Hot Off The Hill

October 9, 2023 -?Congress is in a somewhat no-action mode for the time being because the speakership of the House is temporarily vacant. That is the big political news. They cannot do normal House floor business until a new Speaker is appointed. The Senate is out of Washington for the rest of this week. The Senate Banking Committee did pass their cannabis banking legislation from Committee—for the first time ever—since the last HOTH newsletter. So things remain sluggish at best on the Hill—but at least they kept the government operating to mid-November instead of a shutdown at the end of September. On agencies— We are still looking for final regs from CFPB on two proposals AEA commented on. The first is PACE financing disclosure rules and the second is an item that appears to only affect independents, referred to as contracts with “terms and conditions that seek to waive or limit consumer legal protections.” We are also still looking for a new proposal from FinCEN on reporting rules for residential real estate transactions with cash buyers following their previous request for information which AEA responded to with detailed comments. The original expected date was sometime this August. Last week the FinCEN Director gave a speech and provided the following update remarks: “…. For too long, the U.S. real estate market has been susceptible to manipulation and use as a haven for the laundered proceeds of illicit activity, including corruption. Our real estate market is a relatively stable store of value, and it can be opaque, and there are gaps in industry regulation. Increasing transparency in the real estate sector will assist with curbing the ability of corrupt officials and criminals to launder the proceeds of their illicit activity or ill-gotten gains as well as strengthen U.S. national security and help protect the integrity of the U.S. financial system. For that reason, the Treasury is committed to developing a solution to increase transparency in the domestic real estate market. In December 2021, FinCEN issued an Advance Notice of Proposed Rulemaking to solicit public comment on a potential rule to address the vulnerability in the U.S. real estate market to money laundering and other illicit activity. We considered how best to address the potential for money laundering created by real estate transactions in the commercial and residential sectors. These types of transactions—often conducted through opaque shell companies—are effective vehicles for laundering illicit funds. We are currently developing a Notice of Proposed Rulemaking, the contours of which are still being determined. FinCEN aims to issue this NPRM later this year.” AEA currently is finalizing draft comments to the IRS on a brand new information reporting proposed requirement for transactions in which digital assets are used to purchase real estate. This will greatly impact escrow if finalized as proposed in terms of required systems changes. (Even if very few transactions occur with digital assets as part or all the gross proceeds.) Part of the reason and an important attempted shift of responsibility by IRS rule in this proposal is the addition of new requirements of reporting on the buyer side imposed on the escrow company AND never seen before. AEA will oppose that part.

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