FinCEN Extends and Expands Targeting Orders

FinCEN Extends and Expands Targeting Orders

Apparently satisfied with the progress made in its anti-money laundering efforts, the Financial Crimes Enforcement Network (FinCEN) extended and expanded its Geographic Targeting Order (“GTO”) on July 22, 2016. The original GTO, issued January 13, 2016, required title companies to identify natural persons in residential real estate transactions in Miami-Dade County and Manhattan. The GTO was to expire August 27, 2016. The new GTO extends the existing GTO until February 23, 2017 and adds new cities and counties. Added to the list are Broward and Palm Beach Counties, Florida as well as Bexar County, Texas, San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara Counties California and the Boroughs of Brooklyn, Queens, the Bronx and Staten Island. The price threshold in these new locations are as follows:

• All Florida counties – $1,000,000;
• Bexar County, Texas – $500,000;
• All California counties – $2,000,000;
• Borough of Manhattan – $3,000,000; and
• All other Boroughs of New York – $1,500,000.

The GTO again requires title companies/settlement agents to identify the true owner of the real property being purchased in cash transactions. Agents are required to complete a Form 8300 which requires that the owner provide a drivers license, passport or other acceptable form of identification. From a practice standpoint, the formation of multiple layers of corporations or other entities, on or off-shore, will not protect a purchaser from shielding his identity as the title company/settlement agent is required to continue to drill down and complete the form for each entity until it identifies the individual owner having legal and beneficial ownership. Hiding ownership in a trust will likewise not shield the identity of the owner.

Clearly, shell companies won’t work to shield ownership. Think Panama Papers. By extending and expanding upon the GTO, FinCEN has shown that it is serious in its efforts to curtail money laundering and other financial crimes in the United States. When I last wrote about FinCEN and the original GTO, I was skeptical as to how effective the GTO could be. I questioned that New York and Miami-Dade County was a limited representation as to where the problem lie and the term of the GTO was too short. Extending and expanding the GTO is definitely a good start and, as long as FinCEN continues to do this, it will make progress. However, it remains to be seen if the policy continues is to 2017.