SC Lawyer, July 2003, #3. Ethics Watch July 2003 The next 9/11 victims: closing attorneys.

AuthorBy John Freeman

South Carolina Lawyer


SC Lawyer, July 2003, #3.

Ethics Watch July 2003 The next 9/11 victims: closing attorneys

South Carolina Lawyer July 2003

Ethics Watch July 2003 The next 9/11 victims: closing attorneysBy John FreemanThe September 11 tragedy continues to affect our daily lives. Got to catch a plane? Leave extra time to get through security. Own some stocks? Excuse me for asking. Whatever the business setting, if things have not been doing well and you probe for reasons, you're apt to find 9/11 on the list explaining less than stellar performance.

Outside of Manhattan, the sedate practice of real estate law seems an unlikely candidate to be roiled by 9/11 shock waves. In fact, the Federal Reserve's low interest rate pump priming has favored that segment of the economy by spurring refinancings. The relative tranquility of real estate practice may soon be getting a jolt, however. That 9/11 threatens to affect closing attorneys is a lesson to us all about the insidious impact Osama Bin Laden and company has had on our daily lives.

The source of unwanted federal government scrutiny of real estate practice is an obscure federal agency, the Treasury's "Financial Crimes Enforcement Network." FinCEN, as it is called, recently proposed a notice of proposed rulemaking in the Federal Register with an ominous title, "Anti-Money Laundering Program Requirements for 'Persons Involved in Real Estate Closings and Settlements.'" 68 Fed. Reg. 17569 (April 10, 2003). The release announcing FinCEN's proposal discloses that the agency is eyeing lawyer-client dealings in real estate transactions as an area ripe for government snooping. Part of the Patriot Act amended the Bank Secrecy Act "to make it easier to prevent, detect and prosecute international money laundering and the financing of terrorism."

Under § 352 of the Patriot Act, "financial institutions" need to establish anti-money laundering programs. So far, so good. The rub is that the Patriot Act defines "financial institution" as "persons involved in real estate closings and settlements."

It is fair to question why the federal government would have any interest in monitoring real estate transactions. The answer is that for dirty money to be laundered it needs to be used to purchase something benign. A steak dinner is benign, but it takes a huge number of steak dinners to...

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