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 Orders (GTOs) that impose data collection and reporting requirements on title companies involved in certain residential real estate transactions, effective May 16, 2019, through November 11, 2019.
The GTOs cover the geographic areas listed below for residential non-financed transactions of $300k and above (no longer just certain high-end transactions):
- California - San Diego, Los Angeles, San Francisco, San Mateo, and Santa Clara Counties
- Florida - Miami-Dade, Broward, and Palm Beach Counties
- Hawaii - City and County of Honolulu
- Illinois – Cook County
- Massachusetts – Suffolk and Middlesex County
- Nevada – Clark County
- New York - Brooklyn, Queens, Bronx, Manhattan, and Staten Island
- Texas - Bexar, Tarrant and Dallas Counties
- Washington – King County
While the GTOs do not impose any new obligations on real estate professionals, the title company subject to the GTO may need to consult with the real estate professional to obtain information necessary to maintain their compliance with the order. GTO compliance 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.
The GTOs require certain title companies to identify natural persons with a 25 percent or greater ownership interest in a legal entity purchasing residential real property. A legal entity is defined as a corporation, limited liability company, partnership, or other similar business entity, whether formed under the laws of a state, or of the United States, or a foreign jurisdiction. 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, a money order in any form, a funds transfer, or virtual currency.
The GTOs are helpful to FinCEN’s efforts to crack down on money laundering and the financing of terrorism through various illicit enterprises including foreign corruption, organized crime, fraud, narcotics trafficking, and other violations. NAR continues to be helpful and support these efforts, but opposes any mandatory reporting regulations on real estate professionals that would prove burdensome and unnecessary given the existing anti-money laundering regulations that already apply to U.S. financial institutions.
To learn more about this extension, view FinCEN’s Current Geographic Targeting Order.
For more in-depth information, visit the Money Laundering and Terrorism Financing page.
To learn more about GTOs and FinCEN’s anti-money laundering efforts, watch NAR’s Window to the Law: FinCEN’s GTOs Extended and Expanded.
For real estate professionals’ responsibilities under the law, check out NAR’s Anti-Money Laundering Guidelines of Real Estate Professionals developed with the help of FinCEN.