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  • Writer's pictureGus Fernandez

FinCEN extends real estate buyer-identity rules

The Financial Crimes Enforcement Network (FinCEN), one of the U.S. Treasury’s leading agencies in the fight against money laundering and financing of terrorism, renewed its Geographic Targeting Orders (GTOs) earlier this month. The GTOs impose data collection and reporting requirements on title companies involved in certain residential real estate transactions.

The program operates in a number of U.S. counties and metro areas – generally ones who have a high number of cash sales by foreign investors. That list includes most of South Florida – Miami-Dade, Broward and Palm Beach counties.

The GTOs help FinCEN crack down on money laundering and terrorism financing by requiring certain title companies to identify natural persons with a 25% or greater ownership interest in a legal entity that’s purchasing residential real property. They define a “legal entity” as a corporation, limited liability company, partnership or other similar business entity, whether formed under the laws of a state, or of the United States, or a foreign jurisdiction.

Title companies must file a report with FinCEN regarding covered purchases of residential real property meeting the requirements above when such purchases are:

·Made without a bank loan or similar external financing

·Paid at least in part by using currency or a cashier’s check, a certified check, a traveler’s check, a personal check, a business check, a money order in any form, a funds transfer, or virtual currency.

The GTOs cover residential non-financed transactions of $300,000 and above after a change in November 2018 that lowered the threshold.

The GTOs don’t directly affect real estate professionals – but a title company may need to consult with them to get information necessary to maintain compliance with the order. GTO compliance also shouldn’t affect real estate sales transaction timelines since title companies have 30 days to report a transaction to FinCEN after closing.

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