis.196 Considering yet 

another source, FinCEN reviewed 

Redfin data covering a period between 

2000 to 2022 on investor purchases of 

existing homes to consider as a proxy 

for legal entity and trust purchases.197

This data would suggest an upper 

bound of approximately 20 percent.198

However, Redfin investor purchase data 

is unlikely to capture all the legal entity 

and trust purchases that are covered 

under the proposed rule, is likely to 

include purchases by entities that 

would be exempt from the proposed 

rule, and only covers the purchase of 

existing residential real estate (i.e., nonnew developments). 

FinCEN additionally made attempts to 

factor in the rule’s inclusion of U.S. 

territories by including the number of 

new and existing home sales in Puerto 

Rico in 2022 in the final estimate of 

total potentially reportable transfers.199

In 2022, FinCEN identified 9,962 

existing home sales and 953 new home 

sales in Puerto Rico. Added to the 

previous totals, this brought the total 

number of estimated existing and new 

home sales in the United States to 

7,509,962 and 1,283,953, respectively. 

To account for quit claims to LLCs 

with zero consideration—i.e., real estate 

transfers that would not be captured in 

Census or home sales data—FinCEN 

reviewed various county deed databases 

to estimate the annual number of quit 

claims to LLCs for zero-dollar 

consideration in the United States. 

FinCEN reviewed deed data from the 

following U.S. County databases: Cook 

County, Illinois; Cuyahoga County, 

Ohio; Monroe County, Ohio; Anderson 

County, Texas; Dallas County, Texas; 

Arapahoe County, Colorado; Routt 

County, Colorado; Berrien County, 

Michigan; Roscommon County, Texas; 

Garland County, Arkansas. Counties 

were selected based upon the ability to: 

(i) search for quit claim deeds, (ii) 

search for deeds with zero-dollar 

consideration, (iii) conduct a keyword 

search that included ‘‘LLC’’ in the title 

of the grantee, and (iv) search within the 

2022 calendar year. FinCEN notes that 

its attempt to create a representative 

sample was likely limited by its search 

query requirements and the limitations 

of county databases in terms of 

searchability. This analysis was 

conducted across 10 counties in 6 states 

and the results are included below in 

Table 1: 200

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As a result, the total number of 

estimated quit claims to LLCs covered 

by the rule is approximately 110,389. 

While these sources do not provide a 

complete picture of the potential 

number of reportable transfers in the 

United States, they are useful in 

providing an approximate range for 

estimation and highlight the fact that 

the potential range of transfers each year 

is dependent on multiple potential 

factors and conditions. Overall, the 

sources FinCEN reviewed suggest that 

hundreds of thousands of transfers may 

be covered under the proposed rule. 

FinCEN also estimates that annually 

anywhere between 5.23 million—6.98 

million existing homes that have been 

purchased would be exempt from the 

purview of the rule. Similarly, among 

new home sales, FinCEN estimates that 

annually a range of between 305 

thousand—1.26 million transactions 

will be exempt (See Table 2 below). 

BILLING CODE 4810–02–C 


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Table 1: Deed Analysis 

State County Quit Claims to Total Deeds Percentage LLCs with No 

Consideration 

Illinois Cook 3,069 139,428 2.20% 

Ohio Cuyahoga 1,676 57,492 2.92% 

Texas Dallas 185 123,689 0.15% 

Colorado Arapahoe 141 80,397 0.18% 

Michigan Berrien 96 7,762 1.24% 

Ohio Monroe 142 1,036 13.71% 

Texas Anderson 2 4,709 0.04% 

Michigan Roscommon 29 3,206 0.90% 

Colorado Routt 12 4,722 0.25% 

Arkansas Garland 6 9,220 0.07% 

Totals: 5,358 431,661 1.24% 

Table 2: Transactions Exempted 

Exemption Estimates 

Category 

Lawer Bound Upper Bound 

Existing Home Sales exempted 5,230,313 6,984,265 

New Home Sales exempted 305,848 1,259,231 
12452 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

201See American Land Title Association, Home 

Closing 101, ‘‘Why 20% of Homeowners May Not 

Sleep Tonight,’’ (June 3, 2020), available at https:// 

www.homeclosing101.org/why-20-percent-ofhomeowners-may-not-sleep-tonight/. 

202 In total, FinCEN evaluated ten deeds from 

eleven different U.S. counties in 2022 (removing 

deeds that were deemed to be out of scope). The 

11 counties selected for the purposes of this 

analysis included: Garland County, Arkansas; Routt 

County, Colorado; Sarasota County, Florida; Polk 

County, Georgia; Montgomery County, Maryland; 

Berrien County, Michigan; Middlesex County, New 

Jersey, Cuyahoga County, Ohio; Indiana County, 

Pennsylvania; Greenwood County, South Carolina; 

and Dallas County, Texas. 

203The process of searching deeds across 

different U.S. counties is challenging from a data 

perspective. For example, FinCEN’s research found 

that, in some counties, deeds could only be 

searched in-person; FinCEN was therefore unable to 

include these counties in the potential sample. 

Furthermore, certain other deeds were deemed not 

relevant for the scope of the rule and hence were 

excluded. 

204See discussion of designation agreement, 

supra Section IV.D.3. 

FinCEN acknowledges the 

conditionality that likely exists between 

variables used in its analysis, but notes 

the limitations associated with publicly 

available data on non-financed, 

residential real estate purchases by legal 

entities and trusts. In the exercise above, 

FinCEN had to rely on independent 

estimates of specific characteristics (i.e., 

non-financed, legal entity) to estimate 

the potential number of covered 

transactions and exempted transactions. 

On the basis of available data, studies, 

and qualitative evidence, and in the 

absence of large, unforeseeable shocks 

to the U.S. residential housing market, 

FinCEN analysis suggests that the 

number of potentially reportable 

transfers would be between 

approximately 800,000 and 850,000 

annually. 

ii. Current Market Characteristics 

FinCEN took certain potentially 

informative aspects of the current 

market for residential real property into 

consideration when forming its 

expectations about the anticipated 

economic impact of the proposed rule. 

Among other things, FinCEN considered 

trends in the observable rate of turnover 

in the stock of existing homes. 

Additionally, FinCEN reviewed recent 

studies and data from the academic 

literature estimating housing supply 

elasticities on previously developed 

versus newly developed land. 

FinCEN also considered recent survey 

results of the residential real estate 

holdings of high-net-worth individuals 

and the proportion of survey 

respondents who self-reported the 

intent to purchase additional residential 

real estate in the coming year. 

Further, FinCEN reviewed studies of 

trends in the financing and certain 

distributional characteristics of shared 

equity housing, which includes cooperatives that could be affected by the 

proposed rule. 

iii. Current Market Practices 

1. Settlement and Closing 

FinCEN assessed the role of various 

persons in the real estate settlement and 

closing process to determine a 

quantifiable estimate of each profession 

or industry’s overall participation in 

that process. Accordingly, FinCEN 

conducted research based on publicly 

available sources to assess the general 

participation rate of the different types 

of reporting persons in the proposed 

rule’s cascade. As part of its analysis, 

FinCEN noted a recent blog post citing 

data from the ALTA that 80 percent of 

homeowners purchase title insurance 

when buying a home.201

To better understand the distribution 

of the other types of persons providing 

residential real property transfer 

services to the transactions that would 

be affected by the proposed rules, 

FinCEN utilized county deed database 

records to approximate a randomly 

selected and representative sample of 

residential real estate transfers across 

the United States.202 FinCEN made 

efforts to collect deed data that reflected 

a representative, nation-wide sample, 

both in terms of the number and 

geographic dispersion of deeds, but 

acknowledge selection was nevertheless 

constrained in part by the feasibility to 

search by deed type, among other 

factors.203 To the extent that the same 

analysis would yield substantively 

different results if performed over a 

larger sample (with either more 

geographic locations, more observations 

per location, or both), the public is 

invited to share such data or the results 

of analysis based on such data. 

The final analysis included 100 

deeds, of which 97 involved at least one 

of the following potential reporting 

persons: (i) Title Abstract and 

Settlement Offices, (ii) Direct Title 

Insurance Carriers, or (iii) Offices of 

Lawyers. A candidate reporting person 

was deemed to be involved with the 

creation of the deed if either (i) a 

company or firm performing one of 

these functions was included on the 

deed or (ii) an individual performing or 

employed by a company or firm 

performing one of these functions was 

included on the deed. FinCEN assessed 

the distribution of alternative entities 

identified on the remaining deeds, 

categorizing by reporting person type. 

Based on this qualitative analysis, 

FinCEN tentatively anticipates that 

approximately three percent of 

reportable transaction might have a 

reporting person other than a settlement 

agent, title insurer, or attorney. 

2. Records Search 

Currently, law enforcement searches a 

variety of state and commercial 

databases (that may or may not include 

beneficial ownership information), 

individual county record offices, and/or 

use subpoena authority to trace the 

suspected use of criminal proceeds in 

the non-financed purchase of residential 

real estate. Even after a significant 

investment of resources, the identities of 

the beneficial owners may not be readily 

ascertainable. This fragmented and 

limited approach can slow down and 

decrease the overall efficacy of 

investigations into money laundering 

through real estate. This was one reason 

that FinCEN introduced the Residential 

Real Estate GTOs, which law 

enforcement has reported have 

significantly expanded their ability to 

investigate this money laundering 

typology. At the same time, the 

Residential Real Estate GTOs had 

certain restrictions that limited its 

usefulness nationwide. The proposed 

rule builds on and is intended to replace 

the Residential Real Estate GTOs 

framework and creates reporting and 

recording requirements for specific 

residential real estate transfers that 

would apply nationwide. 

3. Description of Proposed 

Requirements 

a. Transactions 

The proposed rule does not require 

residential real estate transfers to be 

reported if the transfer involves: (i) an 

extension of credit to the transferee that 

is secured by the transferred residential 

real property and is extended by a 

financial institution that has both an 

obligation to maintain an AML program 

and an obligation to report suspicious 

transactions under this chapter; (ii) a 

grant, transfer, or revocation of an 

easement; (iii) a transfer resulting from 

the death of an owner of residential real 

property; (iv) a transfer incident to 

divorce or dissolution of a marriage; (v) 

a transfer to a bankruptcy estate; or (vi) 

a transfer that does not involve a 

reporting person. 

b. Reporting Persons 

The proposed rule would require a 

reporting person, as determined by 

either the reporting cascade or as 

pursuant to a designation agreement,204

to complete and electronically file a 


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205See description of required transferee 

beneficial ownership information, supra Section 

IV.E.6. 

206See Section VII.A.2.b. 

207See Section VII.A.1. 

208See Section VII.A.2.b. 

209See 81 FR 29397 (May 11, 2016) (codified at 

31 CFR 1010.230). 

210As previously grouped by NAICS code, see 

supra Section VII.A.2.b.ii. 

Real Estate Report containing certain 

information about the beneficial 

ownership of the legal entity(ies) or 

trust(s) involved in the non-financed 

exchange of residential real property. To 

facilitate the reporting person’s 

completion of the required report, the 

transferee engaged in the non-financed 

property transfer would need to provide 

a certified copy of their beneficial 

ownership information 205 via a form or 

other attestation to the completeness 

and accuracy of the reported 

information. 

c. Required Information 

The proposed rule would require 

certain professionals or businesses to 

report to FinCEN information about the 

transferor and the transferee behind the 

residential real estate transfer. This 

would include information on the legal 

entity or trust, its beneficial owners, and 

payment information. The collected 

information would be maintained by 

FinCEN in an existing database 

accessible to authorized users. 

3. Expected Economic Effects 

This section describes the main 

economic effects FinCEN anticipates the 

various affected parties identified 

above 206 may experience. Because the 

primary value of the proposed rule 

would be in the extent to which it is 

able to address or ameliorate the 

economic problems discussed under the 

RIA’s broad economic 

considerations,207 the remainder of this 

section focuses primarily on the 

estimates of reasonably anticipated, 

quantifiable costs to affected parties.208

FinCEN aggregate cost estimates suggest 

that first year costs will be between 

approximately $267.3 million and 

$476.2 million and that the current 

dollar value of the aggregate costs in 

subsequent years will be between 

approximately $245.0 million and 

$453.9 million annually. FinCEN also 

invites public comment on these 

estimates. 

a. Costs to Entities in the Reporting 

Cascade 

i. Training 

FinCEN recognizes that the proposed 

rule would impose certain costs on 

businesses positioned to provide 

services to non-financed residential real 

property transfers even in the absence of 

direct participation in a specific covered 

transaction, including the costs of 

preparing informational material and 

training personnel about the proposed 

rule generally as well as certain firmspecific policies and procedures related 

to reporting, complying, and 

documenting compliance. 

To estimate expected training costs, 

FinCEN adopted a parsimonious model 

similar, in certain respects, to the 

methodology used by FinCEN when 

publishing the RIA for the 2016 CDD 

Rule (CDD Rule RIA).209 Taking into 

consideration, however, that, unlike 

reporting entities under the CDD rule, 

only one group of the proposed rule’s 

affected reporting persons has preexisting experience with other FinCEN 

reporting and compliance requirements, 

the estimates of anticipated training 

time here are revised upward from the 

CDD Rule RIA to 75 minutes for initial 

training and 30 minutes for annual 

refresher training. FinCEN’s method of 

estimation assumes that an employee 

who has received initial training once 

will then subsequently take the annual 

refresher training each following year. 

This assumption contemplates that 

more than half of the original training 

would not be firm-specific and remains 

useful to the employee regardless of 

whether they remain with their initial 

employer or change jobs within the 

same industry. As in the CDD Rule RIA 

high estimate model, FinCEN estimates 

that two-thirds of untrained employees 

receive the initial (lengthier) training 

each year. However, because the initial 

training is assumed to provide 

transferrable human capital in this 

setting, turnover is not relevant to the 

assignment to initial training in periods 

following Year 1. Thus, in the revised 

model, FinCEN calculates annual 

training costs as the combination of the 

expected costs of providing two-thirds 

of the previously untrained workforce 

per industry 210 with initial (lengthier) 

training and all previously trained 

employees with the refresher (shorter) 

training. Time costs are proxied by an 

industry-specific fully loaded average 

wage rate per industry. 

Table 3 below presents the 

corresponding per person estimated 

training costs by primary occupation 

without adjustment for wage growth. 


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Table 3: Training Costs 

Estimated Per Person Trainin2: Costs Initial Trainin2: Refresher (Year 2+) 

Fully 

Primary Business Categories Loaded Time Total Time Total 

Hourly (hours) (hours) (unadjusted) 

Wage 

Title Abstract and Settlement $70.33 1.25 $87.91 0.5 $35.16 Offices 

Direct Title Insurance Carriers $84.15 1.25 $105.18 0.5 $42.07 

Other Activities Related to Real $70.46 1.25 $88.07 0.5 $35.23 Estate 

Offices of Lawyers $88.89 1.25 $111.11 0.5 $44.45 

Offices of Real Estate Agents and $70.46 1.25 $88.07 0.5 $35.23 Brokers 
12454 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

211U.S. Bureau of Labor Statistics, Employment 

Projections, ‘‘Employment by industry, occupation, 

and percent distribution, 2021 and projected 2031,’’ 

available at https://data.bls.gov/projections/

nationalMatrix?queryParams=541100&ioType=i 

(reflects projections for the closest NAICS code, 

across all occupations, and not on a specific 

occupation code basis [legal services]); U.S. Bureau 

of Labor Statistics, Employment Projections, 

‘‘Employment by industry, occupation, and percent 

distribution, 2021 and projected 2031,’’ available at 

https://data.bls.gov/projections/nationalMatrix?

queryParams=524120&ioType=i (direct insurance 

[except life, health, and medical] carriers); U.S. 

Bureau of Labor Statistics, Employment Projections, 

‘‘Employment by industry, occupation, and percent 

distribution, 2021 and projected 2031,’’ available at 

https://data.bls.gov/projections/nationalMatrix?

queryParams=531000&ioType=i (real estate). 

212See Federal Reserve Bank of St. Louis, 10-Year 

Breakeven Inflation Rate (as of July 18, 2023), 

available at https://fred.stlouisfed.org/series/ 

T10YIE. 

213This upper bound estimate is based on an 

assumption that, at maximum, five distinct 

functional roles could be concurrently provided to 

a reportable transfer. See supra note 186. 

214At present, FinCEN is unable to assess the 

extent to which the underlying distribution of 

completion times exhibits skew or the extent to 

which current timing outliers may more accurately 

represent the associated burden unique to newly 

affected transactions. FinCEN is therefore 

requesting additional data via public comments in 

the event that such data exists and would materially 

alter the related expected burden estimates below. 

To model industry-specific hiring 

inflows in periods following Year 1, 

FinCEN converted the Bureau of Labor 

Statistics (BLS) projected 10-year 

cumulative employment growth rates 

for 2022–2032 211 for the NAICS code 

mostly closely associated with a given 

industry available. Additionally, 

inflation data from the Federal Reserve 

Bank of St. Louis was utilized to 

estimate annual wage growth given the 

opportunity cost of training is assumed 

to be equivalent to the wage of 

employees.212 Utilizing these inputs, 

and summing costs across all industries 

expected to be affected, FinCEN 

estimates that the aggregate initial year 

training costs would be approximately 

$44.3 million dollars and the 

undiscounted aggregate training costs in 

each of the subsequent years would 

range between approximately $20.2 and 

$27.3 million. 

ii. Reporting 

The total costs associated with 

reporting a given non-financed property 

transaction will likely vary with the 

specific facts and circumstances of the 

transfer. For instance, the cost of the 

time needed to prepare and file a report 

could differ depending on which party 

in the cascade is the reporting person 

because parties receive different 

compensating wages. The costs 

associated with the time to determine 

who is the reporting person will also 

vary by the number of potential parties 

who may assume the role and thus 

might be parties to a designation 

agreement. 

FinCEN estimates an average perparty cost to determine the reporting 

person of 30 (15) minutes for the party 

that assumes the role if a designation 

agreement is (not) required and 15 

minutes each for all non-reporting 

parties (assuming each tier in the 

cascade corresponds to one reporting 

person). Therefore, the range of 

potential time costs associate with 

determining the reporting person is 

expected to be between 15 to 90 

minutes.213 Recently, FinCEN received 

updated information from parties 

currently reporting under the 

Residential Real Estate GTO indicating 

that the previously estimated time cost 

of 20 minutes for that reporting 

requirement was less than half the 

average time expended per report in 

practice. Based on this feedback, the 

filing time burden FinCEN anticipates 

for the proposed rule accordingly 

incorporates a 45-minute estimate for 

the collection and reporting of the 

subset of Real Estate Report required 

information that is similar to 

information in reports filed under the 

Residential Real Estate GTOs, although 

FinCEN recognizes that certain 

transactions may require significantly 

more time.214 Mindful of these outliers, 

FinCEN estimates an average 2 hour per 

reportable transaction time cost to 

collect and review transferee and 

transaction-specific reportable 

information and related documents, and 

an average 30 minute additional time 

cost to reporting. 

Table 4 below presents FinCEN’s 

estimates of the various potential perparty per-transaction reporting costs 

associated with a preparing and filing 

the proposed Real Estate Report. 


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215This estimate assumes the lowest number of 

cascade participants (1), the lowest number of 

estimated annual transfers (800,000), reported by 

the entity with the lowest estimated wage rate 

($70.33/hr.). 

216This estimate assumes the maximum number 

of cascade participants (five (see note 186), each 

compensated at .25 times their respective average 

wage rate), the highest number of estimated annual 

transfers (850,000), reported by the entity with the 

highest estimated wage rate ($89.88/hr.). 

217See discussion of reporting entity hourly wage 

rates, supra Section VII.A.2.b.ii. 

218See discussion of recordkeeping requirements, 

supra Section IV.G; see also proposed amendment 

31 CFR 1031.320(l). 

219This is based on the assumption that reporting 

persons may face comparable market rates for the 

same technological services. However, FinCEN 

invites the public to provide additional data on the 

market rates faced by potentially affected parties. 

Based on the range of expected 

reportable transactions and the wages 

associated with different persons in the 

potential reporting cascade, FinCEN 

anticipates that the proposed rule’s 

reporting costs may be between 

approximately $158.2 million 215 and 

$314.2 million.216

Because FinCEN expects reporting 

persons to be able to rely on technology 

previously purchased and already 

deployed in the ordinary course of 

business (namely, computers and access 

to the internet) to comply with the 

proposed reporting requirements, no 

line item of incremental expected IT 

costs has been ascribed to reporting. 

iii. Recordkeeping 

The proposed rule would impose 

recordkeeping requirements on 

reporting persons as well as, in certain 

cases, members of a given reportable 

transaction’s cascade that are not the 

reporting person. The primary variation 

in expected recordkeeping costs would 

flow from the conditions under which 

the reporting person has assumed their 

role. Additional variation in costs may 

result from differences in the dollar 

value assigned to the reporting person’s 

time costs as a function of their primary 

occupation.217

If the reporting person assumes the 

role as a function of their position in the 

proposed reporting cascade, this would 

imply that no meaningfully distinct 

person involved in the transfer provided 

the preceding service(s). In this case, the 

reporting person’s recordkeeping 

requirements would be limited to the 

retention of compliance documents 

(such as the transferee’s certification of 

beneficial ownership information) for a 

period of five years in a manner that 

preserves ready availability for 

inspection as authorized by law.218

Recordkeeping costs would therefore 

include those associated with creating 

and/or collecting the necessary 

documents, storing the records in an 

accessible format, and securely 

disposing of the records after the 

required retention period has elapsed. 

FinCEN anticipates that over the full 

recordkeeping lifecycle, each reportable 

transaction would, on average, require 

one hour of the reporting person’s time, 

as well as a record processing and 

maintenance cost of ten cents. Because 

FinCEN expects that records will 

primarily be produced and recorded 

electronically and estimates its own 

processing and maintenance costs at ten 

cents per record, it has applied the same 

expected cost per reportable transaction 

to reporting persons.219 On aggregate, 

this would result in recordkeeping costs 

between approximately $56.3 million 

and $75.6 million associated with one 

year’s reportable transactions. 

If the reporting person has instead 

assumed the role as the result of a 

designation agreement, the proposed 

rule would impose additional 

recordkeeping requirements on both the 

reporting person and at least one other 

member of the proposed reporting 

cascade. This is because the existence of 

a designation agreement implies the 

existence of one or more distinct 

alternative parties to the reportable 

transaction that provided a preceding 

service or services as described in the 

proposed cascade. While the proposed 

rule only stipulates that ‘‘the person 

who would otherwise be the reporting 

person but for the agreement’’ would 

also be anticipated to incur 

recordkeeping costs, FinCEN expects 

the minimum number of additional 

parties required to retain a readily 

accessible copy of the designation 


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Table 4: Transaction Reporting Costs 

Non-Reporting Reporting Party Estimated Per Transaction Party 

Reporting Costs Designation-Related Designation- DesignationRelated Independent 

Fully 

Primary Business Loaded Time Total Time Total Time Total Categories Hourly (hours) (hours) (hours) 

Wage 

Title Abstract and $70.33 0.25 $17.58 0.25 $17.58 2.75 $193.40 Settlement Offices 

Direct Title $84.15 0.25 $21.04 0.25 $21.04 2.75 $231.40 Insurance Carriers 

Other Activities 

Related to Real $70.46 0.25 $17.61 0.25 $17.61 2.75 $193.76 

Estate 

Offices of Lawyers $88.89 0.25 $22.22 0.25 $22.22 2.75 $244.45 

Offices of Real 

Estate Agents and $70.46 0.25 $17.61 0.25 $17.61 2.75 $193.76 

Brokers 
12456 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

220See supra note 186. 

221This estimate assumes the lowest estimated 

number of annual transfers occurs and that the 

designation agreement is between only the two 

reporting persons with the lowest and second 

lowest hourly wage rate. 

222This estimate assumes the highest estimated 

number of annual transfers occurs and that all 

members of the cascade (compensated at their 

respective average wage rates) are party to the 

designation agreement. 223Technological implementation for a new 

reporting form contemplates expenses related to 

development, operations, and maintenance of 

system infrastructure, including design, 

deployment, and support, such as a help desk. It 

includes an anticipated processing cost of $0.10 per 

submitted Real Estate Report. 

agreement for a five-year period would, 

in practice, depend on the number of 

alternative reporting parties servicing 

the transaction in a capacity that 

precedes the designated reporting 

person’s in the proposed cascade, as it 

would otherwise be difficult to 

demonstrate the prerequisite sequence 

of conditions were met to establish the 

‘‘but for’’ of the proposed requirement. 

Conservatively assuming that each 

service in the proposed cascade is 

provided by a separate party, this would 

impose an incremental recordkeeping 

cost on at least two parties per 

transaction and at most five.220 Because 

FinCEN estimates of reporting costs 

already assign the costs of preparing a 

designation agreement to the reporting 

person (when a transaction includes a 

designation agreement), the incremental 

recordkeeping costs it estimates here 

pertain solely to the electronic 

dissemination, signing, and storage of 

the agreement. This is assigned an 

average time cost of five minutes per 

signing party to read and sign the 

designation agreement, as well as a tencent record processing and maintenance 

cost per transaction. Thus, designation 

agreement-specific recordkeeping costs 

are expected to include a time cost of 

10–50 minutes (assuming one signing 

party per tier of the cascade) and $0.20– 

$0.50 per reportable transaction that 

involves a designation. This 

corresponds to expected annual 

aggregate costs ranging from 

approximately $9.5 million 221 to $28.6 

million.222 FinCEN notes that it assumes 

that rational parties to a reportable 

transaction would not enter into a 

designation agreement if the expected 

cost of doing so, including compliance 

with the proposed recordkeeping 

requirements, were not elsewhere 

compensated in the form of efficiency 

gains or other offsetting cost savings 

associated with other components of 

compliance with the proposed rule, 

such as training or reporting costs. As 

such, the estimates provided here 

should only be taken to reflect a pro 

forma accounting cost. 

Table 5 below presents FinCEN’s 

estimates of the various potential perparty per-transaction costs associated 

with the proposed Real Estate Report 

recordkeeping requirements. 

b. Government Costs 

To implement the proposed rule, 

FinCEN expects to incur certain 

operating costs that would include 

approximately $8.5 million in the first 

year and approximately $7 million each 

year thereafter. These estimates include 

anticipated novel expenses related to 

technological implementation,223

stakeholder outreach and informational 

support, compliance monitoring, and 

potential enforcement activities as well 

as certain incremental increases to preexisting administrative and logistic 

expenses. 

While such operating costs are not 

typically considered part of the general 

economic cost of a proposed rule, 

FinCEN acknowledges that this 

treatment implicitly assumes that 

resources commensurate with the novel 

operating costs exist. If this assumption 

does not hold, then operating costs 


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Table 5: Recordkeeping Costs Per Party 

Non-Reporting Reporting Party Estimated Per Transaction Party 

Recordkeeping Costs Designation- Designation- DesignationRelated Related Independent 

Fully 

Primary Business Loaded Time Total* Time Total* Time Total* 

Categories Hourly (minutes) (minutes) (hours) (unadjusted) 

Wage 

Title Abstract and $70.33 5 $5.96 5 $5.96 1 $70.43 Settlement Offices 

Direct Title $84.15 5 $7.11 5 $7.11 1 $84.25 Insurance Carriers 

Other Activities 

Related to Real $70.46 5 $5.97 5 $5.97 1 $70.56 

Estate 

Offices of Lawyers $88.89 5 $7.51 5 $7.51 1 $88.99 

Offices of Real 

Estate Agents and $70.46 5 $5.97 5 $5.97 1 $70.56 

Brokers 

* Total Record.keeping cost estimates include both labor (wages) and technology costs ($0.10) 
Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 12457 

224FinCEN, Congressional Budget Justification 

and Annual Performance Plan and Report FY 2024 

(2023), available at https://home.treasury.gov/ 

system/files/266/15.-FinCEN-FY-2024-CJ.pdf. 

225Executive Order 13563, 76 FR 3821 (Jan. 21, 

2011), section 1(c) (‘‘Where appropriate and 

permitted by law, each agency may consider (and 

discuss qualitatively) values that are difficult or 

impossible to quantify, including equity . . . and 

distributive impacts.’’) 

226 5 U.S.C. 601 et seq. 

227See Section VII.2.b.ii. 

228FinCEN acknowledges that because non-profit 

organizations are not exempt as transferees, certain 

small non-profits may also be affected by the 

proposed rule if they engage in the non-financed 

transfer of residential property. However, because 

non-profit organizations are typically accustomed to 

preparing and maintaining governing documents 

and financial records for accountability purposes 

(e.g., with donors, to maintain tax-status, or for state 

regulatory purposes), it is generally expected that 

the beneficial ownership information that would 

need to be collected and provided to a reporting 

person would be relatively inexpensive to 

repackage for purposes of compliance with the 

proposed rule. 

229The proposed rule would not impose the full 

traditional SAR and AML program requirements on 

such businesses. See Section VII.A.5.b. 

230See Section IV.D.1. 

231See Section IV.C.2; see also Section IV.C.4; see 

also Section IV.C.5; see also Section VII.A.2.c.i. 

232See Section IV.C.1. 

233See Section IV.A.1. 

234See Section IV.B.1; see also Section IV.B.3. 

235See Section IV.B.2. 

associated with a rule may impose 

certain economic costs on the public in 

the form of opportunity costs from the 

agency’s forgone alternative activities 

and those activities’ attendant benefits. 

Putting that into the context of this 

proposed rule, and benchmarking 

against FinCEN’s actual appropriated 

budget for fiscal year 2022 ($161 

million),224 the corresponding 

opportunity cost would resemble 

forgoing approximately five percent of 

current activities annually. 

4. Economic Consideration of Policy 

Alternatives 

a. Proposed Requirements Without the 

Option To Designate 

Instead of the rule as proposed, 

FinCEN could have required the 

reporting person to be determined 

strictly by the reporting cascade without 

an option to designate. Given the 

expectation that rational parties to a 

transaction would prefer to assign tasks 

to the party for whom it is least costly 

to complete, this alternative could only 

have been as cost effective as the 

proposed approach (which includes the 

option to designate) in the event that the 

reporting cascade would otherwise 

always assign requirements to the party 

with the lowest associated compliance 

costs. In all other cases, the alternative 

would be more costly. FinCEN therefore 

declined to propose a standalone 

reporting cascade. 

b. Traditional SAR and AML Program 

Requirements 

Instead of the proposed streamlined 

reporting requirement, FinCEN could 

have proposed to impose the full 

traditional SAR and AML program 

requirements on the various real estate 

professionals included in the proposed 

reporting cascade. While this would 

almost certainly lead to the production 

of significantly more reports, and hence, 

potentially more transaction-related 

information available to law 

enforcement, the costs accompanying 

this alternative would be 

commensurately more significant and 

would likely disproportionately burden 

small businesses. Such weighting of 

costs towards smaller entities could 

increase transaction costs associated 

with residential real property 

transactions both directly via programrelated operational costs and indirectly 

via the potential anticompetitive effects 

of program costs. 

c. Alternative Certification 

Requirements 

Instead of allowing the transferee 

legal entity or trust to certify to the 

reporting person that the beneficial 

ownership information they have 

provided is accurate to the best of their 

knowledge, FinCEN could have required 

the reporting person to certify the 

transferee’s beneficial ownership 

information. This alternative would 

likely be accompanied by a number of 

increased costs, including a potential 

need for longer, more detailed 

compliance training, lengthier time 

necessary to collect and review 

documents supporting the reported 

transferee beneficial ownership 

information required, and increased 

recordkeeping costs. There may also be 

costs associated with transactions that 

might not occur, if for example, a 

reporting person is unwilling or unable 

to certify the transferee’s information. If 

certain reporting persons are better 

positioned to absorb the risks associated 

with certifying transferee beneficial 

ownership information, this could also 

have an anticompetitive effect. In this 

scenario, it is foreseeable that smaller 

businesses could be at a disadvantage. 

B. Executive Orders 12866, 13563, and 

14094 

Executive Orders 12866, 13563, and 

14094 (E.O. 12866 and its amendments) 

direct agencies to assess the costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, and public health and 

safety effects; distributive impacts; and 

equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, reducing costs, 

harmonizing rules, and promoting 

flexibility. E.O. 13563 also recognizes 

that some benefits are difficult to 

quantify and provides that, where 

appropriate and permitted by law, 

agencies may consider and discuss 

qualitatively values that are difficult or 

impossible to quantify.225

This proposed rule has been 

designated a ‘‘significant regulatory 

action;’’ accordingly, it has been 

reviewed by the Office of Management 

and Budget (OMB). 

C. Regulatory Flexibility Act 

When an agency issues a rulemaking 

proposal, the RFA 226 requires the 

agency either to provide an initial 

regulatory flexibility analysis (IRFA) 

with a proposed rule or certify that the 

proposed rule would not have a 

significant economic impact on a 

substantial number of small entities. 

Although this proposed rule might 

apply to a substantial number of small 

entities, it is nonetheless not expected 

to have a significant economic impact 

given that FinCEN has attempted to 

minimize the burden on reporting 

persons by streamlining the reporting 

requirements and providing for an 

option to designate the reporting person. 

Accordingly, FinCEN certifies that the 

proposed rule would not have a 

significant economic impact on a 

substantial number of small entities. 

The basis for doing so is discussed in 

further detail below. 

1. Estimate of the Number of Small 

Entities to Whom the Proposed Rule 

Will Apply 

As discussed above,227 the proposed 

rule would apply to a variety of 

individuals and employers in real 

estate-related businesses 228 insofar as 

such persons facilitate specifically nonfinanced transfers of residential 

property.229 The extent to which the 

proposed rule would apply to a person 

or business is therefore contingent on 

the extent to which they provide one of 

the services enumerated in the proposed 

reporting cascade 230 to a nonexempt,231 non-financed 232 transfer of 

residential property 233 to a transferee 

entity 234 or transferee trust.235

Because the rule proposes to 

introduce a streamlined reporting 


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12458 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

236See Section VII.A.2.b.i.1; see also Section 

VII.A.2.C.i. 237See description of services provided by 

cascade tier, supra Section IV.D.1; see also 

explanation of mapping services to primary 

occupation data, supra Section VII.A.2.b.ii. 238Measured as all persons who by virtue of 

primary occupation could foreseeably provide at 

least one service identified in the cascade. 239For example, in FinCEN’s deed analysis (see 

Section VII.A.2.c.iii.1), only three of one hundred 

transfers that would have been reportable under the 

proposed rule did not involve a settlement agent, 

title insurer, or attorney, suggesting that in most 

transactions a person primarily employed in other 

activities related to real estate, a real estate agent 

or broker, and their businesses may be unlikely to 

become the reporting person on a reportable 

transfer and thereby be affected by the proposed 

rule. However, because that finding speaks to the 

proportion of transactions that involved services 

from categories of primary business and not the 

proportion of businesses that provide cascadeidentified services to reportable transfers, FinCEN 

declines to make conclusive inferences from that 

study for this purpose of estimating the population 

of affected businesses. 

240See Section VII.F. 

241Meaning that no method of operationalizing 

the term ‘small’ or vintage of data consistently 

yields either the smallest or the largest numerical 

value of the population estimate. 

242For estimates based on the number of 

employees, FinCEN used the 2021 SUSB Annual 

Data Tables by Establishment Industry. U.S. Census 

Bureau, 2021 SUSB Annual Data Tables by 

Establishment Industry (Nov. 27, 2023), available at 

https://www.census.gov/data/tables/2021/econ/ 

susb/2021-susb-annual.html. For receipts databased estimates, FinCEN used the 2017 SUSB 

Annual Data Tables by Establishment Industry. U.S. 

Census Bureau, 2017 SUSB Annual Data Tables by 

Establishment Industry (May 2021), available at 

https://www.census.gov/data/tables/2017/econ/ 

susb/2017-susb-annual.html. 

requirement that is transaction-specific 

and tailored to a relatively small 

subset 236 of residential property 

transfers, and because only one member 

of the proposed reporting cascade 

would be required to file the proposed 

Real Estate Report per reportable 

transfer, the estimates below of the total 

potential number of small entities to 

whom the rule would apply will 

necessarily exceed the number of small 

entities that in practice will likely be 

affected by the rule, possibly by an 

order of magnitude or more. As 

previously explained,237 the proposed 

obligation to file a Real Estate Report 

follows a cascade stratified by the 

services provided to each non-financed 

residential transfer uniquely, not the 

primary occupation of the person 

providing the service. Therefore, while 

each tier of the proposed reporting 

cascade has, for purposes of estimating 

the broadest extent of persons to whom 

the rule could apply,238 been mapped to 

a primary business category, this should 

not be misinterpreted as an expectation 

that each business in each enumerated 

primary business category provides the 

specific services to the specific 

transactions that would trigger a 

compliance requirement under the 

proposed rule. FinCEN does not 

currently have comprehensive or 

reliable data from which to more 

generally 239 and accurately parse small 

businesses that theoretically could, in 

the ordinary course of business, provide 

a cascade-identified service to a transfer 

deemed reportable from those small 

businesses that do so in practice, but 

welcomes public comments that would 

inform such an exercise.240

The number of small entities to whom 

the proposed rule would apply is 

additionally sensitive to both how firm 

size is determined and the vintage of 

data used for the estimates. As 

illustrated in the footnotes to Table 6 

below, while the consensus across data 

sources and methodological approaches 

is that an upper bound of potentially 

affected small entities includes 

approximately 160,800 firms (by the 

following primary business 

classifications: approximately 6,300 

Title and Settlement Agents, 800 Direct 

Title Insurance Carriers, 18,000 persons 

performing Other Activities Related to 

Real Estate, 15,700 Offices of Lawyers, 

and 120,000 Offices of Real Estate 

Agents and Brokers), the point estimates 

differ non-trivially by how ‘small’ is 

operationally defined, and do not do so 

unidirectionally 241 across 

methodologies and data sources. The 

differences between the smallest and 

largest estimated values per industry 

group can lead to small business impact 

analyses that differ in anticipated 

magnitudes of effect by over 28,900 

firms collectively, meaning that an 

incremental change of $100 in cost per 

firm could vary in aggregate estimated 

impact on small businesses by almost $3 

million. Because estimates of aggregate 

economic effects can thus depend to 

such an extent on methodological 

choices rather than business 

fundamentals, FinCEN instead 

considered economic effects estimated 

and presented at a per-firm by primary 

business category level of analysis as 

more informative. 

The following table (Table 6) further 

illustrates the extent to which an 

estimate of the population of potentially 

affected small entities depends on how 

the term ‘small’ is defined, as 

operationalized over the most recent 

vintages of data available from the 

Census Bureau,242 but it can also be 

used to approximate potential aggregate 

economic effects as a function of the 

per-firm cost analysis below while 

allowing the reader greater flexibility to 

impose the assumptions about the 

extent to which various small 

businesses would be implicated by the 

proposed rule, as each deems most 

reasonable. 

BILLING CODE 4810–02–P 


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243See Section VII.A.4.a. 

2. Expectations of Impact 

At this time, it is unclear how 

individual small entities or categories of 

small entities may choose to respond to 

the proposed rule, as a broad range of 

potentially optimal behaviors and 

outcomes are possible. FinCEN has 

carefully considered the economic 

impact associated with the spectrum of 

possible scenarios a small entity might 

face and summarizes its expectations of 

economic impacts in the paragraphs 

below. To preliminarily clarify why 

certain costs are presented on a per-firm 

basis while others are presented per 

transaction, it is important to keep the 

distinction in mind between the 

anticipated costs of compliance, like 

training, that are independent of 

participation in reporting activity and 

those that are transaction-based, or 

conditional, on participation in a 

reportable transfer, like reporting and 

recordkeeping. Further, and within 

transaction-based costs, there are costs 

incurred by the reporting person that are 

independent of a designation agreement, 

costs incurred by the reporting person 

only when a designation agreement 

exists, and costs incurred by nonreporting persons when a designation 

agreement exists.243

The table below (Table 7) presents 

FinCEN estimates of the average annual 

payroll costs per employee at each of 

the types of small entities to whom the 

proposed rule would apply. This data 

provides a benchmark against which the 

anticipated costs of the proposed rule 

can be compared. FinCEN believes that 

an assessment of economic impact 

relative to individual payroll expenses 

is more appropriate for the purposes of 

this exercise because an analysis 

alternatively based on business receipts 

would need to rely upon the most recent 

SUSB that includes revenue data. That 

survey is approximately seven years old 

and predates the impacts of the COVID– 

19 pandemic on the residential real 

estate market, the market which is the 

specific domain to which the proposed 

rule would apply. Payroll data is 

available for more recent vintages of the 

survey and is therefore more likely to 

reflect the number, distribution, and 

labor costs of the businesses to whom 

the proposed rule would apply. 

Furthermore, because estimated costs 

have been presented at a per-employee 

and per-transaction level throughout the 

RIA, FinCEN expects that the individual 

business reading the analysis, and best 

apprised of its own annual revenues, 

should have the requisite pieces of 

information necessary to individually 

assess the potential impact relative to its 

own unique facts and circumstances. 


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Table 6: Proportion of Potentially Affected Small Entities by Definition of' Small' 

Firms Deemed 'Small' as Defined by 

Maximum <20 <500 Average 

Primary Business NAICS Annual Receipts Employees Employees Receipts below 

Categories Code for 'Small' in 2021b in 2021 SBA threshold 

Desif[flationa in 2017c 

Title Abstract and 541191 $19.5 million 90.89% 97.29% 99.24% Settlement Offices 

Direct Title 524127 $47 million 90.05% 99.87% 95.35% Insurance Carriers 

Other Activities 

Related to Real 531390 $19.5 million 97.00% 99.70% 99.09% 

Estate 

Offices of Lawyers 541110 $15.5 million 95.45% 99.87% 99.32% 

Offices of Real 

Estate Agents and 531210 $15 million 98.85% 99.90% 99.64% 

Brokers 

• 13 CFR 121.201. 

bThese estimates correspond to the following number of firms as reported in the SUSB 2021 data (<20, <500): 

Title and Abstract Settlement Offices, 6.023 and 6,571, respectively; Direct Title Insurance Carriers, 796 and 

865, respectively; Other Activities Related to Real Estate, 18,185 and 18,692, respectively; Offices of Lawyers, 

15,308 and 16,017, respectively; and Office of Real Estate Agents and Brokers, 128,951 and 130,331, 

respectively. 

0 Data on firm receipts is only available in years that end in two or seven; to utilize SBA receipts thresholds, 2017 

survey data is the most recent usable vintage. These estimates correspond to the following number of firms as 

reported in the SUSB 2017 data: Title Abstract and Settlement Offices (6,782), Direct Title Insurance Carriers 

(738), Other Activities Related to Real Estate (15,474), Offices of Lawyers (16,262), and Offices of Real Estates 

Agents and Brokers (106,461). 
12460 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

244A recent article indicated that the top ten title 

insurers in 2022 enjoyed an 88.4 percent market 

share. See American Land Title Association, ALTA 

Reports Full-Year, Q4 2022 Title Insurance 

Premium Volume (May 8, 2023), available at 

https://www.prnewswire.com/news-releases/altareports-full-year-q4-2022-title-insurance-premiumvolume-301817499.html. 

BILLING CODE 4810–02–C 

a. Scenario 1: Little to No Effect 

Some small entities can reasonably be 

expected to experience little to no 

economic impact from the rule. The 

kinds of small entities that would face 

this scenario include both those 

unaffected because they ex ante do not 

participate in reportable transfers and 

those that ensure they do not ex post. 

Among other examples, this would be 

the case for all small entities that, in the 

ordinary course of business, do not 

provide services to the non-financed 

transfers of residential property to 

which the proposed rule pertains. 

FinCEN notes that, at present, there is 

no comprehensive data regarding the 

distribution of cascade-identified 

services used in connection with the 

proposed reportable transfers that is 

organized by firm size of the service 

providers and their primary business 

categories. It is therefore not known if, 

for example, the majority of parties to 

the proposed reportable transfers have 

historically obtained services from 

predominantly larger firms in a given 

industry. While some evidence on the 

market concentration of title insurers 

suggests this might be the case for their 

services in real estate transactions more 

generally,244 it is unclear how 

transferable that observation would be 

to non-financed transactions 

exclusively. In cases where a small 

business in one of the identified 

primary business categories does not 

participate in non-financed, non-exempt 

transfers of residential property to a 

transferee entity or transferee trust, the 

proposed rule would not apply, and 

therefore no costs associated with 

training, reporting, or recordkeeping 

would be incurred. 

Alternatively, some small entities to 

whom the proposed rule would apply 

(based on the previous provision of 

services to transactions that would 

become reportable) might, in light of the 

reporting requirement, preemptively 

adopt a business policy of not providing 

services to non-financed residential 

property transfers or otherwise form 

arrangements to ensure they do not 

become the reporting person. This 

would allow them to similarly forgo the 

need to implement training programs or 

incur compliance costs related to 

reporting or recordkeeping to the same 

extent as those small businesses who 

had never previously facilitated the 

proposed newly reportable transfers. 

Admittedly, these strategies may not be 

entirely cost-free as certain firms may 

incur some costs in the form of forgone 

transactions. Additionally, there may 

also be some transaction costs to 

forming the kinds of alternative 

arrangements, external business 

agreements, or partnerships necessary to 

ensure reportable transfers remain 

substantially unaffected, as desired. In 

many cases, FinCEN contemplates that 

a small business may ensure 


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Table 7: Average Annual Payroll Expense per Employee at Small Entity 

by Primary Business 

Average Payroll/Number of Employees by 

Operational Definition of 'Small' 

Maximum Average 

Primary Annual <20 Employees <500 Employees Receipts 

NAICS below SBA Business Code Receipts for (2021, (2021, threshold Categories 'Small' unadjusted) unadjusted) (2017, Designation a unadjusted) 

Title Abstract 

and Settlement 541191 $19.5 million $56,759.15 $63,006.04 $57,719.33 

Offices 

Direct Title 

Insurance 524127 $47 million $61,332.52 $77,798.41 $59,706.51 

Carriers 

Other 

Activities 531390 $19.5 million $75,867.45 $83,902.18 $94,179.03 Related to Real 

Estate 

Offices of 541110 $15.5 million $73,259.85 $90,790.19 $98,885.14 Lawvers 

Offices of Real 

Estate Agents 531210 $15 million $59,335.71 $61,692.48 $61,693.20 

and Brokers 

"13 CFR 121.201. 
Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 12461 

245See R.H. Coase, ‘‘The Problem of Social Cost,’’ 

The Journal of Law and Economics, vol. 3 (Oct. 

1960). While Coase Theorem traditionally pertains 

to the resolution of externality problems by private 

parties given an initial allocation of property rights, 

the principle is expected in this context to apply 

similarly to the assignment of the proposed 

reporting requirement (and related costs) between 

businesses servicing a reportable transfer given an 

original assignment of the reporting responsibility. 

246See discussion of designation agreement 

specific recordkeeping costs, supra Section 

VII.A.4.a.iii. 

247See Section II.B.3; see also Section VII.A.1.a.i. 

248See Table 3; see generally Section VII.A.4.a.i. 

249See Section VII.G; see also discussion of 

recordkeeping costs, supra Section VII.A.4.a.iii; see 

also discussion of recordkeeping costs, infra 

Section VII.C.2.c and Table 11. 

250See Section VII.E; see also discussion of 

expected reporting costs, supra Section VII.A.4.a.ii; 

see also discussion of reporting costs, infra Section 

VII.C.2.c and Table 10. 

251 Id. 

252Supra, note 250. 

accordingly via relatively informal 

arrangements, such as verbally (or else, 

absent formal consideration), with 

longstanding providers of 

contemporaneous closing services to the 

types of residential property 

transactions that would otherwise 

require the small business to file a Real 

Estate Report under the proposed rule. 

While such arrangements might be 

formed at the minimal cost of a short 

phone call or in the course of an 

informal conversation, all of which 

would be considered de minimis costs, 

other forms of agreement might be more 

costly to certain small businesses. 

FinCEN notes that in keeping with the 

general principle of Coase Theorem,245

nothing prevents potential private 

bargaining arrangements by which an 

otherwise obligated reporting person 

might transfer the bulk of their 

responsibilities via an ex ante agreement 

to compensate their respective 

counterparty’s costs associated with a 

designation agreement,246 either via 

performance of the related 

documentation exercise or via financial 

consideration commensurate with the 

designation agreement-specific costs. A 

more detailed estimate of such costs is 

articulated in the scenario analysis that 

follows. 

b. Scenario 2: Partial Effect 

Other small entities may only be 

marginally affected. These kinds of 

small entities may include some that 

already have experience reporting under 

the Residential Real Estate GTO to the 

extent that such title insurers qualify as 

‘small.’ 247 Such entities already have 

expended resources to establish a 

compliance infrastructure, and given the 

similarities between the requirements 

under the Residential Real Estate GTOs 

and the requirements that would be 

imposed under the proposed rule, some 

of those costs would not to be replicated 

to comply with the proposed rule. 

Therefore, the economic impact of the 

proposed rule on such entities will 

likely be less than it would be for 

entities who are not currently subject to 

the Residential Real Estate GTOs. The 

category of marginally affected small 

entities would also include entities that 

are categorically unlikely to become the 

reporting person when participating in 

reportable transfers. 

For example, small entities that 

facilitate a reportable transaction along 

with other members of the reporting 

cascade may, by the nature of the 

service they provide, always reside in a 

tier below other service-providing 

entities and/or because of being further 

removed from the details required for 

the proposed Real Estate Report, may be 

unlikely to be designated in place of 

higher tier cascade members. Similarly, 

the nature of the service they provide 

may make it less likely that a reportable 

transfer occurs in which their service is 

the only third-party service obtained. As 

such, the main costs incurred as a 

consequence of the proposed rule would 

be associated with training,248 which 

would still be necessary to ensure 

proper recordkeeping 249 associated 

with designation agreements and 

preparedness for reporting 250 in the rare 

event either is required. FinCEN notes 

that, as proposed, no designation 

agreement with a lower-tier service 

provider is required if a higher-tier party 

to a transaction files the required Real 

Estate Report, and entities in tiers lower 

than the reporting person are not 

required to verify or document 

verification that the higher-tier party 

filed the report. Therefore, to the extent 

that a marginally affected small entity of 

the type described here incurs 

reporting 251 or recordkeeping costs,252

it would only be in instances where the 

tiers above it were absent from a deal, 

in which case it may still have the 

ability to designate the reporting 

requirements if lower tier services are 

being provided by an additional party to 

the transaction. 

For small entities whose primary 

costs burden will be associated with 

employee training, such costs would 

represent an increase in payroll expense 

of approximately 0.2 percent per trained 

employee (see Tables 8 and 9 below, 

derived from Tables 3 and 7 above). 

Such a change is not expected to be 

economically significant. FinCEN 

further notes that while its RIA 

incorporates estimates that are informed 

by the previous CDD model of how 

training is operationalized, the proposed 

rule itself is silent on the manner, 

format, and duration of training, and the 

proportion of a business’s workforce 

that needs to be trained. Therefore, to 

the extent that a small business may 

effectively train a sufficient proportion 

of its workforce to the necessary degree 

of familiarity with the proposed rule’s 

reporting requirements to ensure 

appropriate compliance at costs lower 

than FinCEN estimates, it is expected to 

do so at its discretion. 

BILLING CODE 4810–02–P 


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12462 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

c. Scenario 3: Full Effect 

The small entities that would be most 

affected are those that would, as a 

consequence of the proposed rule, incur 

the full reporting requirement with 

certainty. 

This could occur because no other 

members of the proposed reporting 

cascade participate in a given reportable 

transfer or because, when other cascade 

members participate in a reportable 

transfer, no designation agreement 

reassigns the reporting requirement 

away from the small entity. In this 


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Table 8: Initial Training Costs as a Fraction of Payroll 

Per Person Initial Training Costs as a Fraction of Average Payroll/Number of 

Emolovees Individual Annual Payroll Expense 'Small' as Defined by 

Maximum Average 

NAICS Annual < 20 < 500 Receipts 

Primary Employment Code Receipts for Employees Employees below SBA 

'Small' (2021) (2021) threshold a 

Designation (2017) 

Title Abstract and Settlement 541191 $ 19.5 million 0.15% 0.14% 0.15% Offices 

Direct Title Insurance Carriers 524127 $ 47 million 0.17% 0.14% 0.18% 

Other Activities Related to Real 531390 $ 19.5 million 0.12% 0.10% 0.09% Estate 

Offices of Lawyers 541110 $ 15.5 million 0.15% 0.12% 0.11% 

Offices of Real Estate Agents 531210 $ 15 million 0.15% 0.14% 0.14% and Brokers 

a 13 CFR 121.201. 

Table 9: Refresher Training Costs as a Fraction of Payroll 

Per Person Ref res her Training Costs Average Payroll/Number of Employees 

(Unadjusted) as a Fraction of Individual 'Small' as Defined by Annual Payroll Expense 

Average 

Maximum < 20 < 500 Receipts 

Primary NAICS Annual Receipts Employees Employees below SBA 

Employment Code for 'Small' (2021, (2021, threshold a 

Designation unadjusted) unadjusted) (2017, 

unadjusted) 

Title Abstract and 541191 $ 19.5 million 0.06% 0.06% 0.06% Settlement Offices 

Direct Title 524127 $ 47 million 0.07% 0.05% 0.07% Insurance Carriers 

Other Activities 

Related to Real 531390 $ 19.5 million 0.05% 0.04% 0.04% 

Estate 

Offices of Lawyers 541110 $ 15.5 million 0.06% 0.05% 0.04% 

Offices of Real 

Estate Agents and 531210 $ 15 million 0.06% 0.06% 0.06% 

Brokers 

a 13 CFR 121.201. 
Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 12463 

253 In the event that the small entity is the 

reporting person because no other person described 

in the cascade is involved in the transfer, costs are 

reduced by the absence of additional time needed 

to determine the reporting person and the absence 

of time associated with the preparation, circulation, 

and recordkeeping associated with a designation 

agreement. 

254FinCEN notes that because the proposed rule 

is intended to replace the current Residential Real 

Estate GTOs reporting requirement, framing the 

expected economic impact in terms of cost 

increases may overstate the anticipated incremental 

burden of compliance, particularly for small direct 

title insurance carriers. 

scenario, the small entity would incur 

the full or near full expected costs 

associated with training, reporting, and 

recordkeeping.253 Tables 10 and 11 

below indicated that this would 

introduce a cost comparable to an 

approximately 0.5 percent increase in 

average small entity annual payroll 

expense for one employee per 

transaction.254


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Table 10: Reporting Costs as a Fraction of Payroll 

Per Transaction Reporting Costs as a Fraction of Average Payroll/Number of Employees 

Individual Annual Payroll Expense 'Small' as Defined by 

Average 

<20 < 500 Receipts 

Primary Employment Employees Employees below SBA 

(2021, (2021, threshold a 

unadjusted) unadjusted) (2017, 

unad;usted) 

bl) Title Abstract and Settlement Offices 0.03% 0.03% 0.03% 

.s I 

= Direct Title Insurance Carriers 0.03% 0.03% 0.04% t: .9 "cl &p ti:i (I) Other Activities Related to Real Estate 0.02% 0.02% 0.02% ~ = jg Cl! bl) (I) Offices of Lawyers 0.03% 0.02% 0.02% ,A.. ·;i ~ 

= (I) 

0 0 Offices of Real Estate Agents and z 

Brokers 0.03% 0.03% 0.03% 

Title Abstract and Settlement Offices 0.03% 0.03% 0.03% I 

= Direct Title Insurance Carriers 0.03% 0.03% 0.04% .9 "cl ti:i (I) Other Activities Related to Real Estate 0.02% 0.02% 0.02% = jg 

~ -~~ Offices of Lawyers 0.03% 0.02% 0.02% (I) 

A,; 0 Offices of Real Estate Agents and 0.03% 0.03% 0.03% 

bl) Brokers 

= ·-e Title Abstract and Settlement Offices 0.34% 0.31% 0.34% 

0 

0.. I_..., 

Direct Title Insurance Carriers 0.38% 0.30% 0.39% ~ § 5 

-~-g 

= Other Activities Related to Real Estate 0.26% 0.23% 0.21% (I) bl) 0.. 

Offices of Lawyers 0.33% 0.27% 0.25% ·- (I) 00 "cl (I) = o- Offices of Real Estate Agents and 0.33% 0.31% 0.31% Brokers 

a 13 CFR 121.201. 
12464 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

255See description of designation agreement time 

costs, supra Section VII.A.4.a.ii. 

256See description of designation agreement time 

and technology costs, supra Section VII.A.4.a.iii; 

see also Table 8. 

257Because the RFA does not statutorily define 

‘‘significant’’ the SBA has acknowledged that what 

is ‘‘significant’’ will vary depending on the 

economics of the industry or sector to be regulated. 

The agency is in the best position to gauge the small 

entity impacts of its regulations.’’ See Small 

Business Administration, How to Comply with the 

Regulatory Flexibility Act (updated Aug. 2017), 

page 18available at https://advocacy.sba.gov/wpcontent/uploads/2019/06/How-to-Comply-with-theRFA.pdf. Nevertheless, it has suggested that one 

potentially appropriate measure of an economically 

significant impact is one that ‘‘exceeds 5 percent of 

the labor costs of the entities in the sector.’’ Id. p 

19. FinCEN analysis here identifies a maximum 

average per transaction cost of approximately 0.5 

percent, which is a full order of magnitude smaller 

than the proposed SBA threshold. 

BILLING CODE 4810–02–C 

Alternatively, a small entity, for 

reasons of its own, might adopt a 

business policy to always be the 

reporting person on reportable 

transactions. In this case it would incur 

the incremental additional costs 

associated with preparing 255 and 

circulating a designation agreement 256

whenever higher-tier parties to the 

transaction participate but its cost 

profile would otherwise resemble the 

other types of ‘full effect’ small entities. 

The economic impact does not appear to 

be significant in these cases, which 

would be expected to impose the 

highest costs.257

While the general consensus of this 

analysis across the potential scenarios 

that a small business could find itself in, 

as a consequence of the proposed rule, 

is that the related incremental costs are 

not likely to be economically 

significant, it may also be worth nothing 

that an economically significant cost 

generally need not imply that the 

economic impact on a given firm or 

industry would also be significant. 

While that could be the case, the former 

is not a sufficient condition for the 

latter. 

Because a non-financed residential 

property transfer involving one or more 

potential reporting persons, unless 

exempt, must be reported, the parties 

between whom the ownership transfers 

may have relatively little bargaining 

power over the extent to which 

incremental costs related to the 

proposed rule are passed-through. 

Parties may have few viable alternatives 

to compensating the reporting person 

for its additional compliance-related 

services other than to conduct the 

transaction with no reporting persons 

involved in the transfer. This may be 

undesirable to the parties engaged in the 

transfer for a number of risk and/or 

convenience-related reasons that 

outweigh the marginal increase in 

transaction fees. As such, even in a 


lotter on DSK11XQN23PROD with PROPOSALS2EP16FE24.010</GPH>

Table 11: Recordkeeping Costs as a Fraction of Payroll 

Per Transaction Total Recordkeeping Costs as a Fraction Average Payroll/Number of Employees 

of Individual Annual Payroll Expense 'Small' as Defined by 

Average 

<20 < 500 Receipts 

Primary Employment Employees Employees below SBA 

(2021, (2021, threshold a 

unadjusted) unadjusted) (2017, 

unadiusted) 

oJ) Title Abstract and Settlement Offices 0.011% 0.009% 0.010% 

-~ I 

= Direct Title Insurance Carriers 0.012% 0.009% 0.012% .9 "C &e t,j (l) Other Activities Related to Real Estate 0.008% 0.007% 0.006% ~ = jg ro -~~ Offices of Lawyers 0.010% 0.008% 0.008% ,P... 

= (l) 

0 Cl Offices of Real Estate Agents and z 

Brokers 0.010% 0.010% 0.010% 

Title Abstract and Settlement Offices 0.011% 0.009% 0.010% I 

= Direct Title Insurance Carriers 0.012% 0.009% 0.012% .9 "C t,j (l) Other Activities Related to Real Estate 0.008% 0.007% 0.006% = jg 

~ -~~ Offices of Lawyers 0.010% 0.008% 0.008% (l) 

p... Cl Offices of Real Estate Agents and 0.010% 0.010% 0.010% 

gJl Brokers 

·-e Title Abstract and Settlement Offices 0.12% 0.11% 0.12% 0 

0. = "El Direct Title Insurance Carriers 0.14% 0.11% 0.14% ~ 0 (l) 

-~-g 

= Other Activities Related to Real Estate 0.09% 0.08% 0.07% (l) oJ) 0. 

Offices of Lawyers 0.12% 0.10% 0.09% ..... (l) 

fl) "C 

~ ..s Offices of Real Estate Agents and 0.12% 0.11% 0.11% Brokers 

a 13 CFR 121.201. 

* Total Recordkeeping cost estimates include both labor (wages) and technology costs ($0.10) 
Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 12465 

258For example, the full costs of newly 

implementing a training program, filing the 

proposed Real Estate Report (potentially on that 

includes a designation agreement), and complying 

with the proposed recordkeeping requirements. 

259See 2 U.S.C. 1532(a). 

260The U.S. Bureau of Economic Analysis 

reported the annual value of the gross domestic 

product (GDP) deflator in 1995 (the year in which 

UMRA was enacted) as 71.823; and in 2022 as 

127.215. See U.S. Bureau of Economic Analysis, 

‘‘Implicit Price Deflators for Gross Domestic 

Product,’’ Table 1.1.9, available at https://

apps.bea.gov/iTable/?reqid=19&step=2&isuri=

1&categories=survey%23eyJhcHBpZCI6MTks

InN0ZXBzIjpbMSwyLDMsM10sImRh

dGEiOltbIkNhdGVnb3JpZXMiLCJTdXJ2ZXkiXSxbIk

5JUEFfVGFibGVfTGlzdCIsIjEzIl0sWyJGaXJzdF

9ZZWFyIiwiMTk5NSJdLFsiTGFzdF9ZZWFy

IiwiMjAyMSJdLFsiU2NhbGU

iLCIwIl0sWyJTZXJpZXMiLCJBIl1dfQ. Thus, the 

inflation adjusted estimate for $100 million is 

127.215 divided by 71.823 and then multiplied by 

100, or $177 million. 

261See Section VII.A.5; see generally Section 

VII.A. 

262See 44 U.S.C. 3506(c)(2)(A). 

263This estimate represents the upper bound 

estimate of reportable transfers per year as 

described in greater detail above in Section 

VII.A.2.c.i. 

264This estimate includes the upper bound 

estimates of the time burden of compliance, as 

described in greater detail above, with the proposed 

reporting and recordkeeping requirements. See 

Section VII.A.4.a.ii; Section VII.A.4.a.iii. 

265This estimate includes the upper bound 

estimates of the wage and technology costs of 

compliance, as described in greater detail above, 

with the proposed reporting and recordkeeping 

requirements. See Section VII.A.4.a.ii; Section 

VII.A.4.a.iii. 

scenario under which small entities 

would face the highest incremental 

costs,258 it still may not be the case that 

the direct economic impact on these 

small entities will be significant. 

3. Certification 

Having considered the various 

possible outcomes (as grouped above by 

scenarios FinCEN anticipates as most 

likely) for small entities under the 

proposed reporting requirements, 

FinCEN certifies that the rule, if 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities. FinCEN 

invites comments from members of the 

public. 

D. Unfunded Mandates Reform Act 

Section 202 of the UMRA 259 requires 

that an agency prepare a statement 

before promulgating a rule that may 

result in expenditure by state, local, and 

Tribal governments, or the private 

sector, in the aggregate, of $177 million 

or more in any one year.260 Section 202 

of the UMRA also requires an agency to 

identify and consider a reasonable 

number of regulatory alternatives before 

promulgating a rule. FinCEN believes 

that the preceding assessment of 

impact 261 satisfies the UMRA’s 

analytical requirements, but invites 

public comment on any additional 

factors that, if considered, would 

materially alter the conclusions of the 

RIA. 

E. Paperwork Reduction Act 

The new reporting requirements in 

this proposed rule are being submitted 

to OMB for review in accordance with 

the PRA.262 Under the PRA, an agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information unless it 

displays a valid control number 

assigned by OMB. Written comments 

and recommendations for the proposed 

collection can be submitted by visiting 

www.reginfo.gov/public/do/PRAMain. 

Find this document by selecting 

‘‘Currently Under Review—Open for 

Public Comments’’ or by using the 

search function. Comments are welcome 

and must be received by April 16, 2024. 

In accordance with the requirements of 

the PRA and its implementing 

regulations, 5 CFR part 1320, the 

following details concerning the 

collections of information are presented 

to assist those persons wishing to 

comment. 

Reporting and Recordkeeping 

Requirements: The provisions in this 

proposed rule pertaining to the 

collection of information can be found 

in paragraph (a) of proposed 31 CFR 

1031.320. The information that would 

be required to be reported by the 

proposed rule would be used by the 

U.S. Government to monitor and 

investigate money laundering in the 

U.S. residential real estate sector. The 

information required to be maintained 

by the proposed will be used by federal 

agencies to verify compliance by 

reporting persons with the provisions of 

the proposed rule. The collection of 

information is mandatory. 

OMB Control Numbers: 1506–XXX. 

Frequency: As required. 

Description of Affected Public: 

Residential Real Estate Settlement 

Agents, Title Insurance Carriers, Escrow 

Service Providers, Other Real Estate 

Professionals. 

Estimated Number of Responses: 

850,000 263

Estimated Total Annual Reporting 

and Recordkeeping Burden: 4,604,167 

burden hours 264

Estimated Total Annual Reporting 

and Recordkeeping Cost: 

$396,610,297.74 265

General Request for Comments under 

the Paperwork Reduction Act: 

Comments submitted in response to this 

notice will be summarized and included 

in a request for OMB approval. All 

comments will become a matter of 

public record. Comments are invited on 

the following categories: (a) whether the 

collection of information is necessary 

for the proper performance of the 

functions of the agency, including 

whether the information shall have 

practical utility; (b) the accuracy of the 

agency’s estimate of the burden of the 

collection of information; (c) ways to 

enhance the quality, utility, and clarity 

of the information to be collected; (d) 

ways to minimize the burden of the 

collection of information on reporting 

persons, including through the use of 

technology; and (e) estimates of capital 

or start-up costs and costs of operation, 

maintenance, and purchase of services 

required to provide information. 

F. Additional Requests for Comment 

1. In addition, FinCEN generally 

invites comment on the accuracy of 

FinCEN’s regulatory analysis. FinCEN 

specifically requests comments— 

including data or studies—that provide 

additional insight on the following: 

What would be the short-term costs, 

burdens, and benefits associated with 

using a new reporting form to file the 

proposed information? The long term? 

What would be the costs, burdens, and 

benefits associated with collecting and 

storing the information detailed in this 

NPRM? 

2. Would FinCEN’s proposed 

regulatory requirements be integrated 

into current compliance programs in 

ways that are significantly more (or less) 

costly than anticipated in the RIA? How 

much time would be needed to 

successfully integrate them into current 

systems and procedures? 

3. Would reporting persons and their 

employers integrate implementation 

costs into their existing budgets in ways 

that substantially differ from the 

expectations described in the RIA? If so, 

how might this affect the reliability or 

accuracy of the estimated costs? 

4. Is FinCEN correct in assuming that, 

in a single reportable real estate 

transaction, only one business would 

perform any of the functions described 

in the first three tiers of the reporting 

cascade? If not, please provide details 

about, or examples of instances where, 

multiple parties with functions 

described in the first three tiers of the 

cascade would participate in a single 

transaction. If multiple parties do 

participate, would this result in an 

impact on the burden of compliance 

with the rule? 

5. Of the affected parties identified in 

this analysis, would certain 

nonfinancial trades or businesses incur 

higher costs compared to others under 

this proposed rule? Why? 


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12466 Federal Register / Vol. 89, No. 33 / Friday, February 16, 2024 / Proposed Rules 

6. Please detail any aspects of the 

proposed rule that may cause a business 

to operate at a competitive disadvantage 

compared to any business that offers 

similar services but would be outside 

the scope of the proposed rule. 

7. To what extent are the services 

identified in the proposed reporting 

cascade likely to be primarily provided 

by small businesses? 

8. To what extent might the costs of 

compliance with the proposed rule 

dissuade certain small businesses from 

providing services to reportable 

transfers? How large is the economic 

value of such potentially foregone 

transactions to small businesses? If 

possible, please provide data that would 

enable the quantification of these costs. 

9. Please detail any aspects of the 

proposed rule that may cause a small 

business to operate at a competitive 

disadvantage compared to other 

businesses that offers similar services. 

10. To what extent might the parties 

who would be reporting persons under 

the proposed rule be able to pass the 

costs of compliance on to downstream 

customers/clients? Are there concerns 

about such an allocation of the 

economic burden of compliance? 

11. To the extent that services in the 

proposed reporting cascade tiers are 

currently ordered such that a small 

business would precede a larger 

business, are there any economic costs 

to designation or significant transaction 

frictions that would prevent reassigning 

the obligation in cases where the larger 

business is better positioned to absorb 

compliance costs? 

List of Subjects in 31 CFR Part 1031 

Administrative practice and 

procedure, Aliens, Authority 

delegations (Government agencies), 

Bankruptcy, Banks and banking, 

Brokers, Buildings and facilities, 

Business and industry, Condominiums, 

Cooperatives, Currency, Citizenship and 

naturalization, Electronic filing, Estates, 

Fair housing, Federal home loan banks, 

Federal savings associations, FederalStates relations, Foreign investments in 

U.S., Foreign persons, Foundations, 

Holding companies, Home 

improvement, Homesteads, Housing, 

Indian—law, Indians, Indians—tribal 

government, Insurance companies, 

Investment advisers, Investment 

companies, Investigations, Law 

enforcement, Lawyers, Legal services, 

Low and moderate income housing, 

Mortgage insurances, Mortgages, 

Penalties, Privacy, Real property 

acquisition, Reporting and 

recordkeeping requirements, Small 

businesses, Securities, Taxes, Terrorism, 

Time, Trusts and trustees, Zoning. 

Authority and Issuance 

■ For the reasons set forth in the 

preamble, chapter X of title 31 of the 

Code of Federal Regulations is proposed 

to be amended by adding part 1031 to 

read as follows: 

PART 1031—RULES FOR PERSONS 

INVOLVED IN REAL ESTATE 

CLOSINGS AND SETTLEMENTS 

Subparts A–B [Reserved] 

Subpart C—Reports Required To Be Made 

by Persons Involved in Real Estate 

Closings and Settlements 

Sec. 

1031.320 Reports of residential real 

property transfers. 

1031.321 [Reserved] 

Authority: 12 U.S.C. 1829b, 1951–1959; 31 

U.S.C. 5311–5314, 5316–5336; title III, sec. 

314 Pub. L. 107–56, 115 Stat. 307; sec. 701 

Pub. L. 114–74, 129 Stat. 599; sec. 6403, Pub. 

L. 116–283, 134 Stat. 3388. 

Subparts A–B [Reserved] 

Subpart C—Reports Required To Be 

Made by Persons Involved in Real 

Estate Closings and Settlements 

§ 1031.320 Reports of residential real 

property transfers. 

(a) General. A residential real 

property transfer as defined in 

paragraph (b) of this section (‘‘reportable 

transfer’’) shall be reported to FinCEN 

by the reporting person identified in 

paragraph (c) of this section. The report 

shall include the information described 

in paragraphs (d) through (i) of this 

section. Terms not defined in paragraph 

(j) of this section are defined in 31 CFR 

1010.100. The report required by this 

section shall be filed in the form and 

manner, and at the time, specified in 

paragraph (k) of this section. Records 

shall be retained as specified in 

paragraph (l) of this section and are not 

confidential as specified in paragraph 

(m) of this section. 

(b) Reportable transfer. (1) Except as 

set forth in paragraph (b)(2) of this 

section, a reportable transfer is a transfer 

to a transferee entity or transferee trust 

of an ownership interest in: 

(i) Real property located in the United 

States containing a structure designed 

principally for occupancy by one to four 

families; 

(ii) Vacant or unimproved land 

located in the United States zoned, or 

for which a permit has been issued, for 

the construction of a structure designed 

principally for occupancy by one to four 

families; or 

(iii) Shares in a cooperative housing 

corporation where such transfer does 

not involve an extension of credit to all 

transferees that is: 

(A) Secured by the transferred 

residential real property; and 

(B) Extended by a financial institution 

that has both an obligation to maintain 

an anti-money laundering program and 

an obligation to report suspicious 

transactions under this chapter. 

(2) A reportable transfer does not 

include a: 

(i) Grant, transfer, or revocation of an 

easement; 

(ii) Transfer resulting from the death 

of an owner of residential real property; 

(iii) Transfer incident to divorce or 

dissolution of a marriage; 

(iv) Transfer to a bankruptcy estate; or 

(v) Transfer for which there is no 

reporting person. 

(c) Determination of reporting person. 

(1) Except as set forth in paragraphs 

(c)(2) and (3) of this section, the 

reporting person for a reportable transfer 

is the person engaged within the United 

States as a business in the provision of 

real estate closing and settlement 

services that is: 

(i) The person listed as the closing or 

settlement agent on the closing or 

settlement statement for the transfer; 

(ii) If no person is described in 

paragraph (c)(1)(i) of this section, the 

person that prepares the closing or 

settlement statement for the transfer; 

(iii) If no person is described in 

paragraph (c)(1)(i) or (ii) of this section, 

the person that files with the 

recordation office the deed or other 

instrument that transfers ownership of 

the residential real property; 

(iv) If no person described in 

paragraph (c)(1)(i), (ii), or (iii) of this 

section is involved in the transfer, then 

the person that underwrites an owner’s 

title insurance policy for the transferee 

with respect to the transferred 

residential real property, such as a title 

insurance company; 

(v) If no person described in 

paragraph (c)(1)(i), (ii), (iii), or (iv) of 

this section is involved in the transfer, 

then the person that disburses in any 

form, including from an escrow account, 

trust account, or lawyers’ trust account, 

the greatest amount of funds in 

connection with the residential real 

property transfer; 

(vi) If no person described in 

paragraph (c)(1)(i), (ii), (iii), (iv), or (v) 

of this section is involved in the 

transfer, then the person that provides 

an evaluation of the status of the title; 

or 

(vii) If no person described in 

paragraph (c)(1)(i), (ii), (iii), (iv), (v), or 

(vi) of this section is involved in the 

transfer, then the person that prepares 

the deed or, if no deed is involved, any 


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other legal instrument that transfers 

ownership of the residential real 

property. 

(2) Employees, agents, and partners. If 

an employee, agent, or partner acting 

within the scope of such individual’s 

employment, agency, or partnership 

would be the reporting person as 

determined in paragraph (c)(1) of this 

section, then the individual’s employer, 

principal, or partnership is deemed to 

be the reporting person. 

(3) Designation agreement. (i) The 

reporting person described in paragraph 

(c)(1) of this section may agree with any 

other person described in paragraph 

(c)(1) to designate such other person as 

the reporting person with respect to the 

reportable transfer. The person 

designated by such agreement shall be 

the reporting person with respect to the 

transfer. 

(ii) A designation agreement shall be 

in writing, and shall include: 

(A) The date of the agreement; 

(B) The name and address of the 

transferor; 

(C) The name and address of the 

transferee entity or transferee trust; 

(D) Information described in in 

paragraph (g) identifying transferred 

residential real property; 

(E) The name and address of the 

person designated through the 

agreement as the reporting person with 

respect to the transfer; and 

(F) The name and address of all other 

parties to the agreement. 

(d) Information concerning the 

reporting person. The reporting person 

shall report: 

(1) The full legal name of the 

reporting person; 

(2) The category of reporting person, 

as determined in paragraph (c) of this 

section; and 

(3) The street address that is the 

reporting person’s principal place of 

business in the United States. 

(e) Information concerning the 

transferee—(1) Transferee entities. For 

each transferee entity involved in a 

reportable transfer, the reporting person 

shall report: 

(i) The following information for the 

transferee entity: 

(A) Full legal name; 

(B) Trade name or ‘‘doing business 

as’’ name, if any; 

(C) Complete current address 

consisting of: 

(1) The street address that is the 

transferee entity’s principal place of 

business; and 

(2) If such principal place of business 

is not in the United States, the street 

address of the primary location in the 

United States where the transferee 

entity conducts business, if any; and 

(D) Unique identifying number 

consisting of: 

(1) The Internal Revenue Service 

Taxpayer Identification Number (IRS 

TIN) of the transferee entity; 

(2) If the transferee entity has not been 

issued an IRS TIN, a tax identification 

number for the transferee entity that was 

issued by a foreign jurisdiction and the 

name of such jurisdiction; or 

(3) If the transferee entity has not been 

issued an IRS TIN or a foreign tax 

identification number, an entity 

registration number issued by a foreign 

jurisdiction and the name of such 

jurisdiction; 

(ii) The following information for 

each beneficial owner of the transferee 

entity: 

(A) Full legal name; 

(B) Date of birth; 

(C) Complete current residential street 

address; 

(D) Citizenship; and 

(E) Unique identifying number 

consisting of: 

(1) An IRS TIN; or 

(2) Where an IRS TIN has not been 

issued: 

(i) A tax identification number issued 

by a foreign jurisdiction and the name 

of such jurisdiction; or 

(ii) The unique identifying number 

and the issuing jurisdiction from a nonexpired passport issued by a foreign 

government; and 

(iii) The following information for 

each signing individual, if any: 

(A) Full legal name; 

(B) Date of birth; 

(C) Complete current residential street 

address; 

(D) Unique identifying number 

consisting of: 

(1) An IRS TIN; or 

(2) Where an IRS TIN has not been 

issued: 

(i) A tax identification number issued 

by a foreign jurisdiction and the name 

of such jurisdiction; or 

(ii) The unique identifying number 

and the issuing jurisdiction from a nonexpired passport issued by a foreign 

government to the individual; 

(E) Description of the capacity in 

which the individual is authorized to 

act as the signing individual; and 

(F) If the signing individual is acting 

in that capacity as an employee, agent, 

or partner, the name of the individual’s 

employer, principal, or partnership. 

(2) Transferee trusts. For each 

transferee trust in a reportable transfer, 

the reporting person shall report: 

(i) The following information for the 

transferee trust: 

(A) Full legal name, such as the full 

title of the agreement establishing the 

transferee trust; 

(B) Date the trust instrument was 

executed; 

(C) The street address that is the 

trust’s place of administration; 

(D) Unique identifying number, if any, 

consisting of: 

(1) IRS TIN; or 

(2) Where an IRS TIN has not been 

issued, a tax identification number 

issued by a foreign jurisdiction and the 

name of such jurisdiction; and 

(E) Whether the transferee trust is 

revocable; 

(ii) The following information for 

each trustee that is a legal entity: 

(A) Full legal name; 

(B) Trade name or ‘‘doing business 

as’’ name, if any; 

(C) Complete current address 

consisting of: 

(1) The street address that is the 

trustee’s principal place of business; 

and 

(2) If such principal place of business 

is not in the United States, the street 

address of the primary location in the 

United States where the trustee 

conducts business, if any; 

(D) Name and business address of the 

trust officer assigned to the transferee 

trust; and 

(E) Unique identifying number 

consisting of: 

(1) The IRS TIN of the trustee; 

(2) In the case that a trustee has not 

been issued an IRS TIN, a tax 

identification number issued by a 

foreign jurisdiction and the name of 

such jurisdiction; or 

(3) In the case that a trustee has not 

been issued an IRS TIN or a foreign tax 

identification umber, an entity 

registration number issued by a foreign 

jurisdiction and the name of such 

jurisdiction; and 

(F) For purposes of this section, an 

individual trustee of the transferee trust 

is considered to be a beneficial owner of 

the trust. As such, information on 

individual trustees must be reported in 

accordance with the requirements set 

forth in paragraph (e)(2)(iii) of this 

section; 

(iii) The following information for 

each beneficial owner of the transferee 

trust: 

(A) Full legal name; 

(B) Date of birth; 

(C) Complete current residential street 

address; 

(D) Citizenship; 

(E) Unique identifying number 

consisting of: 

(1) An IRS TIN; or 

(2) Where an IRS TIN has not been 

issued: 

(i) A tax identification number issued 

by a foreign jurisdiction and the name 

of such jurisdiction; or 


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(ii) The unique identifying number 

and the issuing jurisdiction from a nonexpired passport issued by a foreign 

government; and 

(F) The category of beneficial owner, 

as determined in paragraph (j)(1)(ii) of 

this section; and 

(iv) The following information for 

each signing individual, if any: 

(A) Full legal name; 

(B) Date of birth; 

(C) Complete current residential street 

address; 

(D) Unique identifying number 

consisting of: 

(1) An IRS TIN; or 

(2) Where an IRS TIN has not been 

issued: 

(i) A tax identification number issued 

by a foreign jurisdiction and the name 

of such jurisdiction; or 

(ii) The unique identifying number 

and the issuing jurisdiction from a nonexpired passport issued by a foreign 

government to the individual; 

(E) Description of the capacity in 

which the individual is authorized to 

act as the signing individual; and 

(F) If the signing individual is acting 

in that capacity as an employee, agent, 

or partner, the name of the individual’s 

employer, principal, or partnership. 

(3) Collection of beneficial ownership 

information from transferees. The 

reporting person may collect the 

information described in paragraphs 

(e)(1)(ii) and (e)(2)(iii) of this section 

from the transferee or a person 

representing the transferee in the 

reportable transfer, provided the 

transferee or their representative 

certifies in writing, to the best of their 

knowledge, the accuracy of the 

information. 

(f) Information concerning the 

transferor. For each transferor involved 

in a reportable transfer, the reporting 

person shall report: 

(1) The following information for a 

transferor who is an individual: 

(i) Full legal name; 

(ii) Date of birth; 

(iii) Complete current residential 

street address; and 

(iv) Unique identifying number 

consisting of: 

(A) An IRS TIN; or 

(B) Where an IRS TIN has not been 

issued: 

(1) A tax identification number issued 

by a foreign jurisdiction and the name 

of such jurisdiction; or 

(2) The unique identifying number 

and the issuing jurisdiction from a nonexpired passport issued by a foreign 

government to the individual; 

(2) The following information for a 

transferor that is a legal entity: 

(i) Full legal name; 

(ii) Trade name or ‘‘doing business 

as’’ name, if any; 

(iii) Complete current address 

consisting of: 

(A) The street address that is the legal 

entity’s principal place of business; and 

(B) If the principal place of business 

is not in the United States, the street 

address of the primary location in the 

United States where the legal entity 

conducts business, if any; and 

(iv) Unique identifying number 

consisting of: 

(A) An IRS TIN; 

(B) In the case that the legal entity has 

not been issued an IRS TIN, a tax 

identification number issued by a 

foreign jurisdiction and the name of 

such jurisdiction; or 

(C) In the case that the legal entity has 

not been issued an IRS TIN or a foreign 

tax identification number, an entity 

registration number issued by a foreign 

jurisdiction and the name of such 

jurisdiction; and 

(3) The following information for a 

transferor that is a trust: 

(i) Full legal name, such as the full 

title of the agreement establishing the 

trust; 

(ii) Date the trust instrument was 

executed; 

(iii) Unique identifying number, if 

any, consisting of: 

(A) IRS TIN; or 

(B) Where an IRS TIN has not been 

issued, a tax identification number 

issued by a foreign jurisdiction and the 

name of such jurisdiction; 

(iv) For each individual who is a 

trustee of the trust: 

(A) Full legal name; 

(B) Current residential street address; 

and 

(C) Unique identifying number 

consisting of: 

(1) An IRS TIN; or 

(2) Where an IRS TIN has not been 

issued: 

(i) A tax identification number issued 

by a foreign jurisdiction and the name 

of such jurisdiction; or 

(ii) The unique identifying number 

and the issuing jurisdiction from a nonexpired passport issued by a foreign 

government; and 

(v) For each legal entity that is a 

trustee of the trust: 

(A) Full legal name; 

(B) Trade name or ‘‘doing business 

as’’ name, if any; 

(C) Complete current address 

consisting of: 

(1) The street address that is the legal 

entity’s principal place of business; and 

(2) If the principal place of business 

is not in the United States, the street 

address of the primary location in the 

United States where the legal entity 

conducts business, if any; and 

(D) Unique identifying number 

consisting of: 

(1) An IRS TIN; 

(2) In the case that the legal entity has 

not been issued an IRS TIN, a tax 

identification number issued by a 

foreign jurisdiction and the name of 

such jurisdiction; or 

(3) In the case that the legal entity has 

not been issued an IRS TIN or a foreign 

tax identification number, an entity 

registration number issued by a foreign 

jurisdiction and the name of such 

jurisdiction. 

(g) Information concerning the 

residential real property. The reporting 

person shall report the street address, if 

any, and the legal description, such as 

the section, lot, and block, of each 

residential real property that is the 

subject of the reportable transfer. 

(h) Information concerning payments. 

(1) The reporting person shall report the 

following information concerning each 

payment, other than a payment 

disbursed from an escrow or trust 

account held by a transferee entity or 

transferee trust, that is made by or on 

behalf of the transferee entity or 

transferee trust regarding a reportable 

transfer: 

(i) The amount of the payment, 

consisting of the total consideration 

paid by the transferee entity or 

transferee trust; 

(ii) The method by which the 

payment was made; 

(iii) If the payment was paid from an 

account held at a financial institution, 

the name of the financial institution and 

the account number; and 

(iv) The name of the payor on any 

wire, check, or other type of payment if 

the payor is not the transferee entity or 

transferee trust. 

(2) The reporting person shall report 

the total consideration paid or to be 

paid by all transferees regarding the 

reportable transfer. 

(i) Information concerning hard 

money, private, and other similar loans. 

The reporting person shall report 

whether the reportable transfer involved 

credit extended by a person that is not 

a financial institution with an obligation 

to maintain an anti-money laundering 

program and an obligation to report 

suspicious transactions under this 

chapter. 

(j) Definitions. For purposes of this 

section, the following terms have the 

following meanings. 

(1) Beneficial owner—(i) Beneficial 

owners of transferee entities. (A) The 

beneficial owners of a transferee entity 

are the individuals who would be the 

beneficial owners of the transferee 

entity on the date of closing if the 

transferee entity were a reporting 


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company under 31 CFR 1010.380(d) on 

the date of closing. 

(B) The beneficial owners of a 

transferee entity that is established as a 

non-profit corporation or similar entity, 

regardless of jurisdiction of formation, 

are limited to individuals who exercise 

substantial control over the entity, as 

defined in 31 CFR 1010.380(d)(1) on the 

date of closing. 

(ii) Beneficial owners of transferee 

trusts. The beneficial owners of a 

transferee trust are the individuals who 

fall into one or more of the following 

categories on the date of closing: 

(A) A trustee of the transferee trust. 

(B) An individual other than a trustee 

with the authority to dispose of 

transferee trust assets. 

(C) A beneficiary who is the sole 

permissible recipient of income and 

principal from the transferee trust or 

who has the right to demand a 

distribution of, or withdraw, 

substantially all of the assets from the 

transferee trust. 

(D) A grantor or settlor who has the 

right to revoke the transferee trust or 

otherwise withdraw the assets of the 

transferee trust. 

(E) A beneficial owner of any legal 

entity that holds at least one of the 

positions in the transferee trust 

described in paragraphs (j)(1)(ii)(A) 

through (D) of this section, except when 

the legal entity meets the criteria set 

forth in paragraphs (j)(10)(ii)(A) through 

(P) of this section. Beneficial ownership 

of any such legal entity is determined 

under 31 CFR 1010.380(d), utilizing the 

criteria for beneficial owners of a 

reporting company. 

(F) A beneficial owner of any trust 

that holds at least one of the positions 

in the transferee trust described in 

paragraphs (j)(1)(ii)(A) through (D) of 

this section, except when the trust 

meets the criteria set forth in paragraphs 

(j)(11)(ii)(A) through (D). Beneficial 

ownership of any such trust is 

determined under this paragraph 

(j)(1)(ii)(F), utilizing the criteria for 

beneficial owners of a transferee trust. 

(2) Closing or settlement agent. The 

term ‘‘closing or settlement agent’’ 

means any person, whether or not acting 

as an agent for a title agent or company, 

a licensed attorney, real estate broker, or 

real estate salesperson, who for another 

and with or without a commission, fee, 

or other valuable consideration and 

with or without the intention or 

expectation of receiving a commission, 

fee, or other valuable consideration, 

directly or indirectly, provides closing 

or settlement services incident to the 

transfer of residential real property. 

(3) Closing or settlement statement. 

The term ‘‘closing or settlement 

statement’’ means the statement of 

receipts and disbursements for a transfer 

of residential real property. 

(4) Date of closing. The term ‘‘date of 

closing’’ means the date on which the 

transferee entity or transferee trust 

receives an ownership interest in 

residential real property. 

(5) Ownership interest. The term 

‘‘ownership interest’’ means the rights 

held in residential real property that are 

demonstrated: 

(i) Through a deed, for a reportable 

transfer described in paragraph (b)(1)(i) 

or (ii) of this section; or 

(ii) Through stock, shares, 

membership, certificate, or other 

contractual agreement evidencing 

ownership, for a reportable transfer 

described in paragraph (b)(1)(iii) of this 

section. 

(6) Recordation office. The term 

‘‘recordation office’’ means any State, 

local, or Tribal office for the recording 

of reportable transfers as a matter of 

public record. 

(7) Residential real property. The term 

‘‘residential real property’’ means: 

(i) Real property located in the United 

States containing a structure designed 

principally for occupancy by one to four 

families; 

(ii) Vacant or unimproved land 

located in the United States zoned, or 

for which a permit has been issued, for 

the construction of a structure designed 

principally for occupancy by one to four 

families; or 

(iii) Shares in a cooperative housing 

corporation. 

(8) Signing individual. The term 

‘‘signing individual’’ means each 

individual who signed documents on 

behalf of the transferee as part of the 

reportable transfer. However, it does not 

include any individual who signed 

documents as part of their employment 

with a financial institution that has both 

an obligation to maintain an anti-money 

laundering program and an obligation to 

report suspicious transactions under 

this chapter. 

(9) Statutory trust. The term 

‘‘statutory trust’’ means any trust 

created or authorized under the Uniform 

Statutory Trust Entity Act or as enacted 

by a State. For the purposes of this 

subpart, statutory trusts are transferee 

entities. 

(10) Transferee entity. (i) Except as set 

forth in paragraph (j)(10)(ii) of this 

section, the term ‘‘transferee entity’’ 

means any person other than a 

transferee trust or an individual. 

(ii) A transferee entity does not 

include: 

(A) A securities reporting issuer 

defined in 31 CFR 1010.380(c)(2)(i); 

(B) A governmental authority defined 

in 31 CFR 1010.380(c)(2)(ii); 

(C) A bank defined in 31 CFR 

1010.380(c)(2)(iii); 

(D) A credit union defined in 31 CFR 

1010.380(c)(2)(iv); 

(E) A depository institution holding 

company defined in 31 CFR 

1010.380(c)(2)(v); 

(F) A money service business defined 

in 31 CFR 1010.380(c)(2)(vi); 

(G) A broker or dealer in securities 

defined in 31 CFR 1010.380(c)(2)(vii); 

(H) A securities exchange or clearing 

agency defined in 31 CFR 

1010.380(c)(2)(viii); 

(I) Any other Exchange Act registered 

entity defined in 31 CFR 

1010.380(c)(2)(ix); 

(J) An insurance company defined in 

31 CFR 1010.380(c)(2)(xii); 

(K) A State-licensed insurance 

producer defined in 31 CFR 

1010.380(c)(2)(xiii); 

(L) A Commodity Exchange Act 

registered entity defined in 31 CFR 

1010.380(c)(2)(xiv); 

(M) A public utility defined in 31 CFR 

1010.380(c)(2)(xvi); 

(N) A financial market utility defined 

in 31 CFR 1010.380(c)(2)(xvii); 

(O) An investment company as 

defined in section 3(a) of the Investment 

Company Act of 1940 (15 U.S.C. 80a– 

3(a)) that is registered with the 

Securities and Exchange Commission 

(SEC) under section 8 of the Investment 

Company Act (15 U.S.C. 80a–8); and 

(P) Any legal entity whose ownership 

interests are controlled or wholly 

owned, directly or indirectly, by an 

entity described in paragraphs 

(j)(10)(ii)(A) through (O) of this section. 

(11) Transferee trust. (i) Except as set 

forth in paragraph (j)(11)(ii) of this 

section, the term ‘‘transferee trust’’ 

means any legal arrangement created 

when a person (generally known as a 

settlor or grantor) places assets under 

the control of a trustee for the benefit of 

one or more persons (each generally 

known as a beneficiary) or for a 

specified purpose, as well as any legal 

arrangement similar in structure or 

function to the above, whether formed 

under the laws of the United States or 

a foreign jurisdiction. A trust is deemed 

to be a transferee trust regardless of 

whether residential real property is 

titled in the name of the trust itself or 

in the name of the trustee in the 

trustee’s capacity as the trustee of the 

trust. 

(ii) A transferee trust does not 

include: 

(A) A trust that is a securities 

reporting issuer defined in 31 CFR 

1010.380(c)(2)(i); 


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(B) A trust in which the trustee is a 

securities reporting issuer defined in 31 

CFR 1010.380(c)(2)(i); 

(C) A statutory trust; or 

(D) An entity wholly owned by a trust 

described in paragraphs (j)(11)(ii)(A) 

through (C) of this section. 

(k) Filing procedures—(1) What to file. 

A reportable transfer shall be reported 

by completing a Real Estate Report and 

collecting and maintaining supporting 

documentation as required by this 

section. 

(2) Where to file. The Real Estate 

Report shall be filed electronically with 

FinCEN, as indicated in the instructions 

to the report. 

(3) When to file. A reporting person is 

required to file a Real Estate Report no 

later than 30 calendar days after the date 

of closing. 

(l) Retention of records. A reporting 

person shall maintain a copy of any Real 

Estate Report filed by the reporting 

person and a copy of any certification 

described in paragraph (e)(3) of this 

section. In addition, all parties to a 

designation agreement described in 

paragraph (c)(3) of this section shall 

maintain a copy of such designation 

agreement. 

(m) Exemptions—(1) Confidentiality. 

Reporting persons, and any director, 

officer, employee, or agent of such 

persons, and Federal, State, local, or 

Tribal government authorities, are 

exempt from the confidentiality 

provision in 31 U.S.C. 5318(g)(2) that 

prohibits the disclosure to any person 

involved in a suspicious transaction that 

the transaction has been reported or any 

information that otherwise would reveal 

that the transaction has been reported. 

(2) Anti-money laundering program. 

A reporting person under this section is 

exempt from the requirement to 

establish an anti-money laundering 

program, in accordance with 31 CFR 

1010.205(b)(1)(v). However, as provided 

in 31 CFR 1010.205(c), no such 

exemption applies for a financial 

institution that is otherwise required to 

establish an anti-money laundering 

program by this chapter. 

§ 1031.321 [Reserved] 

Andrea M. Gacki, 

Director, Financial Crimes Enforcement 

Network. 

[FR Doc. 2024–02565 Filed 2–7–24; 8:45 am] 

BILLING CODE 4810–02–P 


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