FinCEN Extends Geographical Targeting Orders through Sept. 16, 2018 (Effective March 20, 2018)

The Financial Crimes Enforcement Network (FinCEN) renewed for an additional six months (effective March 20, 2018) an existing Geographic Targeting Order (GTO) that requires U.S. title insurance companies—along with their subsidiaries and agents—to identify the individuals behind companies used to conduct high-end, all-cash real estate transactions in certain major jurisdictions.

The new GTO runs through Sept. 16, 2018. The previous GTO expired March 20. This is the third time FinCEN has broadened and/or extended the GTO. In September, FinCEN revised the GTOs to capture a broader range of transactions, including those involving wire transfers. The order also included transactions above $3 million conducted in the city and county of Honolulu, Hawaii. FinCEN previously issued an advisory that provides information on how to detect and report these transactions to FinCEN.

FinCEN originally ordered GTOs in September 2016 requiring certain underwriters to identify and report the true “beneficial owner” behind a legal entity involved in certain high-end deals in Manhattan and Miami-Dade County. A beneficial owner is an individual or entity who directly or indirectly owns 25 percent or more of the equity interest in the legal entity. FinCEN provides the information to law enforcement investigators as part of FinCEN’s database.

The extended GTO includes these areas and price thresholds:

• Borough of Manhattan, N.Y.; $3 million
• Borough of Brooklyn, Queens and Bronx, N.Y.; $1.5 million
• Miami-Dade, Broward and Palm Beach counties, Florida; $1 million
• Los Angeles, San Francisco, San Mateo, Santa Clara and San Diego counties, California; $2 million
• City and County of Honolulu; $3 million
• Bexar County, Texas (San Antonio); $500,000

A currency transaction report must be filed with FinCEN if these things occur:

• Location (deal occurs in one of the areas included in the GTOs)
• All-cash deal (no financing)
• Purchase price exceeds threshold determined for each covered jurisdiction
• There’s a corporate buyer
• Purchase price paid via monetary instrument or wire transfer

The report must include:

• Information about the identity of the individual primarily responsible for representing the buyer. The title company must obtain a record of the individual’s driver’s license, passport of other similar identification
• Date of closing of the covered transaction
• Total amount transferred in the form of a monetary instrument
• Total purchase price of the covered transaction
• Address of real property involved

If the purchase involved in the covered transaction is a limited liability company, the underwriter must provide the name, address and taxpayer identification number of all its members. Additionally, covered title companies must retain all records relating to compliance with the order for five years, store the records so they are accessible with a reasonable period of time and make the data available to FinCEN or other law enforcement or regulatory agency, upon request. Under the Bank Secrecy Act, covered businesses must retain all records relating to compliance with the GTOs for at least five years from the last day that the GTOs are effective (including any renewals).

[NOTE: This update provided courtesy of ALTA.]

FinCEN Extends Their GTO Reporting Requirements Again and Adds the County of Honolulu - Effective August 22, 2017

The Financial Crimes Enforcement Network (FinCEN) recently announced Geographic Tracking Orders (GTOs) will be extended, but there will be a brief interim period between the expiration of the former GTO and the renewal.

As a reminder, GTOs require all title insurers to acquire and report information from transactions meeting certain criteria.

The current GTOs, set to expire on August 22, 2017, will not be immediately renewed. Transactions closing between August 23, 2017 and September 21, 2017 do not have to be reported to FinCEN.  There will be no requirement to obtain information about the identity of Beneficial Owners of purchasing business entities for transactions closing during that period.

Title company employees should consult with their management as to how the company will deal with this interim time period and how it will affect your company’s procedures.

FinCEN will issue new GTOs effective September 22, 2017.  The new GTO’s will include the same terms as the current GTOs with the following additions:

• FinCEN Geographic Targeting Orders - Effective September 22, 2017
  • US Department of Treasury Press Release
  • Sample Order
  • ALTA Fact Sheet
• FinCEN Geographic Targeting Orders - Effective Aug. 28, 2016

Additional Resources

• FinCEN Forms
• Real Estate Infographic
• CLTA/ALTA Recorded Webinar
• ALTA Resource Center

FinCEN Forms

Developed in partnership with the American Land Title Association, individuals can use these fillable PDF questionnaire forms to determine whether a transaction falls under reporting obligations and Information Collection Form:

• ALTA Covered Transaction Determination Form:  Use this form to determine whether a transaction falls under reporting obligations
  
  
• ALTA GTO Information Collection Form:  Use this form to collect certain information for covered transactions
  
  
• IRS Form 8300.
  
  
• FAQs:  U.S. Department of Treasury, FinCEN re: GTO (August 19, 2016)
  

Real Estate Professional FinCEN Infographic

Intended for title companies to distribute to real estate professionals with which they are in contact, this infographic quickly breaks down the basics of the FinCEN Geographical Targeting Orders: CLTA FinCEN Real Estate GTO Infographic.

Recorded Webinar:  re: FinCEN Order

CLTA, with the help of ALTA, recorded a webinar which was presented on August 19th.  The webinar outlines the order and how to comply. All title insurance agents and underwriters in San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara Counties, or anyone who is involved in handling transactions in these counties, are urged to view this recorded webinar.  

• Webinar Recording (August 2016)
• Webinar Handouts

NOTE: The above presentation is meant for informational purposes only and the statements and opinions provided are not those of CLTA or its member companies. CLTA strongly recommends that underwritten title companies, independent escrow companies and real estate professionals consult directly with the title insurance companies with which they do business to discuss the title insurer’s precise expectations and protocols associated with FinCEN reporting.