Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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9/29/2008 AML Guidance Describes Risk Issues Facing Real Estate Agents, Accountants, and Trust and Company Service Providers

The Financial Action Task Force, which serves as a policy hub and think tank for the world’s financial intelligence units (including the U.S.’s FinCEN), has issued anti-money laundering/counter terrorist financing guidance for accountants, real estate agents, and trust and service company providers. These are three professions and businesses as to which the FATF found deficiencies in the U.S. AML system in the Mutual Evaluation of the U.S. issued two years ago. Although the FATF studies focus rather repetitively on the meaning of a risk-based approach (as opposed to a rules-based approach), each document also contains succinct statements of the kinds of risks that each profession or operation is likely to encounter, as well as describing factors that may increase or decrease risks. Persons involved in real estate closings and settlements are financial institutions under 31 U.S.C. 5312(a)(2)(U), although temporarily exempted from establishing anti-money laundering programs under 31 CFR 103.170(b). In 2003, the U.S. Treasury asked a number of questions with a view to issuing regulations concerning persons involved in real estate settlements and closings (68 Fed. Reg. 17569), but regulations were never proposed. Given that FATF studies and guidance often precedes action by FinCEN, U.S. regulatory initiatives for real estate transactions might receive renewed attention. The risk-based guidance releases for accountants, real estate agents, and trust and company service providers, will be analyzed in forthcoming issues of the Monitor.

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