FinCEN Proposes New Reporting Requirements for Title Agents 

This notice of proposed rulemaking is the first step in FinCEN's process of adoption of new rules and will be followed by a sixty-day comment period. TLTA is monitoring this significant regulatory proposal, will submit comments to FinCEN on behalf of the Texas title insurance industry, and will keep you apprised as this proposal moves closer to implementation.

FinCEN official statement regarding the agency's intentions

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking to combat and deter money laundering by foreign “Politically Exposed Persons” (PEPs) in the U.S. residential real estate sector by increasing the ability for federal identification and monitoring of individuals in certain transactions. The proposed rule would require certain professionals involved in real estate closings and settlements to report information to FinCEN about non-financed transfers of residential real estate to legal entities or trusts. See press release linked below for more info from FinCEN. 

TLTA members: What should you know?

FinCEN is proposing reporting and compliance requirements that would have a significant impact on you and your business when handling cash transactions. 

What's in the proposal?

TLTA's initial analysis at this early stage of FinCEN's proposal process
 
  • This proposed reporting requirement would apply to all non-financed transfers including cash and gifts on “Residential Real Property,” where the transferee is an entity or trust.   
  • Under the proposed rule, there must be a “Reporting Person” designated or identified for each transaction. The reporting person is identified based on what FinCEN's proposal describes as a “cascading” approach, starting with the person listed as closing agent on the settlement statement. Or, if that's not applicable, the person who prepared the statement or the person who files the deed. If none of these individuals are identifiable or applicable, then the reporting person is the title company that underwrites the owner's policy. If there's no owner’s policy, then the reporting person would be the person who distributes the greatest amount of funds, the person who evaluates the status of title, or the person who prepares the deed.  
  • This is the information for all transferees in an entity or trust that FinCEN is proposing to require for the “Real Estate Report”:
    • Name(s) and Address(es)
    • Citizenship
    • Unique Identifying numbers such at IRS Tax Identification Number (TIN) (e.g., social security number or entity identification number (EIN)).
    • Representative capacity of the signing individual
    • Information concerning payments requiring specific descriptions of all potential forms of consideration in the transaction for all transferees, including the sources of those payments including specific account information. Included in this category would be specific account information, including monies transferred between buyer and seller but not included in the escrow funds held by the settlement agent.
    • Information concerning the residential real property, such as the legal description, including section, lot and block.
  • Data collected from the transferee would be based on a certification by the transferee or the representative of the transferee.
  • The report would be required to be filed within 30 days of the transaction and a copy of the filing retained for 5 years by the settlement agent or Reporting Person.
    FINCEN cited data suggesting that this reporting will be required of 11.5-15% of all residential property transactions.
  • According to FINCEN, the estimated cost for the time of the reporting persons will be from $70.33-$89.89 per transaction.

Read FinCEN's press release »
Review FinCEN's formal notice »

Questions or comments?

If you have questions, or you would like to submit comments that TLTA should consider including in our formal response to this potentially significant regulatory proposal, please send them to Aaron Day or call Aaron at 512.810.8800, thank you.