The buzz is in the air with more questions than answers.
FinCEN published its Final Anti-Money Laundering Regulations for Residential Real Estate Transfers on August 28, 2024 (“Final Rule”), throwing the entire real estate industry into a state of high anxiety. What does it all mean? How do we meet its requirements? Will the expense of compliance be a financial drain — or even put us out of business? Title agents — who most often also fill the role of settlement or closing agents and would be the first elected reporter under the Final Rule — have been asking themselves these questions. While law firms and industry associations, as well as news outlets, have discussed the black letter text requirements set out in the 120-page Final Rule, no one knows exactly how this is going to play out. Of course, our biggest fear is always the great and looming unknown.
So, what can we say and do to allay those fears? First of all, the Final Rule does not become effective until December 1, 2025. This gives the industry time to become prepared and adapt to the new requirements. Secondly, ALTA has stated in its Industry News publication of August 29, 2024, that it “will develop and provide several education and training opportunities to prepare the industry for the rule’s requirements.”
Moving forward to operationalize the Final Rule, FinCEN released the unpublished version of its draft Real Estate Report on November 12, 2024 with the formal published version to follow; thereafter the collection form is open for a 60 day comment period. Additionally, FinCEN agreed to provide FAQs as it goes through implementation. If saying “help will be on the way” doesn’t quite do it for you, then think about the things that you can do now — including strategic planning — to take control, empower, educate and prepare yourself.
What kind of strategic planning are we talking about? Here are a few ideas:
Consider setting up a workflow to help you identify reportable transactions and direct the information, documents and forms to the appropriate personnel for processing the required report; including providing a secure intake portal to accept and store documents and forms containing non-public personal information
This would include identifying any order regarding a purchase of residential real property by an entity or trust/trustee for cash (without a traditional lender that has a required AML program and who must file SARS) as the term “residential real property” is defined:
1-4 family occupancy residential units (e.g. a stand-alone, such as a single-family residence or townhouse; or even a unit within a multi-unit complex, such as a condo or shares in a coop; or even a residential unit in a mixed use building; as well as entire buildings designed for occupancy by one to four families)
Vacant land upon which the purchasing entity or trust/trustee intends to build a structure that is designed principally for occupancy by 1-4 families building such a residential real property
So, if you have an internal IT team or outsource your IT needs with a particular vendor, having a conversation with them now about how they can help you accomplish the work discussed above would not be premature.
Consider the Final Report’s required information, identifying what you already have and what you need to obtain from other sources – i.e. from the bank, from the purchaser’s representative, the seller or seller’s representative, and from the signer for the purchaser.
The Final Rule requires bank account information for the bank from which the source of funds originated. A title agent does not typically get that information on the wire confirmation or receipt that it receives from its own bank when an incoming wire or certified check is received or deposited. However, you can talk to your bank manager and inquire if the bank would be willing to provide you with that additional information on the documentation that it sends to you.
While the Final Rule only requires retention of the Purchaser’s Certification of Beneficial Ownership Information (and of any Designation Agreement that you may enter into), it is still both important and smart to retain all of the data in writing that is provided to you by others. If a question regarding your compliance should ever arise, then you would have documented evidence to show what you relied upon. This would apply to even an analysis of whether or not you have a reportable transaction under the Final Rule. For example, if the transaction is a purchase of vacant land, you may want to have the buyer’s representative state its future intent for the land in writing (because if it doesn’t intend to build a structure that is designed principally for occupancy by 1-4 families, then you don’t have a reportable transaction under the Final Rule).
Consider the cost of compliance with the Final Rule and how you can make your process be the most efficient and effective in terms of the expense — and perhaps even recoup some of the expense depending upon what your state law and regulator allow.
The biggest cost driver is going to be the administrative personnel’s time for those who will be working on collecting the data and reporting it. Here are some tips that may help:
Have two well-trained staff members whose education, experience, workload and market rate are appropriate for the time and tasks required to comply with the Final Rule. In case one staff member is unavailable to do the reporting, you will have ready coverage by having a backup person. Remember that there is a due date for compliance – which is the later of either:
(i) the final day of the month following the month in which the date of closing occurred; or
(ii) 30 calendar days after the date of closing.
In other words, if November 1st is the closing date, then December 31st would be the last day for submitting a timely report to FinCEN.
If you have very few transactions that would be subject to reporting under the Final Rule, perhaps it does not make sense for you to have your own staff members trained to take on the task. In that event, you may want to investigate your options for designating another reporter as identified in the Final Rule. In this event, you would want to do your due diligence and vetting in advance of December 1, 2025. Be aware that if you see a vendor advertising to provide this service, unless it is identified as an optional designated reporter within the Final Rule, it cannot relieve you of your reporting responsibilities.
This can’t be stressed enough: collect the data from the respective parties or people before the closing date. Our experience with FinCEN’s Geographic Targeting Orders has shown that if you wait until after closing, then you will be wasting a lot of time (and money) chasing after the needed information.
If you have repeat entity or trust customers who typically purchase residential real estate for cash, educate them in advance of the effective date of the Final Rule regarding what to expect. This may help your customers to have their information ready for data collection while at the same time building their trusted relationship with you. The Final Rule does not require confidentiality as to its contents.
Since the Final Rule does not discuss recoupment of cost, there is no federal prohibition against it. Your state laws and regulators will be the ones who ultimately determine what kind of recoupment, if any, is allowed for the expense you will incur to comply with the Final Rule. Start having conversations with your state land title association early, as they are your advocates and may be able to provide you with guidance from your state regulators.
Stay abreast of developments (e.g. any amendments to the Final Rule or FinCEN FAQs) by subscribing to FinCEN News Updates (sent to you via email or text messages). Also, keep an eye out for ALTA’s publications and resources as they become available.
From eager beavers to phantom fraudsters, here are the tricks you need to watch out for.
The world of title insurance is full of highs and lows. On the positive side, title agents often get to help aspiring buyers achieve their dream of home ownership. On the other hand, doing this work, and doing it well, means having to stay vigilant for a wide variety of cyberthreats. Seller impersonation fraud is one such danger. A rising industry threat, seller impersonation fraudsters use various tactics to deceive buyers, sellers and industry professionals alike. From “eager beavers” to “phantom fakers,” here are the top five seller impersonator personas you need to know.
I. The “Eager Beaver”
The first seller impersonation persona is the “Eager Beaver.” These fraudsters thrive on creating a false sense of urgency, pushing transaction participants to rush through the process. When deploying this tactic, a fraudster will offer a variety of reasons why the property sale must be completed as quickly as possible, including:
Financial necessity
Upcoming travel or relocation
Legal concerns or necessities
Health problems that could imperil the transaction
Alternative offers
We find that many fraudsters use this approach for one simple reason: it is often effective. Property sales can be intimidating and overwhelming to many people. Applying pressure can cause stakeholders to bypass organizational processes and procedures, which are in place for a reason, and lead to costly mistakes down the line.
II. The “Meticulous Mimic”
“Meticulous Mimics” rely on ID forgeries to pass themselves off as property owners to carry out fraudulent transactions. Of course, these criminals aren’t using the type of fake IDs you would find tucked into the wallet of your average high schooler. In fact, they are usually equipped with nearly flawless replicas of IDs, deeds and other sensitive documents. These fraudsters often put on airs of being overly prepared and highly detail oriented. Meticulous Mimics are a formidable threat because they excel at lulling other stakeholders into a false sense of security.
III. The “Sneaky Sparrow”
In the animal kingdom, there are many species that target the vacant homes of other animals for their own gain. Sparrows are one example. Sparrows are infamous for invading other birds’ nests.Unfortunately, real estate and title agents have their own “Sneaky Sparrows” to deal with. These are seller impersonators who target unoccupied homes.They fabricate a claim of ownership and then sell the property before the real owner even realizes what’s happened.
IV. The “Detail Devil”
Next up are the “Detail Devils,” seller impersonators who are experts at targeting properties that have complex ownership histories and dense details. These bad actors know how to navigate tangled webs of property information and exploit the confusion these transactions can understandably cause. Whether it be by manipulating legal frameworks or financial records, these fraudsters excel at turning convoluted property documents into illegal paydays.
V. The “Phantom Faker”
Finally,you can’t discount “Phantom Fakers,” fraudsters who attempt to pass themselves off as deceased property owners. They often use a combination of forged documents to fabricate a claim of ownership on a given property. Their schemes benefit greatly from the real owner no longer being capable of defending or disputing their behavior, which makes it easier to fraudulently sell or transfer a targeted property.
Stay safe with Alliant National and SecureMyTransaction
Knowing the most common seller impersonators can give you a leg up on potential fraudsters, but leveraging the right technology is key to truly securing your transactions. Alliant National’s SecureMyTransaction is one such solution, offering advanced tools to guard against today’s threats, including seller impersonation fraud. This new security solution also provides detailed audit trails, helping title professionals simplify compliance and protect their clients with greater confidence. Learn more about SecureMyTransaction here.
Wellness includes mental, psychological and physical health; don’t dismiss it!
Employee wellness is at a crossroads in 2024. Despite increased attention from employers, mental and emotional health challenges remain distressingly common in the workplace. In a recent ADP survey, nearly half of employees said their work has suffered due to poor mental health. Additionally, the number one cited workspace challenge was burnout.[i] These results should serve as a wakeup call for businesses, especially when you consider the consequences.
Many business leaders know turnover is a huge driver of costs, with some estimates saying that replacing a worker can cost “half to four times the employee’s annual salary.”[ii] That means if you’re “hiring for a job that pays $60,000, you could be spending upwards of $180,000 to fill that role.”[iii]
Given these costs, investing in employee wellness is not just beneficial — it’s essential. To mark National Wellness Month this August, we spoke with Alliant National HR Director Stacy Stolen about the significance of wellness and how agencies can better address this crucial need.
The multifaceted nature of wellness
Most people would agree that workplace wellness matters. However, if you asked folks about what exactly goes into wellness, you’d probably get a range of answers. That’s because wellness isn’t one thing but the “culmination of one’s mental, psychological AND physical health,” said Stolen. “Achieving wellness is a uniquely individual experience,” she continued. “It’s based on one’s lifestyle, identities, cultural understanding and commitment level to change.” Businesses must embrace this idea and approach wellness with something more than a one-size-fits-all approach.
The relationship between wellness and inclusion
Naturally, this means wellness connects with inclusion, a topic previously explored on this blog. Inclusion initiatives, said Stolen, “help employees feel safe bringing more of themselves to work.” This approach is different from what has often been done historically, which required employees to downplay “parts of themselves for purposes of assimilation.” When companies show that they genuinely value every team member’s knowledge, skills, input and life experience, they help foster an inclusive culture which, in turn, promotes employee wellness. This doesn’t happen automatically, said Stolen. It requires “a trusting relationship between employer and employee” born out of a company making “intentional and informed choices that allow [employes] to fully show up and contribute their maximum potential.”
Connecting the individual to the collective
How does a business make space for everyone’s individual needs while still focusing on its collective identity and goals? For Stolen, it is a symbiotic relationship. “By working collaboratively with each other through the process of learning and unlearning,” she said, “we can ensure the success of the individual AND the collective.”
Much of this can be accomplished by simply reframing the golden rule of “treating others as you want to be treated,” to treating “others as they want to be treated.” By doing so, employees stop seeing everything solely through the lens of personal experiences. Over time, a culture emerges where employees genuinely want to recognize the experiences of others. That’s because they will feel confident that their own experiences and abilities will also be respected and embraced.
Wellness in action at Alliant National
There are numerous ways that organizations can cultivate wellness in the workplace. Here are of some of tools and resources Alliant National has created to contribute to the wellness of staff and external agents:
A standing activity at all-company calls,which is designed to give executive leadership a moment to address staff concerns and increase transparency.
An “Employee Resource Group,” which champions “Caring” across all levels and functions of the organization.
A paid volunteer day for all employees.
An “employee engagement team” whose purpose is to create an environment where employees feel engaged, rewarded and personally committed.
All-staff wellness challenges, such as a recent “Fitness Challenge.”
“Mental Health Awareness” month activities, wheremanagers focus on encouraging work/life balance, sharing mental health resources and making space for employees to find support.
CEO email check-ins on employee stress levels.
The Alliant National Employee Assistance Program (EAP), which delivers free, professional and confidential support and guidance to employees and their families in the following areas:
Family
Work
Money
Legal services
Identity theft recovery
Health
Everyday life concerns
Company-wide, HR-led meetings that are specifically geared toward addressing wellness.
The lasting importance of wellness
When asked for her final thoughts on wellness, Stolen was unequivocal: “The work we do is already stressful, right? We don’t need to add additional layers and barriers to entry. Instead, we want to open doors and drive innovation. We must rethink what we’ve been taught about others and center employee wellness as a foundational pillar to company success.”
Ensuring that all employees feel their experiences and capabilities are valued can go a long way toward building this type of wellness and helping businesses thrive. Incorporating strategies and resources such as those listed earlier can be similarly effective.
Stolen reinforced these ideas, noting that when companies take these steps, everyone benefits. “Toxic workplaces obviously can damage one’s mental state, whereas an inclusive and safe environment can motivate people,” she said. “Companies should want to address these issues because it’s the right thing to do and because it’s a business necessity. If you don’t ensure employee wellbeing, it can have negative impacts on your team and lead to poor business outcomes.”
Build out your SWOT for a complete picture of your business.
As any business leader knows, there is a huge difference between having an idea for your business and bringing it to fruition. One way to increase your chances of success is to utilize what’s known as a SWOT analysis. SWOTs bring increased visibility to your operations, while providing an honest assessment of your company’s capabilities. The exercise’s insights can then be used for more informed decision-making. Let’s explore what’s involved in doing this work and doing it right.
What is SWOT?
The “SWOT” in “SWOT analysis” is an acronym for strengths, weaknesses, opportunities and threats. Here’s some additional detail on each point:
Strengths are everything you have going for you with your business. This can include things like a strong balance sheet, top talent or a high net promoter score.
Weaknesses are the opposite. They can include high turnover, significant customer churn or outdated and inefficient technology.
Opportunities involve industry trends that you can capitalize on. Some examples are regulatory changes, strategic partnerships or positive changes in customer behavior.
Threats include anything that might imperil your business in the short and long term. Threats could be negative economic forecasts, supply chain disruptions or new competitors in the market.
Create your dream team
The first thing to realize about doing a SWOT is that it’s pretty difficult to pull off alone. No business leader is going to know everything about their organization. You need a team with you that has first-hand knowledge of each aspect of your business. Include different department heads and stakeholders from both in and outside of your company.
Dig into the data
Next, begin collecting data – and lots of it. Compile information on internal processes, review existing resources and pull up any performance metrics you have on hand. Some specific examples could include:
Financial reports
Brand recognition data
Customer reviews
Employee feedback
Draw conclusions and establish your matrix
Once you’ve gathered these insights, start identifying your company’s strengths and weaknesses. Drill down on what is working well and pay attention to any unique selling propositions. Then, do the reverse and look at what is not working. Be open and transparent here. It is the only way to get an accurate picture of what might prevent you from achieving your goals. Next, catalog opportunities and threats. Write down anything that might enable or prevent you from taking your business where you want it to go in the near and long term.
Now organize your thoughts via a SWOT matrix. It’s often easiest to group elements by: 1.)internal factors, that is, your strengths and weaknesses, followed by 2.) external factors, also known as your opportunities and threats.
Analyze your results and plan for action
You can then start putting together an action plan to achieve your organizational objectives, armed with the knowledge that you have an informed outlook on your business’s prospects. Be sure your plan works in unison with your SWOT. When done right, your plan’s strategies, tactics and decision points will grow organically out of your matrix.
Moving forward
Like any piece of strategic planning collateral, always remember a SWOT is a living document. As your business changes or the market shifts, don’t forget to update your analysis so it remains accurate and helpful. That way, you will always have a powerful tool on hand that will help you see your business clearly and make more strategic decisions.
SecureMyTransaction from Alliant National is reshaping fraud prevention in real estate. Listen in as Alliant National Risk Management and Data Privacy Officer Tom Weyant, and Jerome Magana with Select Specialty Insurance, discuss how cutting-edge technologies and business insurance coverages work together to help you safeguard transactions, protect clients, and preserve your business.
VP, Risk Management and Data Privacy Officer CQA, CFE American Society for Quality (ASQ®) Member Association of Certified Fraud Examiners (ACFE®) Member d: 303.682.9800 x530 | c: 720.534.6235 e: tweyant@alliantnational.com
