FinCEN expands buyer-identity rules to more cities
WASHINGTON – Nov. 16, 2018 – 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 Nov. 17, 2018, through May 15, 2019.
The GTOs help FinCEN crack down on money laundering and terrorism financing. They require certain title companies to identify natural persons with a 25 percent or greater ownership interest in a legal entity purchasing residential real property. They define a “legal entity” 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 must file a report with FinCEN regarding covered purchases of residential real property meeting the requirements above when such purchases are made:
- Made without a bank loan or similar external financing
- 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 (new addition)
The GTOs cover residential non-financed transactions of $300k and above (no longer just certain high-end transactions)
GTOs don’t impose new obligations on real estate professionals, but a title company may need to consult with real estate professionals to get information necessary to maintain their compliance with the order. GTO compliance also 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.
NAR says it continues to help and support FinCEN efforts, but it opposes mandatory reporting regulations on real estate professionals that would be burdensome and unnecessary. According to NAR, there’s no need since existing anti-money laundering regulations already apply to U.S. financial institutions.
GTO areas included in latest update
- 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 (new addition)
- Massachusetts – Suffolk and Middlesex County (new addition)
- Nevada – Clark County (new addition)
- New York - Brooklyn, Queens, Bronx, Manhattan, and Staten Island
- Texas - Bexar, Tarrant (new addition), and Dallas (new addition) counties
- Washington – King County (new addition)
FinCEN’s FAQs and announcement are posted online.
For background on the issue, visit NAR’s page on money laundering.
Source: National Association of Realtors® (NAR), Christie DeSanctis, Dan Blair
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