The Financial Crimes Enforcement Network (FinCEN) issued a new Geographic Targeting Order (GTO) that requires U.S. title insurance companies to identify the natural persons behind companies used to pay “all cash” for high-end residential real estate in six major metropolitan areas. FinCEN is monitoring whether real estate transactions involving “all cash” (i.e. without bank financing) in deals where the purchasers are limited liability companies, or other business structures that are not transparent, are being used to hide assets related to possible criminal activity.
The six metropolitan areas that are impacted are (1) all boroughs of New York City; (2) Miami-Dade, Broward and Palm Beach counties; (3) Los Angeles County, California; (4) San Francisco, San Mateo, and Santa Clara counties; (5) San Diego County, California; and (6) Bexar County, which includes San Antonio, Texas. The monetary threshold for Bexar County, TX is relatively low at $500,000. Additional monetary thresholds can be located at https://www.fincen.gov/news_room/nr/files/Title_Ins_GTO_Table_072716.pdf.
Title insurance companies in the impacted geographic areas should review detailed requirements for filing a correct Form 8300. It is noteworthy to mention that the normal requirements and definitions applicable to Form 8300 are broadened within this GTO. Therefore, filers should review the instructions carefully and consult with an attorney to ensure compliance with the GTO. The GTO goes into effect on August 28, 2016 and is effective for 180 days. It can be reviewed at https://www.fincen.gov/news_room/nr/files/Title_Ins_GTO_Sample_072716.pdf