On February 23, 2017, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced the renewal of the existing Geographic Targeting Orders (GTOs) issued in July 2016 relating to money laundering concerns in connection with all-cash purchases of high-end residential real estate properties. The renewed GTOs cover the same geographic areas at the same monetary thresholds for certain real estate purchases in New York, Florida, California, and Texas.
We previously reported on the expansion of the GTOs last July. The GTOs require U.S. title insurance companies to identify the natural person who is the ultimate beneficial owner behind limited liability companies, partnerships, and other legal entities involved in all-cash residential real estate sales in the five boroughs of New York City, three counties in Florida, five counties in California, and one county in Texas. The terms of the GTOs remain the same. FinCEN has provided a sample GTO and Frequently Asked Questions about the GTOs.
In its press release announcing the renewal, FinCEN stated that about 30% of the transactions covered by the GTOs involved a beneficial owner or purchaser representative that is the subject of a previous suspicious activity report (SAR). FinCEN apparently considers the GTOs to be effective in gathering useful information on potential money laundering. Accordingly, it is likely to continue the GTO program for the foreseeable future, and may potentially expand the orders to cover other geographic areas suspected of being high-risk for money laundering through luxury real estate. Depending on the results of the GTOs, FinCEN may also implement further anti-money laundering compliance requirements in the real estate sector.
The renewed GTOs took effect February 24, 2017, and will be in effect for 180 days (through August 23, 2017).