Title: Treasury Department’s Crackdown on Financial Crime: Reinforcing Reporting Requirements for Corporations and Real Estate

Countering Corruption: U.S. Treasury Department’s Renewed Focus

The U.S. Department of the Treasury has intensified its efforts to combat corruption and financial crimes, following the U.S. Strategy on Countering Corruption released in 2020. Corruption brings about serious consequences, including the laundering of corrupt proceeds, weakening governance, and the exacerbation of other criminal activities.

Two Key Areas of Focus

To make considerable progress in countering corruption, the U.S. Department of the Treasury has identified and focused on two primary areas:

1. Preventing the laundering of corrupt proceeds
2. Enhancing transparency in specific sectors susceptible to these activities

1. Preventing the laundering of corrupt proceeds

Enhancing Corporate Transparency

The integrity of the U.S. financial system is critical to this objective. Corrupt actors frequently exploit vulnerabilities to hide, launder, move, and store illicit funds within the U.S. financial systems. The Department of the Treasury is addressing these vulnerabilities, particularly by concentrating on corporate transparency.

The Corporate Transparency Act (CTA)

Passed in 2021, the Corporate Transparency Act (CTA) requires many companies to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). This measure empowers law enforcement agencies to disrupt financial anonymity, making it harder for corrupt actors to launder their ill-gotten gains.

Reporting Requirements and Deadlines

FinCEN issued the final beneficial ownership information (BOI) reporting rule in September 2022. As of January 1, 2024, many domestic and foreign companies will be required to report their BOI to FinCEN. This move signifies a significant step towards combating corruption and enhancing the U.S. anti-money laundering/countering the financing of terrorism (AML/CFT) regime.

2. Safeguarding the Residential Real Estate Sector

The residential real estate sector is a significant area of concern due to the anonymity and non-financed purchases that corrupt actors often exploit to launder proceeds. The Department of the Treasury has been actively addressing these risks through its Residential Real Estate Geographic Targeting Orders (GTOs) program since 2016.

Advance Notice of Proposed Rulemaking (ANPRM)

In December 2021, the Department issued an advance notice of proposed rulemaking (ANPRM) to collect public feedback on potential measures to increase transparency and mitigate risks associated with the residential real estate sector. With the information obtained and public feedback, the Department aims to issue a notice of proposed rulemaking (NPRM) in early 2024. This step could result in increased transparency in the market, making it more challenging for corrupt actors to operate hidden in this sector.

Stay Informed

Keep updated on the Department of the Treasury’s ongoing initiatives to counter corruption and strengthen the U.S. financial system’s integrity.