anti money laundering officer

there are anti-money laundering (AML) laws and guidelines that apply to real estate professionals in the U.S., including realtors, though not as strictly as they apply to banks or money services businesses.

However, this is changing β€” especially due to the growing use of real estate to launder illicit funds.

🏘️ Are Realtors Subject to AML Laws?

πŸ”Ή Currently (as of 2025):

  • Real estate professionals (like agents and brokers) are not directly required to have a formal AML compliance program under the Bank Secrecy Act (BSA).
  • BUT: They can still be involved in transactions that must comply with AML regulations, especially cash transactions and dealings with foreign buyers or shell companies.

πŸ“œ Key AML Requirements and Guidance for Realtors

1. Geographic Targeting Orders (GTOs) – FinCEN

FinCEN (Financial Crimes Enforcement Network) issued GTOs that require title insurance companies to collect and report beneficial ownership information in all-cash real estate transactions over a certain threshold.

πŸ” Applies when:

  • Residential real estate is purchased in cash (no mortgage/loan)
  • Value exceeds $300,000 (threshold varies by city)
  • Buyer uses a legal entity (LLC, corporation, trust)
  • Transaction occurs in designated areas like:
    • New York City
    • Miami
    • Los Angeles
    • San Francisco
    • Washington D.C.
    • Chicago
    • …and others

πŸ’‘ Even though realtors aren’t directly responsible, they’re often part of the transaction and may assist in gathering information.

2. Voluntary AML Best Practices (NAR Guidance)

The National Association of Realtors (NAR) encourages agents and brokers to:

  • Be familiar with red flags of money laundering (e.g., buyer avoiding questions, complex cash deals, use of shell companies)
  • Report suspicious activity voluntarily (even if not required)
  • Keep good records
  • Know Your Customer (KYC): Verify identities and sources of funds when possible

3. Suspicious Activity Reporting (SARs)

  • Realtors themselves are not required to file SARs.
  • But: Title companies, banks, and lawyers involved in a deal may be required to β€” and may rely on info from the realtor.
  • If you witness suspicious behavior, you can file a voluntary tip with FinCEN.

⚠️ Ongoing Regulatory Changes (2024–2025 Updates)

FinCEN has proposed new rules to extend AML obligations directly to real estate professionals, including:

  • Requiring certain real estate agents and brokers to implement AML compliance programs
  • Applying due diligence and reporting requirements more broadly across the real estate sector

πŸ› οΈ These rules are still in progress but are expected to roll out in the near future.

βœ… Summary

Question Answer
Are realtors currently required to have AML programs? ❌ Not required (as of 2025)
Can real estate transactions be subject to AML rules? βœ… Yes β€” through GTOs, FinCEN, and title companies
Are there proposed AML rules for realtors? βœ… Yes β€” likely to be implemented soon
Should realtors be cautious of money laundering risk? βœ… Absolutely β€” especially in cash purchases, foreign buyers, or shell companies

πŸ‘€ What Does an External AML Officer Do?

An external AML officer is an outside expert or third-party service provider hired to design, implement, and oversee an organization’s anti-money laundering program. They perform the same core functions as an internal AML compliance officer, but operate as independent contractors or consultants.

πŸ”§ Key Responsibilities:

  1. Develop or review the AML compliance program
    • Tailored to your business type and risk level
  2. Monitor transactions and activity
    • Look for red flags or suspicious behavior
  3. Perform Know Your Customer (KYC) and due diligence reviews
    • Ensure customers and partners are legit
  4. File Suspicious Activity Reports (SARs) if necessary
  5. Train staff on AML compliance
  6. Act as the point of contact with regulators like FinCEN or the IRS
  7. Conduct internal audits and risk assessments
  8. Stay updated on changing laws and regulations

🏒 Who Should Consider Hiring an External AML Officer?

βœ… 1. Small or Medium-Sized Financial Institutions

  • Banks, credit unions, or money services businesses (MSBs) that don’t have the budget or need for a full-time compliance officer.
  • Examples: crypto platforms, fintech startups, foreign exchange businesses, remittance services.

βœ… 2. Non-Bank Financial Institutions (NBFIs)

  • Lenders, real estate investment firms, private equity funds, casinos, and others required to comply with the Bank Secrecy Act (BSA).

βœ… 3. Companies Expanding into Regulated Industries

  • A company entering crypto, cross-border payments, or any business that will now be regulated for AML purposes.

βœ… 4. Real Estate Companies (Proactively or for Compliance Readiness)

  • Especially those dealing in high-value, all-cash, or foreign transactions in FinCEN’s Geographic Targeting Order (GTO) zones.

βœ… 5. Businesses under Investigation or Facing Regulatory Pressure

  • An external AML officer can quickly step in and help remediate compliance issues.

❓ Why Have an External AML Officer?

πŸ’‘ Benefits:

Reason Why It Matters
βœ… Expertise on Demand External AML officers bring specialized experience without hiring a full-time employee.
βœ… Cost-Effective Perfect for small businesses that need compliance help but can’t afford a team.
βœ… Neutral & Independent Great for investigating internal issues or acting without conflicts of interest.
βœ… Regulatory Expectations Having a qualified AML officer β€” internal or external β€” helps meet legal requirements.
βœ… Audit Readiness They can prepare you for exams by FinCEN, the IRS, or other regulators.
βœ… Rapid Deployment Can quickly build or fix a compliance program if you’re starting from scratch or facing pressure.

πŸ§‘β€βš–οΈ Is It Legally Acceptable?

Yes β€” U.S. regulators (like FinCEN and the IRS) allow businesses to outsource the AML compliance officer role, as long as:

  • The external AML officer has access to necessary records
  • The program is well-designed, documented, and monitored
  • The business remains accountable for compliance

🧩 Summary

Question Answer
What is an external AML officer? A hired expert who manages your AML program from outside your company
Who should have one? Smaller financial businesses, MSBs, real estate firms, crypto startups, or anyone needing compliance help
Why have one? Cost-effective, independent, expert-led support to meet AML requirements and reduce risk
Is it legal? βœ… Yes β€” if properly structured under FinCEN/BSA guidance