Thursday
July 27, 2017

FinCEN GTOs Expand Beyond NYC and Florida

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FinCEN GTOs Expand Beyond NYC and Florida

The Financial Crimes Enforcement Network today announced an expansion of their Geographic Targeting Orders in an effort to identify situations where property purchases are being used in money-laundering schemes or to finance terrorism. FinCEN, which is part of the U.S. Treasury Department, issued GTOs in Manhattan and Miami-Dade County, Fla. earlier this year, which they say “are helping law enforcement identify possible illicit activity and informing future regulatory approaches.”

The new rules temporarily require U.S. title insurance companies to identify the buyers behind shell companies who are paying all cash for high-end residential real estate in six major metropolitan areas. The new areas covered by the orders announced today are:

  • all boroughs of the city of New York
  • the two counties immediately north of Miami-Dade County (Broward and Palm Beach)
  • Los Angeles County
  • San Francisco, San Mateo, and Santa Clara counties
  • San Diego County
  • Bexar County, which includes San Antonio, Texas

Jurisdiction

Price Threshold

Manhattan

$3,000,000

Brooklyn

$1,500,000

Queens

$1,500,000

The Bronx

$1,500,000

Staten Island

$1,500,000

Miami-Dade County

$1,000,000

Broward County

$1,000,000

Palm Beach County

$1,000,000

San Diego County

$2,000,000

Los Angeles County

$2,000,000

San Francisco County

$2,000,000

San Mateo County

$2,000,000

Santa Clara County

$2,000,000

Bexar County

$500,000

The GTOs only cover residential transactions above a certain monetary threshold, which varies by location as noted in the chart on the right.

The agency is still concerned that that all-cash purchases are being used to hide assets, and they noted in a release today that information from the first two GTOs appears to have uncovered criminal activity has helped generate leads and identify previously unknown subjects.

“The information we have obtained from our initial GTOs suggests that we are on the right track,” said FinCEN Acting Director Jamal El-Hindi in a statement released this afternoon. “By expanding the GTOs to other major cities, we will learn even more about the money laundering risks in the national real estate markets.”

As NAR has noted in the past, GTOs are targeted at financial institutions and do not impose any new requirements on real estate professionals. However, the association did collaborate with FinCEN to develop voluntary guidelines for members to help minimize the use of real estate in money laundering schemes.

NAR staff also met with officials from the Treasury Department and the Financial Action Task Force (an international body focused on stopping money laundering and terrorist financing) earlier this year to underscore that real estate agents and brokers are not in a position to detect money laundering, since the funds involved in real estate transactions are handled through regulated financial institutions.

NAR President Tom Salomone said the association will be watching FinCEN’s efforts to “combat money laundering and the financing of terrorism” closely.  

“The National Association of REALTORS® appreciates FinCEN’s continued recognition that regulated entities, such as residential mortgage lenders, originators, financial depository institutions, and here, title insurance companies, are uniquely trained and positioned to help them achieve their goals,” he said in a statement accompanying FinCEN’s announcement. “We will continue to monitor this extension of the GTOs as well as any expansions made to the program.”

—Meg White, REALTOR® Magazine