The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), in its continued efforts to fight money laundering, has renewed, expanded, and clarified its Geographic Targeting Order to Title Agencies, closing attorneys, escrow agents, and title insurance underwriters who handle closing real estate transactions.
The order is no longer confidential, therefore we’re now allowed to share its details with the public. We were not permitted to do this with the previous version of the Order.
The Order requires that if a closing agent is handling a closing where the purchaser is an entity (LLC, corporation, partnership, limited partnership), there is no mortgage financing being used, and the sales price is $300,000.00 or more in certain jurisdictions, the closing agent must gather the identification information of the shareholders, officers, partners, members, managers, directors, etc. and report it to FinCEN under the Bank Secrecy Act. It’s important to note that “Trusts” are no longer considered to be “Legal Entities” that will require reporting of beneficiaries. This is probably because the trustee is already required to file IRS Form 56 that notifies the IRS of the beneficiaries’ identification information.
It’s also important to note that the definition of “funds” used for purchase now includes virtual currency along with wires, cashier’s checks, ACH, and cash itself.
The following jurisdictions are now covered:
- Texas counties of Bexar, Tallant, and Dallas;
- Florida Counties of Miami-Dade, Broward, and Palm Beach;
- Boroughs of Brooklyn, Queens, Bronx, Staten Island, or Manhattan in New York City, New York;
- California Counties of San Diego, Los Angeles, San Francisco, San Mateo, or Santa Clara;
- City and County of Honolulu, Hawaii;
- Clark County, Nevada;
- King County, Washington;
- Suffolk and Middlesex Counties in Massachusetts; and
- Cook County, Illinois.
When the Order was first initiated, only closings of $3 million or more in New York City and $1 million or more in South Florida were covered, so this is a considerable expansion of coverage since it first rolled out.
The Order appears to be working at preventing criminals (international and domestic) from using the funds they gain from criminal activities and laundering them through the legitimate activity of purchasing and selling investment real estate. As a consequence, this has also had a negative effect on the market for high-end real estate in many of these jurisdictions.
If you have any questions about the renewed order, please don’t hesitate to contact us.