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The Financial Crimes Enforcement Network (FinCEN), one of the U.S. Treasury’s leading agencies in the fight against money laundering and financing of terrorism, has renewed the Geographic Targeting Order (GTO) that imposes data collection and reporting requirements on title companies involved in certain high-end real estate transactions.
FinCEN issued an updated GTO effective beginning on May 10, 2020 through November 5, 2020, requiring title companies to continue to collect and report information involving persons engaged in residential real estate transactions of $300,000 or more made without a bank loan or other similar financing. The most updated GTO significantly lowers the threshold amount, which triggers reporting, and expands the geographical areas that must report these types of transactions.
Residential real estate transactions for the purchase of real property for $300,000 or more and that are purchased without a mortgage or any similar form of financing must be reported in the following areas:
- Texas: Bexar, Tarrant, or Dallas Counties
- Florida: Miami-Dade, Broward, or Palm Beach Counties
- New York: Boroughs—Brooklyn, Queens, Bronx, Staten Island or Manhattan
- California: San Diego, Los Angeles, San Francisco, San Mateo, or Santa Clara Counties
- Hawaii: City and County of Honolulu
- Nevada: Clark County
- Washington: King County
- Massachusetts: Suffolk or Middlesex Counties
- Illinois: Cook County
In accordance with the GTOs, title companies, and their agents, must file a report with FinCEN regarding covered purchases of residential real property meeting the requirements above when such purchases are made without a bank loan or similar external financing and is paid at least in part by using currency or a cashier’s check, a certified check, a traveler’s check, a personal check, a business check, money order, or virtual currency. Pursuant to federal legislation that directed Treasury to allow investigators to obtain additional records to better target illicit Russian activity, the GTOs also now include wire funds transfers.
The GTOs do not impose any new obligations on real estate professionals. However, it is important for members to be aware of these and the potential impact on real estate sales transactions. In the event a transaction is covered by a GTO, the title company may consult with the real estate professional to obtain information necessary to report in compliance with the order. Such communications should not affect the real estate sales transaction or timeline for closing as title companies are required to report GTO covered transactions to FinCEN within 30 days of the closing.
FinCEN’s new Advisory to Financial Institutions and Real Estate Firms and Professionals
Information on Money Laundering Risks for Real Estate Transactions and How to Detect and Report These Transactions
Background on Real estate Professionals’ Responsibilities Under the Law
NAR’s Voluntary Guidelines Developed in Collaboration with FinCEN
Recognizing Suspicious Money Laundering Activities
Video Created by NAR in Partnership with the U.S. Treasury Department