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Moving forward to operationalize the Final Rule, FinCEN released the unpublished version of its draft Real Estate Report on November 12, 2024 with the formal published version to follow; thereafter the collection form is open for a 60 day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.
For over 15 years, multi-factor authentication (MFA) has played a critical role in how businesses operate securely online. The rise of cloud computing, social media, and mobile apps has made MFA essential for many companies—particularly in regulated industries. However, despite its importance, many users find MFA cumbersome due to its reliance on SMS text or authentication apps.
The good news is that significant changes are coming to the MFA landscape. Let’s explore the latest trends for 2025 and beyond, showing you how to leverage these advancements to maximize security while minimizing inconvenience.
Why you should keep up with the MFA evolution
When it comes to cybersecurity, the threat landscape is ever changing. MFA practices continue to evolve as well. Agencies that evolve along with this technology in 2025 will be able to reap the full benefits of advances like biometrics, adaptive MFA and continuous authentication. Let’s look at each one-by-one.
Believe in biometrics
Arguably, the biggest shift coming down the MFA pike is the rise of biometrics. Biometrics is already a big part of many applications. Anytime fingerprints are used to log in, for example, biometrics is at work. Look for these services to proliferate more quickly, and eventually include vocal and behavioral verification capabilities. Title companies can leverage advanced biometrics to improve security and convenience for their teams and customers. These services offer unique layers of protection without the hassles of managing multiple passwords.
Adaptive MFA is advancing
Another development for agencies to watch out for is adaptive MFA. Today’s MFA requires repeated verification, sometimes as often as during every login. Adaptive MFA streamlines this by analyzing the context. It prompts additional verification only when warranted—such as when a change is detected in a login’s location or device. By reducing unnecessary prompts without compromising security, title agencies can offer a smoother, more user-friendly experience.
Continuous authentication is coming
Perhaps one of the most exciting MFA developments that has a clear applicability for title agencies is continuous authentication. Continuous authentication is closely related to adaptive verification. It takes it one step further, however, by working in the background and constantly assessing factors like typing patterns, device usage and location. This allows it to confirm the user’s identity throughout a given session and detect anomalies in real time. Title agencies can use this technology to improve verification and security experiences.
Protecting transactions
In an age of endless cyber threats, adopting the latest MFA technology is critical for agencies seeking the right balance between security and convenience. In addition to MFA, agents need effective solutions to address fraud risks within transactions. Alliant National’s new identity verification and fraud prevention tool, SecureMyTransaction, for instance, provides validation of identity instruments, as well as bank account and business information, helping to move transactions forward with confidence. Title professionals also benefit from detailed audit trails, simplifying compliance and providing added peace of mind.
Achieve reliable and convenient MFA security MFA technology is an effective, albeit inconvenient, security technology. In an era of remote work and complex technology like cloud networks, it will remain an important part of agencies’ security stacks. The encouraging news is that we are on the cusp of new MFA developments that will ensure better security and improved customer experiences. In the end, that will enable the type of smooth, swift transactions that both customers and agents appreciate.
Use this year’s spooky season to assess your strategies and ward off the specter of cybercrime.
For many people, October is associated with ghosts, goblins, tricks and treats. But for those involved in IT, it represents something equally scary: the unpredictable cybersecurity landscape facing businesses today. You see, October is Cybersecurity Awareness Month, and it’s the perfect time for title agencies to reassess their digital defense strategy. Let’s review some top priorities and best practices to ensure your strategy is working as efficiently as possible.
The undeniable importance of cybersecurity in title insurance
Title agencies are no strangers to handling large amounts of sensitive and personal information, as collecting and transmitting data is key to any successful real estate transaction. However, it can be challenging to know which aspect of your security to focus on, especially with so much information out there about threats, breaches, and solutions. Cutting through this noise requires a careful strategy that aligns with your agency’s specific needs, goals, and risks. For title agencies, this means focusing on solutions that protect sensitive client information, prevent wire fraud and ensure compliance. Let’s dive deeper into how you can ensure you achieve each of these priorities.
Investing in data protection
Achieving comprehensive data protection means examining and securing potential attack vectors. Let’s take email as an example. Email is one of the top ways in which cyber criminals exploit a business’s defenses and breach critical systems, especially in the real estate industry. Techniques like multi-factor authentication, encryption, mail filters and domain-based message authentication are all non-negotiable if you want to keep your people and agency safe. But that’s just the tip of the iceberg. One of the main ways that attackers harm businesses is through human error, which means that any technology solutions you implement must also be paired with security awareness training. These programs are invaluable for training team members on how they can spot suspicious or dangerous email activity and take action to keep systems and data safe.
Protect against wire fraud
Easily one of the most well-known cyberthreats to title agencies is the scourge of wire fraud. Fraudsters frequently target transactions by intercepting wire instructions and diverting funds into their accounts, often with devastating consequences for both title agents and consumers. While encrypted communication channels and stringent verification methods — such as multi-factor authentication and verbal confirmations — are critical to combating this threat, comprehensive verification solutions are equally essential. SecureMyTransaction, developed by Alliant National, is one such solution. It helps agents verify transaction participants and performs both bank account and business verifications. By integrating solutions like this alongside educating clients on best practices, you can significantly reduce the risk of human error and safeguard your transactions.
Don’t forget compliance
Closely connected to agency security is the issue of regulatory compliance. Agencies are subject to many industry standards and requirements. You must always be mindful of whether your cybersecurity strategies are in alignment with these obligations. Routine audits of your security practices and activities can provide greater visibility and ensure ongoing compliance, which is essential to avoiding fines. I can’t stress enough how important it is to be proactive rather than reactive with this aspect of your security. Your company’s very reputation hinges on it!
Stay safe during Cybersecurity Awareness Month and beyond
When October comes around each year, there is always a lot to look forward to. The weather is cooler, the air crisper. Jack-o’-lanterns begin showing up on doorsteps. And everywhere leaves are bursting into color. While digging into your cybersecurity strategy may not sound as fun, October’s Cybersecurity Awareness Month is a great moment to stop, reflect and recalibrate for a successful year ahead. By taking a hard look at how your agency is handling data protection, wire fraud and regulatory compliance, you can reduce your risk and move into the final stages of the year with greater confidence in your agency’s security. You may still have ghosts, goblins and even mischievous trick-or-treaters to deal with, but at the very least, you’ll know you’ve taken steps to keep cybercriminals at bay.
How a small agency deals with the big problem of fraud.
As a small, three-person office, Asbury Land Title is no stranger to collaborating on difficult challenges. “We all work together in getting things done,” said Jessica Taylor, Closing Officer at Asbury Land Title. The agency’s employees are also no strangers to trusting each other’s intuition. When someone has a “gut feeling” that a transaction may not be entirely legitimate, for instance, the entire team pitches in to conduct necessary research and follow-up.
This potent mixture of collaboration and intuition proved instrumental when Asbury Land Title recently was confronted with a fraudulent transaction. They successfully stopped the bogus deal and earned recognition from Alliant National’s Crime Watch Program.
Trusting your gut
In the beginning, nothing appeared amiss with the transaction. “It was a single-family home in a nice neighborhood,” said Taylor. But as with many illegitimate transactions, it didn’t take long for red flags to emerge. The first warning sign was the buyer’s address, which was in Canada. Then, there was the issue of earnest money, which was much higher than the normal range. Finally, the transaction order itself raised concerns, such as the signatures and dates appearing in different fonts. These details were more than enough for Taylor to intuit that greater scrutiny was warranted.
Sleuthing out the truth
After deeming the transaction suspect, Taylor began collaborating with the rest of her team to verify whether it was truly fraudulent or not. They looked up the buyer’s address on Google Earth, which returned what appeared to be a restaurant. Reviewing the result, the team thought there might be “an apartment above the restaurant but couldn’t be sure.” Spotting a REMAX office on the same street, they thought about contacting the business to see if they could verify whether it was indeed an apartment above the restaurant and to potentially “make contact with the buyer in person.” However, before they could reach out, new information emerged about the seller.
Stopping the “seller”
While hunting down information on the buyer, Taylor was also simultaneously working to verify the seller. “I had originally found the property on a ‘for sale by owner’ website and had sent a message to the seller asking them to please contact us.” She also noticed that information about the seller’s wife was missing. Additional research revealed that the seller’s wife’s mother had passed away recently, which gave Asbury Land Title another lead to pursue. They called the funeral home, which eventually put them in touch with the actual seller and allowed them to terminate the transaction.
An emotional journey
This transaction had a positive resolution, in addition to a few lessons applicable to anyone working in title insurance. First, finding the truth required Taylor and the Asbury Land Title team to trust their instincts and leave no stone unturned while conducting additional research into the transaction.
The story also highlights the emotional impact agents can make when they take all necessary steps to protect their transactions from fraud. As Taylor explained: “The seller was grateful to us for tracking him down. And I was excited as well. It was like solving a puzzle. Once that final piece was found, we were able to glue it together.”
Having that type of effect at your work is a rare thing indeed. While stopping fraud can be challenging and require additional effort, the payoff at the end of the day makes it work well worth doing.
Would you like to learn more about the Alliant National Crime Watch Program or submit your own experience for consideration? Find out more here.
