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Harry Cassin
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FinCEN expands beneficial owner reporting for cash real estate deals

The Treasury Department’s Financial Crimes Enforcement Network issued an order Thursday expanding the requirement for title insurance companies to report the beneficial owners of shell companies buying residential real estate for cash or cryptocurrencies.

FinCEN’s revised Geographic Targeting Order or GTO now covers transactions in these metropolitan areas:

 Dallas-Fort Worth
 Las Vegas
 Los Angeles
 New York City
 San Antonio
 San Diego
 San Francisco

The purchase amount threshold is now $300,000 in cash (including cryptocurrencies) for all covered areas. The threshold used to vary by city.

FinCEN said covered real estate deals using virtual currencies must now be reported.

It’s not illegal to use shell companies to buy real estate in the United States.

But FinCEN said data it already collected shows that residential real estate deals are sometimes used to launder money by “persons implicated, or allegedly involved, in various illicit enterprises including foreign corruption, organized crime, fraud, narcotics trafficking, and other violations.”

Thursday’s new Geographic Targeting Order requires title insurance companies “to identify the natural persons behind shell companies used in all-cash purchases of residential real estate” of $300,000 or more of residential property.

Under the prior GTO, the reporting thresholds were generally higher. In San Antonio the threshold was $500,000. In the covered Florida counties, deals worth $1 million or more were covered. The threshold for Brooklyn, Queens, Bronx, and Staten Island was $1.5 million, and $3 million in Manhattan. In California, the prior order covered cash purchases of $2 million or more.

Under FinCEN’s rules, a “beneficial owner” is “each individual who, directly or indirectly, owns 25 percent or more of the equity interests” of the shell company buying the covered real estate.

The GTOs started on March 1, 2016 and have been renewed every 180 days since then.

FinCEN’s November 15, 2018 Geographic Targeting Order is here (pdf).


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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