Reporting Required by FinCEN for Housing Markets in California
Wednesday, July 27, 2016
The Financial Crimes Enforcement Network (FinCEN) has issued Geographic Targeting Orders (GTOs) for a number of U.S. housing markets, including San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara Counties, effective for 180 days beginning on August 28, 2016. The GTOs require title insurance underwriters to identify the names of natural persons behind companies that are used to pay all-cash purchases above a certain dollar amount for high-end residential real estate. Only transactions valued at $2M and above will trigger the GTO reporting requirements for the newly named California markets.
“In California, title companies are the independent party at the closing table for millions of real estate transactions and CLTA member companies take their obligations very seriously,” said Craig Page, Executive Vice President and Counsel for the California Land Title Association. “CLTA will be doing everything we can to provide our members with the information and means they need to properly comply with FinCEN’s new reporting requirements for several counties in the state. As an industry, we understand the importance of FinCEN’s efforts to target money laundering and the illegal purchase of real property and will assist FinCEN any way we can.”
FinCEN is concerned that all-cash purchases through LLCs or other structures may be used by individuals attempting to hide assets and identities, and views the GTOs as a risk-based approach to combat money laundering in the real estate sector. The information reported under a GTO is made available to law enforcement investigators as part of FinCEN’s database. FinCEN has made it clear in past announcements that it appreciates the assistance and cooperation of the title insurance industry in protecting the real estate market from abuse by illicit actors and that title companies play a central role in providing FinCEN with valuable information. This latest round of GTOs follows on the heels of similar orders issued in January for Manhattan, N.Y., and Miami-Dade County, Fla.
To see the GTO issued on California locations click here. For more information, visit the ALTA’s FinCEN Resource Center.