BIC TIP #1166: Reminder of the New FinCEN Rule
In case you missed it, Stephen Long has a quick reminder for North Carolina brokers: the new FinCEN rule is in place as of March 1. The good news? There is nothing you have to do for it. The better news? You will look very smart when your client asks about it and you already know the answer.
What the Rule Is About
The FinCEN rule is a federal effort aimed at preventing money laundering and similar activity in real estate. It focuses on a specific type of transaction: purchases made with cash where the property is being titled to an LLC or a trust.
In those situations, the closing attorney is considered the reporting person. That means the attorney will ask the client more questions than usual and ultimately report some of that information to the federal government.
Who Does the Work
Here is the part brokers will love. The real estate attorney does the work. You are not filling out reports or collecting the information yourself. The rule places that responsibility on the attorney handling the closing.
That said, being aware of the rule matters. If your buyer is paying cash and planning to take title in an entity or trust, a heads-up early in the process helps them avoid being surprised when the attorney’s office starts asking for additional details.
Yes, It Is Legit
Expect this question: “The attorney is asking for all this information. Is this real?” Clients are rightly cautious about scams and wire fraud, and an unexpected request for personal details can set off alarm bells.
You can let them know that yes, this is a legitimate federal requirement and the attorney is following it. Of course, encourage them to verify any request by calling the attorney’s office at a known, trusted number, never one supplied in an unexpected email.
The Practical Takeaway
Know the rule, even though you do not have to execute it. When you have a cash buyer titling to an LLC or trust, give them a heads-up that the closing attorney will likely ask extra questions under the FinCEN rule. You will calm their nerves, smooth the closing, and prove once again that watching a BIC tip pays off.
