The Defending American Security from Kremlin Aggression Act of 2018, a bipartisan bill introduced in the U.S. Senate last month, would force title insurance companies to report the identities of people using limited liability companies (LLCs) behind high-priced real estate transactions across the country. Under the proposed legislation, co-sponsored by Sens. Lindsey Graham (R-S.C.) and Bob Menendez (D-N.J.), Geographic Targeting Orders (GTO), a temporary program implemented by the Treasury Department's Financial Crimes Enforcement Network, would become a law applied nationally.
Currently, the GTO program applies to a dozen countries where title insurance companies must disclose beneficial owners of anonymous LLCs used to purchase real estate with cash. Those rules initially applied to transactions of more than $3 million in New York City and more than $1 million in Miami, and now apply in San Francisco, Los Angeles, San Antonio and Honolulu. The proposed law seeks to tamp down Russian interference in the midterm elections and impose sanctions on several Russian nationals. The title insurance rule was one of several anti-money laundering reform items included in the bill. The title insurance industry has bristled at the temporary nature of the GTO program and the added resources needed to conduct due diligence on anonymous LLCs. While the industry agrees that the core issue lies with the fact that LLCs can be operated anonymously, it also believes that beneficial ownership disclosure at the time an LLC is formed would remove the need for title insurance companies to find out what entity is behind a company.