However, real estate was barely mentioned at the hearing. Rep. Chuy Garcia (D-IL) briefly raised the issue, but connected the issue of all-cash residential transactions fueled by “kleptocrats” to pricing out working-class families. Garcia provided no evidence for his claim.
As we previously covered, CREFC responded to an advanced notice of proposed rulemaking (ANPRM) to urge FinCEN to tailor its real estate proposal to true all-cash transactions rather than capture nonbank CRE finance. Click here to read CREFC’s comment letter.
Beneficial Ownership: Too Much Work; Not Enough Money
Director Das received bipartisan criticism on FinCEN’s slowness to implement nationwide beneficial ownership reporting rules required by the Corporate Transparency Act (CTA). Rep. Brad Sherman (D-CA) repeatedly asked Das for a timeline on implementation. Das said that he hoped to get the second of three rules proposed by yearend, but declined to estimate when the database would be functional. On the other side of the aisle, Ranking Member Patrick McHenry (R-NC) criticized FinCEN’s first CTA proposal as “far too complex, overly broad, and deviated significantly from Congress' intent.”
Das also drew attention to increased budgetary constraints on FinCEN that have limited the agency’s enforcement and rulemaking capabilities (including those to implement the CTA). The Biden administration proposed a $210 million budget for FY 2023, a 31% increase.
Geographic Targeting Orders on Residential Real Estate Expanded
The day after the hearing, FinCEN again extended its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate.
FinCEN extended, by six months, the GTOs that cover all-cash purchases of residential real estate in certain counties within the following major U.S. metropolitan areas: Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco, and Seattle.
FinCEN, working in conjunction with its law enforcement partners, including the FBI, identified additional regions that present greater risks for illicit finance activity through all-cash purchases of residential real estate. Accordingly, FinCEN expanded the geographic coverage of the GTOs to parts of the District of Columbia, Northern Virginia, and Maryland (DMV) metropolitan area, the Hawaiian islands of Maui, Hawaii, and Kauai, and Fairfield County, Connecticut. The purchase amount threshold remains $300,000 for each covered metropolitan area, with the exception of the City and County of Baltimore, where the purchase threshold is $50,000.