[Reported today by ALTA]

On Oct. 29, the Financial Crimes Enforcement Network (FinCEN) announced the renewal of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to collect and report beneficial ownership information for certain residential real estate purchases.

The purchase amount threshold remains $300,000 for each covered metropolitan area, including certain counties within Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco and Seattle.

The GTO is effective through April 29, 2022.

We have updated the information page about the US Treasury GTO effective August 28.

The page is located in the main navigation tab GOVERNMENT > FEDERAL GOVERNMENT > US TREASURY GTO

You can find it here:

https://nyslta.site-ym.com/page/FinCENGTOAug2016

In addition to helpful information, we have added a sample Form 8300 and a link to the webinar recording of Aug 19 presented by CLTA & ALTA.

Helpful information about the Geographic Targeting Order from folks in Washington DC, the US Treasury and ALTA.

Files are attached here and posted in the Licensing & Regulation File Library. 

What you need to know about the GTO

FinCEN is the Financial Crimes Enforcement Network, operated by the US Department of the Treasury

GTO is a Geographic Targeting Order

This GTO establishes a pilot program scheduled to run six months, from March to August 2016.

The scope of the program is residential properties in New York County (Manhattan) and Miami-Dade County in Florida, when there is cash transaction of $3,000,000 (three million dollars) or greater.

NYSLTA is working in concert with ALTA, who is playing a major role:

·         ALTA is in contact with FinCEN to clarify terms and definitions in the GTO

·         ALTA will host a call for agents in New York;  FinCEN and the underwriters who received the GTOs will be leading the calls along with ALTA.

·         ALTA is working with the four underwriters on a common notice and fact sheet, which will be the basis of each underwriter’s instructions to their agents.

·         A notice and fact sheet will be developed for the general real estate community and will be co-branded by NAR, ALTA and NYSLTA to help ease concerns in the marketplace as we head into the Spring and Summer buying seasons.

Information collected by the agents as required by the GTO will be reported up to the underwriters, who will submit reports to FinCEN.

Many agents are already collecting purchaser identity information required by NYC Department of Finance (DoF) for the NYC-RPT, so this may be viewed as an incremental requirement.

FinCEN will back-check the GTO reports with data from the NYC DoF to ensure all transactions are reported and the data is both consistent and complete.

FinCEN will publish a FAQ document with additional guidance for the underwriters, which will resolve additional questions and concerns as they arise.

The pilot program has not yet launched and some changes in the reporting protocol may evolve. Stay in touch with your underwriter and check with NYSLTA for further updates.

You can view the GTO here:

 https://www.fincen.gov/news_room/nr/files/Real_Estate_GTO-NYC.pdf

The best explanation to date of the GTO has been prepared and published by our friends at the Florida Land Title Association. We re-print key segments of their report, with permission:

The Financial Crimes Enforcement Network (FinCEN) issued orders on Wednesday, January 13, 2016, that will temporarily require certain U.S. title insurance companies to identify the natural persons behind companies used to pay “all cash” for high-end residential real estate in the Borough of Manhattan in New York City, New York, and Miami-Dade County, Florida.

The stated reason underlying these orders is to gather information regarding all-cash purposes of high-end homes by individuals, through the use of companies designed to hide their identities, for the purpose of hiding assets and other money laundering purposes. These orders issued by FinCEN will require title insurance companies, their subsidiaries and agents to identify and report the true “beneficial owner” behind a legal entity involved in these targeted high-end residential real estate transactions in Manhattan and Miami-Dade County. 

The title insurance company, or its subsidiary or agent involved in the transaction, must obtain and record a copy of the driver’s license, passport, or other similar identifying document of this individual and of the “Beneficial Owner,” who is defined as each individual who, directly or indirectly, owns 25% or more of the equity interests of the Purchaser. The form will also report information about the identity of the Purchaser, including the Beneficial Owner of the Purchaser. This form will also report the date of closing, the amount transferred in the form of a monetary instrument and the total purchase price of the residential real property involved. If the Purchaser is a limited liability company, then the form must also include the name, address, and taxpayer identification number of all its members.

The American Land Title Association (“ALTA”) has sent FinCen a letter requesting that the agency define the term “representing the purchaser”… ALTA’s letter proposes that the agency adopt the definition of the term “residential” as it is used under RESPA for purposes of determining whether a “Covered Transaction” has occurred. This letter also recommends that the FinCEN’s Order should not cover transactions when only a de minimis amount of the transaction price (suggested threshold is $10,000.00) is paid via a Monetary Instrument. ALTA’s letter to FinCEN recommends the term “agent” be limited only to people or entities with a contractual relationship with the covered title insurer.