Industry Update
FinCEN Geographic Targeting Orders
2016.09.19 17:46
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Important CEA Member Communication: FinCEN Expands Reach of Real Estate “Geographic Targeting Orders” to Five Counties in California, Additional Federal Reporting Required
The Director of the Financial Crimes Enforcement Network (“FinCEN”) U.S. Department of the Treasury, has issued a Geographic Targeting Order (“GTO”) requiring Title Agent underwriters to collect and report information about individuals involved in certain residential real estate with a cash only purchase price of $2,000,000 or more. The GTO effective date is 180 days from 8/28/2016 and expires 2/23/2017. For purposes of the GTOs, “residential real property” means real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families.
A cash only transaction is described as a purchase price met without financing by a financial institution and if any portion of the transaction is paid with cash, cashier’s check, certified check, personal check, business check, traveler’s check, and/or money order. Any escrow transaction that is fully funded through funds wired to the Escrow Holder is EXEMPT. The areas affected in California are:
San Diego County
Los Angeles County
San Francisco County
San Mateo County
Santa Clara County
The entities that must be reported on are:
Limited liability company
Partnership
Corporation
FinCEN has stated at this time that all forms of trusts (including business trusts) ARE NOT considered legal entities for purposes of the GTO.
Items that must be collected by the title underwriters to sufficiently complete IRS Form 8300 as required are the following:
Information about the identity of the individual primarily responsible for representing the purchasing entity;
Information about the purchasing entity including information of the Beneficial Owner (each individual who owns 25% or more of purchase entity); and
Copies of current valid driver license or passport for items 1 and 2 above.
Be prepared for requirements by the title insurer for completion of Affidavits with information regarding the authorized signer and additional Beneficial Owner information on residential real estate transactions over 2 million dollars prior to recording.
If you have a current residential transaction for $2,000,000 or more closing after August 28, 2016, please contact your title officer to obtain the requirements.
For additional information, please go to the FinCEN FAQ page.
From your CEA National Affairs Committee and your CEA Board of Directors
