FinCEN Expands GTO to Additional Markets

On July 27, 2016, the Financial Crimes Enforcement Network, one of the Department of Treasury’s lead agencies in the fight against money laundering, announced an expansion of the two Geographic Targeting Orders released this past March 2016.  The original orders imposed data collection and reporting requirements on specific title companies involved in high-end real estate transactions in Miami-Dade County, Florida, and the Borough of Manhattan in New York, New York.  These orders are set to expire on August 27, 2016.

FinCEN’s new Geographic Targeting Orders will take effect beginning August 28, 2016 and end February 23, 2017. 

These new orders cover an expanded geographic area, which includes six major metropolitan areas.  Along with Miami-Dade County and the Borough of Manhattan in New York, New York, the new Geographic Targeting Orders will also cover Broward and Palm Beach Counties in Florida, and in California it will cover Los Angeles, San Francisco, San Mateo, Santa Clara, and San Diego Counties, and Bexar County, located in and around San Antonio, Texas.

As with the original orders, the new orders require U.S. title insurance companies to identify certain natural persons with ownership interests in a legal entity that is purchasing residential real property without a bank loan or similar form of external financing. 

In order to be considered a covered transaction under the order, the purchase must be made, at least in part, using currency or a cashier’s check, a certified check, a traveler’s check, personal check, business check, or a money order.  And note that the purchase price of a covered transaction varies by jurisdiction.

Like the previous orders, the new Geographic Targeting Orders do not impose any new obligations on real estate professionals.  But, as a real estate professional involved in a transaction that may be covered by the orders, it would be wise to educate and inform your clients that certain information may be asked of them in accordance with the orders.  This can help not only prevent your clients from being caught off guard, but it may also encourage a smoother and more efficient transaction.

And remember, the intent of the orders is not to slow down or hinder real estate transactions from occurring. Title companies are not required to submit their reports to FinCEN until thirty days AFTER closing. 

NAR supports FinCEN’s efforts to combat money laundering and prevent the financing of terrorism.

For additional information on how you can identify red flags associated with money laundering, please familiarize yourself with NAR’s voluntary “Anti-money Laundering Guidelines for Real Estate Professionals”, which were created in collaboration with the U.S. Department of Treasury.