FinCEN Proposed Regulations Could Expand Non-Financed U.S. Residential Transaction Reporting

Proposed regulatory changes released by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) look to expand reporting requirements for non-financed U.S. residential transactions involving legal entities and trusts.

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is considering regulatory changes that could expand reporting and recordkeeping requirements around certain non-financed real estate transactions. On 7 February, FinCEN published in the Federal Register a proposed rule that would expand requirements under FinCEN’s Residential Real Estate Geographic Targeting Order (GTO) program to be nationwide. Under the GTO program, title insurance companies are required to submit reports on the beneficial owners of legal entities making certain non-financed residential housing purchases in jurisdictions identified as part of the program.

The proposed rule would modify the reporting requirements to entities providing closing or settlement functions for non-financed sale or transfer of residential property report to FinCEN a range of items, including:

• Beneficial ownership information for the legal entity (transferee entity) or trust receiving the property;
• Information related to the individuals representing transferee entity or trust; and
• Details about the transferor, residential property being sold or transferred and associated financial transactions, and the organization submitting the required reporting.

The proposed rule released by FinCEN does not include any reference to this practice with the expansion of the GTO program, and relocation management companies (RMCs) are not currently listed as an exempt legal entity within the proposed rule. WERC and members of its North American Real Estate and Mortgage Forum are preparing a comment letter to FinCEN based on the proposed rule asking for RMCs to be exempted from any nationwide program FinCEN implements.

The proposed rule is open for public comment until 16 April 2024, and organizations are encouraged to consider submitting their own comments on this rule. After the comment period closes, FinCEN will review submissions and adjust, as necessary, before publishing a final rule that would need to go into effect before any new reporting requirements go into effect.

Michael T. Jackson is vice president of member engagement and public policy at WERC.