Feds still eyeing 'other persons'.

Author:Sichelman, Lew

AT THE 24TH ANNUAL WEST COAST ANTI-MONEY LAUNDERING (AML) Forum in San Francisco in early May, JENNIFER SHASKY CALVERY, director of the Financial Crimes Enforcement Network (FinCEN), said the Department of

Justice (DOJ) last year sold more than 450 forfeited or seized properties taken from people who purchased them with funds earned from illicit activities. The properties were sold for more than $92 million, she reported.

Calvery worked for 15 years as a prosecutor at the Justice Department before becoming FinCEN's director three years ago. Many of her cases at DOJ involved organized criminals outside the United States who laundered their drug money by buying houses in this country, so she has a unique perspective on how the process works.

Keynoting the two-and-a-half-day event at the Marines Memorial Club, she told the conference that her agency, which is a wing of the Treasury Department, "continues to see the use of shell companies by international corrupt politicians, drug traffickers and other criminals to purchase luxury residential real estate for cash."

She added, "Our information shows funds transfers in the form of wire transfers originating from banks in offshore havens at which accounts have been established in the name of the shell companies. The criminals will direct an individual involved in the settlement and the closing in the United States to put the deed to the property in the name of the shell company. Thus, the identity of the owner of the property is obfuscated."

FinCEN has promulgated anti-money laundering requirements for non-bank lenders and originators as well as the government-sponsored enterprises that issue mortgage-backed securities. But it has yet to issue rules for the broader category of "persons involved in real estate closings and settlements."

More than a dozen years ago, it considered issuing rules for settlement and closing attorneys and agents, appraisers, title search and insurance companies, escrow companies and mortgage servicers. But based on the comments the agency received, it decided to hold off "until we better identified the money-laundering risks and activities involved," Calvery told the AML conference.

Still, she said, FinCEN's "task remains to define the money-laundering risks associated with certain persons involved in real estate closings and settlements, and consider appropriate initiatives to address these risks. Outreach and engagement with our regulatory, law enforcement and real...

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