Geographic Targeting Order (GTO)

The Financial Crimes Enforcement Network (“FinCEN”) has, once again, extended its Geographic Targeting Order (“GTO”) requiring U.S. title insurance companies to identify the natural persons behind legal entities used in purchases of residential real estate performed without a bank loan or similar form of external financing.  Again, the monetary threshold remains at $300,000, and purchases

“Sanctions Bill from Hell” Targets Real Estate Deals

On February 13, 2019, Sen. Lindsay Graham (R – S.C.) introduced S.482 – the Defending American Security from Kremlin Aggression Act of 2019 (“DASKAA”), a bill intended “[t]o strengthen the North Atlantic Treaty Organization, to combat international cybercrime, and to impose additional sanctions with respect to the Russian Federation and for other purposes.” DASKAA was introduced by a bipartisan coalition of Senators and is a revision to a similar bill that was introduced but stalled in the Senate in 2018.

Like its previous iteration, dubbed by its authors as the “sanctions bill from hell,” DASKAA would implement a litany of measures meant to punish Russia for its interference in the 2016 presidential election and to combat future aggression, including the development of chemical weapons, cybercrime, election interference and, importantly for our purposes, money laundering. Russian officials have denounced the bill, referring to the proposed sanctions as “insane”, “reckless”, and amounting to “racketeering.” Whether DASKAA can reach the Senate floor, let alone achieve passage through both Houses of Congress and gain the signature of the President (whose son has observed publically that “Russians make up a pretty disproportionate cross-section of a lot of our assets”), is as uncertain as the sources of Russian money flowing through the American economy. What is clear, however, is that neither the means by which Russia seeks to interfere with, exploit and influence America and the American economy, nor legislators’ willingness to keep a light on those efforts and develop measures to counter them, are going away. One example is DASKAA’s codification and expansion of the current use of Geographic Targeting Orders (“GTOs”) to combat money laundering through real estate transactions.
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Are Proposed AML Regulations for Real Estate Closings and Settlements Soon to Follow?

The Financial Crimes Enforcement Network (“FINCEN”) announced on November 15 that it has renewed and revised its Geographic Targeting Orders (“GTOs”) that require U.S. title insurance companies to identify the natural persons behind legal entities used in purchases of residential real estate

In its “Risk Outlook, Autumn Update” (“Update”) released last week, the Solicitor Regulation Authority (“SRA”), a regulator of solicitors and law firms in England and Wales, found that although the legal sector remains at “high risk of exploitation for money laundering,” reports made by legal practitioners to law enforcement of suspicious, money laundering-related activities dropped by nearly 10% last year. The Update then explores the AML risks associated with legal services.See the source image

As we will discuss below, many of the issues addressed by the SRA Update resonate with similar Anti-Money Laundering (“AML”) issues which have been brewing recently in the United States — such as the issues of beneficial ownership, the potential use of real estate in money laundering, and lawyers as “gate keepers.”  Of course, however, the very notion of legal practitioners reporting their clients to law enforcement for suspicious activity — a practice which represents a given to the SRA Update in light of U.K. law reporting requirements — remains deeply antithetical to basic notions of client confidentiality and loyalty held by the U.S. legal profession and courts.  We will discuss here this unique convergence of (i) very similar AML issues and concerns confronting the U.K. and the U.S., and (ii) drastically different approaches — at least to date — as to the appropriate duty of lawyers to report the conduct of their own clients to the government.
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FinCEN has announced the expansion of its Geographical Targeting Orders (GTOs) for high-end cash buyers of real estate. The expansion is two-fold. First, FinCEN has expanded the scope of Form 8300 reportable transactions to include “funds transfers” in addition to currency, cashier’s checks, certified checks, traveler’s check, personal checks, business checks, or money orders in any form. Second, FinCEN has added real estate transactions with a total purchase price of $3,000,000 or more in the City and County of Honolulu, Hawaii. This brings the markets covered to seven metropolitan areas.

The renewed GTOs require title insurance companies to identify and report on the natural persons behind shell companies that make covered transactions. The renewed and expanded GTOs will be in effect from September 22, 2017 through March 20, 2018. FinCEN has again praised the “assistance and cooperation” of the title insurance industry in this effort.

On the same day as the GTO expansion, FinCEN published an “Advisory to Financial Institutions and Real Estate Firms and Professionals.” This Advisory is in line with our expectation that FinCEN would further expand their supervisory and enforcement activity in the real estate market, as recommended by the FATF in their 2016 Mutual Evaluation Report and highlighted in an April 12, 2016, speech by former FinCEN Director Jennifer Shasky Calvery.


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On Friday, the Department of Justice (“DOJ”) filed a civil forfeiture complaint in the Southern District of Texas seeking recovery of approximately $144 million in assets that allegedly represent the proceeds of foreign corruption and which were laundered in and through the U.S. The complaint’s narrative focuses on Diezani Alison-Madueke, who is Nigeria’s former Minister for Petroleum Resources.  The 52-page complaint, which contains additional attachments, is very detailed – but nonetheless interesting reading – so we will discuss here only three salient points:

  • The most eye-catching property subject to forfeiture, the spectacular yacht Galactica Star (which you can inspect here), apparently has no discernible nexus to the U.S. – except that the funds used to acquire the yacht allegedly were transferred through correspondent bank accounts at financial institutions which process their U.S. dollar wire transactions through the U.S.
  • The complaint emphasizes the continued enforcement focus on high-end U.S. real estate as a potential vehicle for money laundering from abroad.
  • The complaint purports to quote a recording of a conversation allegedly made by Ms. Alison-Madueke herself, in which she allegedly offers a co-schemer some critiques on his approach to laundering illicit funds.


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This week, we have the opportunity to lead a discussion with real estate industry professionals about AML and CFT trends at the Real Estate Services Providers Council, Inc. (RESPRO®) Annual Conference in Las Vegas. We have written several times in this blog about the real estate industry, including the 2017 extension of the GTOs for

FinCEN announced today that it is renewing the existing Geographical Targeting Orders (GTOs) issued in July 2016 that require all title insurance companies to identify and report on the natural persons behind shell companies that make cash-only purchases of high-end real estate in six major metropolitan markets. The renewed GTOs will be in effect from

In January 2016, FinCEN issued two geographic targeting orders (GTOs) aimed at combating money laundering in all-cash real estate transactions in the Borough of Manhattan, New York, and Miami-Dade County, Florida—two areas identified by FinCEN as having “a higher than average percentage of all-cash transactions.” The GTOs, which took effect in March 2016, required certain title insurance companies to identify the natural persons behind entities using cash to purchase high-end real estate—properties with a sales price of more than $1 million in Miami-Dade County and more than $3 million in Manhattan.

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The December 2016 FATF Mutual Evaluation Report on the United States’ Measures to Combat Money Laundering and Terrorist Financing repeatedly highlighted the need for U.S. regulators and the real estate industry to do more to address money laundering and terrorist financing risks.

The FATF report identified “high-end real estate” transactions as an area needing priority action. In the report, the FATF assessors recommend that FinCEN take further action after analyzing the outcomes from FinCEN’s 2016 GTOs for high-end cash transactions in several U.S. real markets.


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