Robert Freedman is the former director of multimedia communications at NAR.
The USA Patriot Act regulates reporting of earnest money deposits.
February 8, 2012
USA PATRIOT ACT
Real estate professionals are required to 1) report, using IRS form 8300, any single or series of related transactions in which they receive cash in excess of $10,000, and 2) check a list maintained by the Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury. The list is of individuals and companies that are owned or controlled by, or acting for or on behalf of, targeted countries, which are collectively called Specially Designated Nationals (SDNs). The SDN list can be found at: www.treasury.gov/sdn. If an individual or company is on the list, practitioners must report the entity to OFAC. Separately, home mortgage lenders and other financial institutions are required to create programs to help protect against money laundering and to block the financial dealings of terrorists. At this time, real estate professionals engaged in brokerage or property management activities and their real estate firms are not required to implement anti-money laundering or anti-terrorist financing programs, but the Treasury Department may expand coverage of these requirements to include real estate professionals.
U.S. Department of Treasury (Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN)
Original statutory authority:
“USA PATRIOT Act,” Public Law No. 107-56
Civil and criminal penalties. Home mortgage lenders and other financial institutions that fail to terminate any targeted accounts within 10 days of being so ordered by the U.S. Attorney General or the Secretary of Treasury can be subject to fines of $10,000 for each day the account remains open after the 10 day limit has expired.
NAR Issue Summary on Money Laundering and Terrorist Financing
This summary is not a comprehensive analysis of how the law applies to you. Consult a qualified real estate attorney to determine how the federal law and laws in your state impact you in this area.