Davis Polk partner Dan Stipano discussed money laundering in commercial real estate with Law360. Dan explained that “FinCEN hasn’t put out any rules yet on reporting suspicious activities in commercial real estate specifically, though the bureau has put out a proposed rule focusing on residential properties.” 

Dan added that the absence of regulations specific to commercial real estate has created a gap that could be exploited. “But truthfully, one of the biggest hurdles here is that no industry really wants to be subject to the Bank Secrecy Act,” he said. “It’s costly to create programs to comply with the Bank Secrecy Act and follow the reports that are necessary, so this is an area where you can anticipate pretty strong headwinds from the real estate industry.”

He noted that the residential real estate industry has already pushed back on the proposed rule FinCEN announced in February.

“Over $2.6B In Dirty Money Hidden In Commercial Real Estate,” Law360 (May 2, 2024) (subscription required)

 

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