Reported by Matthew Erskine

Many families have legacy family real estate – a primary residence, a vacation home or a condominium in Florida. Often, these properties are passed down from one generation to another by gifts in trusts or other entities, either during the owner’s lifetime or at their death. Now, those transfers may trigger a reporting requirement of the beneficial owners of the real estate similar to the current requirements for private businesses under the Coporate Transparency Act. This is because on February 16, 2024, the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, unveiled a new rule designed to boost transparency in the U.S. residential real estate market. This measure aims to hinder illicit actors from laundering money through non-financed transfers of residential properties to specific legal entities and trusts on a national scale, including the gifts of interest in legacy real estate.

Key Points of the Proposed Rule:

The new rule requires individuals involved in real estate closings and settlements to report and maintain records on specific transactions. It introduces a more streamlined Suspicious Activity Report (SAR) known as a “Real Estate Report” to reduce reporting burdens while still providing crucial information to law enforcement and national security agencies. The rule adopts a “cascading” approach to determine the reporting party based on their role in the real estate transaction, with provisions for real estate professionals to designate a reporting party through agreement.

FinCEN’s action comes in response to identified risks of illicit finance within the U.S. real estate sector, particularly through non-financed transfers that currently bypass due diligence requirements. The proposed rule aims to capture high-risk activities and equip law enforcement with transaction-specific details to enhance investigations into money laundering activities.

Read full report: https://www.forbes.com/sites/matthewerskine/2024/03/07/fincen-to-require-beneficial-ownership-reporting-for-transfers-of-residential-real-estate/?sh=5584e39559aa