FinCEN Expands Reach of Real Estate "Geographic Targeting Orders" Beyond Manhattan and Miami

The U.S. Treasury Department's anti-money laundering unit on Wednesday expanded the scope of its temporary anti-money laundering reporting regime targeting the real estate sector, requiring U.S. title insurance companies in additional cities to identify the true, or "beneficial" owners behind shell companies that pay cash for posh residential real estate.

The move -- aimed at exposing transactions involving corrupt leaders, drug traffickers and other criminals -- builds on the original Geographic Targeting Orders, or GTOs, that Treasury's Financial Crimes Enforcement Network (FinCEN) issued earlier this year requiring such steps from title insurance companies in Manhattan and Miami-Dade County. The GTOs require the filing of so-called Forms 8300 and the collection and retention of identification documents.

Between August 28, 2016 and February 23, 2017, such duties will be 
imposed on title insurance companies in: all boroughs of New York City; Miami-Dade, Broward and Palm Beach counties in Florida; Los Angeles, San Francisco, San Mateo, Santa Clara and San Diego counties in California; and, Bexar County, Texas, where San Antonio is located.

thresholds at which beneficial owners must be identified range from $500,000 in Bexar County to $3 million in Manhattan. 

"The information we have obtained from our initial GTOs suggests that we are on the right track," said FinCEN Acting Director Jamal El-Hindi. "By expanding the GTOs to other major cities, we will learn even more about the money laundering risks in the national real estate markets, helping us determine our future regulatory course."

FinCEN, which is concerned about the money laundering threat posed by real estate transactions involving essentially anonymous buyers, is continuing to focus on title insurance companies "because title insurance is a common feature in the vast majority of real estate transactions," FinCEN said. 

It added that a "significant portion" of covered transactions reported to date "have indicated possible criminal activity associated with the individuals reported to be the beneficial owners behind shell company purchasers." 

"This corroborates FinCEN's concerns that the transactions covered by the GTOs are highly vulnerable to abuse for money laundering," FinCEN said. "Federal and state law enforcement agencies have also informed FinCEN that information generated by the GTOs has provided greater insight on potential assets held by persons of investigative interest and, in some cases, has helped generate leads and identify previously unknown subjects."

The American Land Title Association (ALTA), the national trade association of the title insurance industry, is "ensuring our members have the tools and information they need to properly comply with FinCEN’s reporting requirements," Michelle Korsmo, ALTA’s chief executive officer, said in a written 

ALTA Press Release

For Immediate Release

ALTA Members Roles Expanded in FinCEN Money Laundering Prevention Effort

Washington, D.C., July 27, 2016 — The American Land Title Association (ALTA), the national trade association of the land title insurance industry, released the following statement in response to the United States Department of Treasury Financial Crime Enforcement Network’s (FinCEN) new Geographic Targeting Orders (GTO) announced today:

“As an independent party at the closing table for millions of real estate transactions each year, ALTA members take their responsibility seriously,” said Michelle Korsmo, ALTA’s chief executive officer. “Once again, we are ensuring our members have the tools and information they need to properly comply with FinCEN’s reporting requirements. We appreciate FinCEN’s efforts to prevent money laundering schemes and the illegal purchase of real estate.”

Top 5 Things to Know about the GTOs:

  1. New GTOs include all title insurance underwriters
  2. Effective Date: 180 Days Beginning on August 28, 2016
  3. Counties Covered and All-Cash Purchase Price Thresholds include:
    1. Bexar County (San Antonio), Texas - $500,000+
    2. Miami-Dade, Broward and Palm Beach Counties, Florida - $1,000,000+
    3. New York City Boroughs of Brooklyn, Queens, Bronx and Staten Island - $1,500,000+
    4. New York City Borough of Manhattan - $3,000,000+

San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara Counties, California -