Financial Crimes Enforcement Network ("FinCEN") Director Jennifer Shasky Calvery warned of money-laundering vulnerabilities in the real estate industry, particularly the risks associated with "all-cash" real estate purchases.
Director Shasky Calvery explained that existing anti-money laundering ("AML") regulations cover approximately 78% of residential real estate purchases nationwide. However, she added, regulators still struggle to detect and address AML risks in the remaining 22% of residential real estate transactions, which are completed with cash and for that reason are not covered. FinCEN's January 2016 Geographic Targeting Orders ("GTOs"), which require U.S. title insurance companies to identify the natural persons behind high-end residential real estate transactions in Miami, Florida and New York City, are beginning to address that lack of insight by supplying regulators with a new source of data. These GTOs should be regarded not as part of an industry "crackdown," but as a first step in gathering information and analyzing trends of suspicious activities in all-cash real estate transactions, Director Shasky Calvery noted.
Director Shasky Calvery delivered her remarks at the Association of Certified Anti-Money Laundering Specialists' 21st Annual International AML and Financial Crime Conference in Hollywood, Florida.