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| Signing forms for FinCEN |
The Financial Crimes Enforcement Network published a Residential Real Estate Rule in 2024 which does require real estate closing services, i.e., title and escrow ("Reporting Persons"), to collect data on "certain" all cash transactions and report that information to FinCEN. This applies to the purchase of residential real estate, occupied by one to four families, a condo, single family house, or shares in a co-op, residential property in a mixed use residential/commercial building, all of which are located in the United States including territories and Indian lands.
In the words of the California Association of REALTORS, "Reporting persons are required to collect information from buyers and sellers on an “all-cash” purchase of residential real estate, regardless of location or price, and report the collected information to FinCEN if the buyer is an entity or trust.
Failure to do so can result in significant civil and criminal penalties. All-cash includes financing through parties not normally subject to reporting requirements, like many hard-money lenders. Reporting information includes name, address, taxpayer ID – including foreign jurisdiction if applicable, and applies to trustees, beneficial owners and signing individuals, as well as price, property address and account from which the purchase price was paid."
Notice that it concerns if the buyer is an entity or trust, including a living trust. This program is meant to combat money laundering--per the www.fincen.gov site:
Information provided on Real Estate Reports is meant to help combat and deter money laundering by increasing transparency in the U.S. residential real estate sector. Although there are many legitimate reasons to use legal entities and trusts to own residential real property, illicit actors intent on laundering funds through residential real property often use legal entities and trusts to disguise their identities and make the proceeds of crime more difficult to identify. Illicit actors often favor non-financed transfers (including “all-cash” sales) of residential real estate to avoid scrutiny from financial institutions that have anti-money laundering and countering the financing of terrorism (AML/CFT) program and Suspicious Activity Report (SAR) filing requirements under the Bank Secrecy Act.
Escrow cannot close until the requested data is submitted via the Federal Reporting Requirement Purchase Addendum (a REALTOR form) and the Reporting Person (escrow or title) has determined the applicability; signing this form does not affect a transaction if it's determined the data collection does not apply to the particular transaction. In other words, the Reporting Persons bear the responsibility of making sure the FinCEN requirements are complied with so that escrow closes on time.
Also, escrow may have an additional charge for handling this additional requirement. Reporting information includes name, address, taxpayer ID – including foreign jurisdiction if applicable, and applies to trustees, beneficial owners and signing individuals, as well as price, property address and account from which the purchase price was paid.
More information at https://www.fincen.gov/rre-faqs#A_1
Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996
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