The Financial Crimes Enforcement Network (FinCEN) announced that it will continue revised 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 until November 11, 2019.
The purchase amount threshold, which previously varied by city, is now set at $300,000 for each covered metropolitan area.
FinCEN is also requiring that covered purchases using virtual currencies be reported. FinCEN is dropping the confidentiality provision and removing GTO coverage for purchases by trusts. For purposes of this order, “Beneficial Owner” means each individual who, directly or indirectly, owns 25% or more of the equity interests of the Legal Entity purchasing real property in the Covered Transaction. “Legal Entity” means a corporation, limited liability Company, partnership or other similar business entity, whether formed under the laws of a state, or of the United States, or a foreign jurisdiction.
WHAT EXACTLY IS A GEOGRAPHIC TARGETING ORDER?
Under the Bank Secrecy Act (BSA), the director of FinCEN can issue orders which require additional recordkeeping and reporting requirements on domestic financial institutions in a specific geographic areas (“Covered Transactions”) that involve transactions using certain amounts of United States currency or monetary instruments. Orders such as these can be in effect for up to 180 days. See 31 USC § 5326(a); CFR § 1010.370.
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.