FinCEN Renews AML Reporting Requirements for Title Insurers in Nine States
16 May 2019

The US Treasury Department on Wednesday renewed an order requiring title insurers to identify individuals using companies to purchase residential real estate in 12 metropolitan areas.

The geographical targeting order (GTO), issued by the Financial Crimes Enforcement Network (FinCEN), applies to purchases of homes valued at $300,000 or more whenever such purchases do not involve a bank loan or similar financing and have been partly or fully paid for with banknotes, personal checks, cashier’s checks, cryptocurrency or other forms of cash.

FinCEN last expanded and extended the anti-money laundering reporting requirements in November, when it doubled the metropolitan areas to which it applies. The GTO renewed on Wednesday covers residential sales in the major cities of nine states, including New York, California, Florida, Texas, Hawaii and Massachusetts.

Under the order, title insurance companies must file currency transaction reports (CTRs) within 30 days of the relevant transaction and include identifying information on the individual representing the buyer, the legal entity used to make the purchase and the beneficial owner of the legal entity.

The CTRs must also include the address and total price of the property in question.

Title insurers must separately retain copies of driver’s licenses, passports or similar identifying documentation for both the representative involved in the sale and the beneficial owner “who, directly or indirectly, owns 25 percent or more of the equity interests of the Legal Entity purchasing real property.”

Failures to comply with the order could result in civil or criminal penalties for covered businesses or any of their employees, FinCEN said.

Although FinCEN has intermittently issued GTOs since the late-1990s, the bureau has most often made use of the tool over the last five years.

The Financial Action Task Force (FATF), which in 2016 criticized the United States for insufficient oversight of its real estate sector, has called on FinCEN to expand the scope of GTOs, in part by requiring that firms obtain more data on the “key players” of high-end real estate purchases.

“Although GTOs are not preventatives measures and are temporary in nature, they are a comprehensive tool that the authorities can use to gather information on vulnerabilities,” FATF said in its 2016 mutual evaluation of the country.

Photo: Emmanuel Lieberman [CC BY-SA 4.0], via Wikimedia Commons

Read more:

Know Your Buyer: Governments act against money laundering in real estate

U.S. Legislators Propose Expansion of FinCEN’s Mission

US anti-money laundering: Hot topics for 2019


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