Golden State Today

California Attorney General Rob Bonta has expressed his support for a proposed rule aimed at deterring bad actors from using real estate transactions to conceal criminal activity. In a comment letter submitted to the U.S. Department of Treasury’s Financial Crimes Enforcement Network, Attorney General Bonta, along with a bipartisan coalition of 25 attorney generals, endorsed the proposed rule that seeks to increase transparency and reduce the risk of real estate being used for money laundering.

In the letter, Attorney General Bonta emphasized the importance of addressing the issue, stating, “For many Californians, making a real estate purchase is a hard-fought, major life goal; for others, participation in the real estate market is a way to conceal financial crimes. This is unacceptable.” He commended the U.S. Department of the Treasury for taking steps to tackle the vulnerability that allows bad actors to exploit the real estate market for illicit purposes.

The proposed rule focuses on non-financed residential real estate transactions that are purchased by entities like trusts or limited liability companies, which can obscure the identities of the real owners. These transactions, particularly those made with cash offers above market value, are at a heightened risk of illicit activity due to their anonymity and lack of anti-money laundering checks.

If implemented, the rule would require businesses and individuals involved in real estate transactions to collect and report information to FinCEN through a Real Estate Report. This report would include details such as names, addresses, unique identifiers of key participants, property information, and payment details. By creating a record that can be used for investigations and prosecutions, the Real Estate Reports aim to equip law enforcement with the necessary tools to combat financial crimes in the real estate sector.

The coalition of attorneys general, including Attorney General Bonta, not only supports the proposed regulations but also urges FinCEN to extend the same rules to the commercial real estate sector. The attorneys general of various states and territories have come together to advocate for increased transparency and accountability in real estate transactions that could be exploited for illicit purposes.

This collaborative effort to close the real estate loophole used for financial crimes underscores the commitment of law enforcement officials to safeguard the integrity of the real estate market and prevent it from being misused for criminal activities.