The Financial Crimes Enforcement Network (FinCEN) has announced a major expansion and extension of its geographic targeting orders (GTOs) aimed at high-end cash buyers of real estate to a total of six separate metropolitan areas. This action reflects FinCEN's continued efforts to prevent money laundering through the real estate industry that were highlighted in former FinCEN Director Jennifer Shasky Calvery's April 12, 2016, speech. The new GTOs cover all title insurance companies, rather than the handful of insurers subject to the initial orders issued in January 2016 that expire on August 27, 2016.
The two narrowly drawn areas in the initial GTOs, the Borough of Manhattan, New York, and Miami-Dade County, Florida, have been expanded to include all five boroughs of New York City and Broward County and Palm Beach County, Florida. Four other markets have been added as well – Los Angeles County (California), San Diego County (California), Bexar County (San Antonio, Texas) and three California Bay Area counties (San Francisco, San Mateo, and Santa Clara). Similar to the initial GTOs, each county has a separate dollar threshold for covered transactions. The new GTOs will be in effect from August 28, 2016, until February 23, 2017.
The scope of "covered transactions" that must be reported on Form 8300 also has been significantly expanded by the addition of personal checks and business checks to the types of monetary instruments that trigger reporting. We expect that this change will lead to significantly more reported transactions than under the original GTOs.
FinCEN's announcement highlighted that the required reporting under the initial GTOs has been beneficial to law enforcement. According to FinCEN, "Federal and state law enforcement agencies have…informed FinCEN that information generated by the GTOs has provided greater insight on potential assets held by persons of investigative interest and, in some cases, has helped generate leads and identify previously unknown subjects."
In this latest release, FinCEN again noted the "assistance and cooperation of the title insurance companies and the American Land Title Association in protecting the real estate markets from abuse by illicit actors."
Ballard Spahr's Consumer Financial Services and Mortgage Banking Groups regularly counsel bank and nonbank clients on anti-money laundering program development and compliance, represents them in connection with enforcement actions, and assists them in preparing and submitting comments in pending rulemakings. The Consumer Financial Services and White Collar Defense/Internal Investigations Groups include experienced lawyers who regularly assist clients in corporate investigations, responses to subpoenas, and civil investigative demands.
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