If you conduct real estate or related title processing operations in/for the following geographies, last week's announcement from he Financial Crimes Enforcement Network (FinCEN) applies to you:
- Dallas-Fort Worth
- Las Vegas
- Los Angeles
- New York City
- San Antonio
- San Diego
- San Francisco
Similar to the UK's recent focus on ownership transparency, geographic targeting orders (GTOs) require title insurance companies to collect and report information about the persons involved in certain real estate transactions. The purpose is clear... to provide transparency for real estate transactions that are high risk as money laundering or tax evasion vehicles.
FinCEN has reported that property management, real estate investment, realty and real estate development companies were the most commonly-reported entities associated with commercial real estate-related money laundering.
The most commonly-reported activity appears to be money laundering to promote tax evasion. There also may be an increasing trend towards using commercial real estate-related accounts to launder money for politically-exposed persons and for promoting informal value transfer systems.
Additionally, FinCEN has issued guidance on real estate-related financial crimes, which include:
- Money Laundering
- Foreign Use of Counterfeit Funds
- Real Estate Facilitation of Human Trafficking
- Misappropriation of Funds
- Bank Insider Collusion
- Flipping and Straw Buyer Schemes
- Collateral Transfer
- Advance Fee Schemes
The Financial Crimes Enforcement Network (FinCEN) today announced the renewal of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold remains $300,000 for each covered metropolitan area. These renewed GTOs will be identical to the May 2019 GTOs with one modification: the new GTOs will not require reporting for purchases made by legal entities that are U.S. publicly-traded companies. Real estate purchases by such entities are identifiable through other business filings. The terms of this Order are effective beginning November 12, 2019 and ending on May 9, 2020. GTOs continue to provide valuable data on the purchase of residential real estate by persons possibly involved in various illicit enterprises.