October 14, 2019

October 14, 2019

Subscribe to Latest Legal News and Analysis

FinCEN Again Extends Real Estate GTOs

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 involving virtual currency are within the reach of the GTO, as well as purchases involving “fiat” currency, wires, personal or business checks, cashier’s checks, certified checks, traveler’s checks, a money order in any form, or a funds transfer.

FinCEN also released a related, and slightly updated, response to Frequently Asked Questions (“FAQs”).

We have blogged extensively on this topic, and therefore we will discuss this not-very-surprising development only lightly here.  To restate the obvious: U.S. regulators and law enforcement are very interested in the possibility that real estate transactions are serving as a vehicle for money laundering, particularly to the extent that the funds are coming from foreign sources.  As we previously have blogged, FinCEN regards the data flowing in from the GTOs as very useful to uncovering potential money laundering schemes.

To keep track, here is the list of affected counties.  The recent extension does not add to the previously existing coverage of the GTOs:

  • California: San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara Counties
  • Florida: Miami-Dade, Broward and Palm Beach Counties
  • Hawaii: City and County of Honolulu
  • Illinois: Cook County
  • Massachusetts: Suffolk and Middlesex Counties
  • Nevada: Clark County
  • New York: Boroughs of Brooklyn, Queens, Bronx, Staten Island and Manhattan
  • Texas: Bexar, Tarrant and Dallas counties
  • Washington: King County

As noted, FinCEN also released a slightly updated FAQs relating to the new extension.

Finally, and as we have blogged, on February 13, 2019, Sen. Lindsay Graham (R – S.C.) introduced S. 482 – the Defending American Security from Kremlin Aggression Act of 2019 (“DASKAA”). In part, through DASKAA, Congress is attempting to codify and expand the GTOs. Under DASKAA, title insurance companies would be required to “obtain, maintain, and report to the Secretary information on the beneficial owners of entities that purchase residential real estate in high-value transactions in which the domestic title insurance company is involved.” DASKAA defines “Beneficial Owner” to include any individual or entity who directly or indirectly owns 25% or more of a purchasing entity. FinCEN would be required under the bill to prescribe implementing regulations within 90 days of enactment, which would include establishing a monetary threshold for covered transactions “based on the real estate market in which the transaction takes place.”  In essence, DASKAA would make the GTOs permanent and expand them nationwide. To date, the legislative fate of DASKAA is unclear.

Regardless, the latest extension of the FinCEN GTO strongly suggests that FinCEN continues to collect data to support final regulation or legislation in this area.

Copyright © by Ballard Spahr LLP

TRENDING LEGAL ANALYSIS


About this Author

Priya Roy, Attorney, Ballard Spahr
Attorney

Ms. Roy focuses her practice on white collar defense, regulatory compliance and complex civil litigation. She conducts internal investigations and advises and defends companies and individuals facing criminal and civil investigation, and has participated in negotiations with the U.S. Department of Justice and federal regulatory authorities. Ms. Roy's practice includes counseling clients in Anti-Money Laundering and Bank Secrecy Act matters, as well as matters involving allegations of tax fraud, violations of the False Claims Act and Anti-Kickback Statute, violations of...

www.ballardspahr.com
 Peter D. Hardy, Ballard Spahr, Philadelphia lawyer, White Collar Defense lawyer, Internal Investigations, Consumer Financial Services, Privacy and Data Security, Tax
Partner

Peter Hardy advises corporations and individuals in a range of industries against allegations of misconduct—including tax fraud, money laundering, Bank Secrecy Act, mortgage fraud and lending law violations, securities fraud, health care fraud, public corruption, Foreign Corrupt Practices Act violations, and identity theft and data breach.

Mr. Hardy has extensive trial and appellate court experience. He oversees internal investigations, advises in potential disclosures to the Internal Revenue Service, and has litigated complex criminal matters at the trial and appellate levels. He also counsels clients through every stage of a tax controversy – from audit through administrative appeal to litigation and collection.

Before entering private practice, Mr. Hardy spent more than a decade as a federal prosecutor. He served as an Assistant U.S. Attorney in Philadelphia, where he focused on fraud and tax cases. He also served as a trial attorney for the Department of Justice’s Tax Division in Washington, D.C., where he tried cases in a number of federal districts and helped write the Department's Criminal Tax Manual.

A national thought leader on the subject of criminal tax and money laundering law, Mr. Hardy is the author of  Criminal Tax, Money Laundering, and Bank Secrecy Act Litigation, a well-reviewed and comprehensive legal treatise on the litigation of criminal tax, money laundering, and Bank Secrecy Act cases, published by Bloomberg BNA. He also serves as an adjunct professor at Villanova University School of Law, where he teaches a class on criminal and civil tax penalties in the graduate law program.

215.864.8838