FinCEN announced yesterday that, once again, it is extending the Geographic Targeting Order, or GTO, which requires U.S. title insurance companies to identify the natural persons behind so-called “shell companies” used in purchases of residential real estate not involving a mortgage. FinCEN also has expanded slightly the reach of the GTOs.
The new GTO is here. FAQs issued by FinCEN on the GTOs are here. This is a topic on which we previously have blogged extensively.
FinCEN’s press release summarizes the new GTO and its expansion. The sections pertaining to the new expansions are in bold.
The terms of the GTOs are effective beginning April 30, 2022, and ending on October 26, 2022. The GTOs continue to provide valuable data on the purchase of residential real estate by persons possibly involved in various illicit enterprises. Renewing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector.
FinCEN renewed the GTOs that cover certain counties within the following major U.S. metropolitan areas: Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle. FinCEN, working in conjunction with our law enforcement partners, identified additional regions that present greater risks for illicit finance activity through all-cash purchases of residential real estate. Accordingly, today, FinCEN expanded the geographic coverage of the GTOs to parts of the District of Columbia, Northern Virginia, and Maryland (DMV) metropolitan area, the Hawaiian islands of Maui, Hawaii, and Kauai, and Fairfield County, Connecticut. The purchase amount threshold remains $300,000 for each covered metropolitan area, with the exception of the City and County of Baltimore, where the purchase threshold is $50,000.
This is the first renewal (and expansion) of the GTO since FinCEN issued on December 6, 2021 an Advanced Notice of Proposed Rulemaking (“AMPRM”) to solicit public comment on potential requirements under the Bank Secrecy Act for certain persons involved in real estate transactions to collect, report, and retain information. As we have blogged, the ANPRM envisions imposing nationwide recordkeeping and reporting requirements on specified participants in transactions involving non-financed real estate purchases, with no minimum dollar threshold. The new and expanded GTO represents another step towards such regulations — although the breadth of their application, when finalized, currently remains a very open question. Indeed, in his prepared remarks before the Committee on Financial Services U.S. House of Representatives on April 28, 2022, Acting FinCEN Director Himamauli Das stated:
FinCEN is carefully studying the 150 comments we received in response to the real estate ANPRM. These comments will help us move toward the next step, a proposed rule to address the illicit finance threats to the real estate market. While it is still too early to identify the scope of any NPRM or final rule, we are working to ensure that the requirements would be carefully crafted to result in valuable information for law enforcement, regulators, and the intelligence community, as well as to help the real estate sector protect itself from abuse by corrupt and other bad actors.
If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. Please click here to find out about Ballard Spahr’s Anti-Money Laundering Team. Please also check out our detailed chapter on these issues, The Intersection of Money Laundering and Real Estate,