US Treasury Tightens AML Rules for Real Estate and Investment Advisors

The U.S. Treasury Department has taken the initiative to eradicate money laundering by revising the regime in notably upscale real estate markets as declared by the agency.

The Financial Crimes Enforcement Network (FinCEN) program obliges some investment consultants and real estate agents to report “the real identities of buyers and sellers” engaged in “all-cash residential property deals.”

This legislation imposes sales exceeding the “$300,000 threshold” in high-risk areas such as “Manhattan, Miami, Los Angeles, San Francisco, and Chicago, among others” under the

Expansion of Geographic Targeting Orders (GTO).

Geographic targeting orders is a systematic plan introduced in 2016 and has evolved through several updates and expansions to combat money laundering. It will become part of “Treasury’s larger crackdown” in the real estate sector in no time soon. It will target the “secretive shell companies” frequently misused to buy and sell expensive property to conceal funds obtained by money laundering.

Nationwide Implementation of New Rules

Currently, the Treasury has announced an updated regime by approving a new set of regulations that will mainly make the “GTO disclosure requirements” apply across the country and make it difficult for buyers to hide their identity while purchasing luxury homes.

Read Also:

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• FINTRAC Implements New AML Regulations for Mortgage Brokers and Lenders

Closing Loopholes and Nationwide Expansion

The new set of rules introduced by the Treasury aims to address a gap between 2015 and 2020, which allowed approximately “$2.3 billion in illicit funds” to be transferred through property sales in the U.S.

Banks are implementing due diligence requirements to prevent illicit activities like money laundering; however, the industry has not fully adhered to these regulations.

Starting in December 2025, new rules will require investments and real estate agents to disclose the identity of parties engaged in all cash transactions. According to the updated regime, financial criminals can no longer hide their identities.

Mentioning the importance of these new regulations, “Treasury Secretary Janet Yellen” emphasized their impact by stating, “These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors.”

As per the sources, the plan has undergone several changes, resulting in revisions that now include “12 states and the District of Columbia.”

As of October 2023, the current updates include “adding three counties in Massachusetts, several counties along Florida’s Gulf Coast, and Travis County in Texas, which is home to Austin” to combat money laundering in the real estate sector.

The most recent GTO extension is valid through April of the following year and takes effect on Wednesday.