U.S. Title Insurers Now Also Required To Identify High-End Cash Buyers in Six Major Metros in California, Texas
Known as Geographic Targeting Orders (GTO), FinCEN will now temporarily require title insurance companies to identify the natural persons behind shell companies used to pay “all cash” for high-end residential real estate in six major metropolitan areas.
The GTOs announced this week include:
- All boroughs of New York City;
- Miami-Dade County and the two counties immediately north (Broward and Palm Beach);
- Los Angeles County, California;
- Three counties comprising part of the San Francisco area (San Francisco, San Mateo, and Santa Clara counties);
- San Diego County, California; and
- The county that includes San Antonio, Texas (Bexar County).
FinCEN remains concerned that all-cash purchases (i.e., those without bank financing) may be conducted by individuals attempting to hide their assets and identity by purchasing residential properties through limited liability companies or other opaque structures.
FinCEN said the initial GTOs are helping law enforcement identify possible illicit activity and informing future regulatory approaches. In particular, a significant portion of covered transactions have indicated possible criminal activity associated with the individuals reported to be the beneficial owners behind shell company purchasers.
Federal and state law enforcement agencies have also 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.
“The information we have obtained from our initial GTOs suggests that we are on the right track,” said FinCEN Acting Director Jamal El-Hindi. “By expanding the GTOs to other major cities, we will learn even more about the money laundering risks in the national real estate markets, helping us determine our future regulatory course.”
Foreign corrupt money in the U.S. has become a central focus for both FinCEN and the Department of Justice’s Kleptocracy Asset Recovery Initiative. Last week, the DOJ announced it seeks to recover $1 billion in its largest kleptocracy case to date.
Through civil forfeiture complaints, DOJ is seeking to recover assets associated with a fund owned by the Malaysian government that raised nearly $8 billion to benefit the Malaysian people. Instead, much of the money was diverted by high-ranking fund officials and their associates to purchase yachts, hotels, a $35 million jet, artwork by Vincent Van Gogh and Claude Monet, and to bankroll the popular 2013 film The Wolf of Wall Street.
Last week, the DOJ also announced that it is returning $1.5 million to Taiwan, proceeds derived from the sale of a forfeited New York condo and a Virginia home. The DOJ discovered that both properties had been purchased with bribes paid to the family of Taiwan’s former President Chen Shui-Bian.
GTO Areas & Deal Reporting Price Thresholds
The Borough of Manhattan $3,000,000
The Borough of Brooklyn $1,500,000
The Borough of Queens $1,500,000
The Borough of Bronx $1,500,000
The Borough of Staten Island $1,500,000
Miami-Dade County $1,000,000
Broward County $1,000,000
Palm Beach County $1,000,000
San Diego County $2,000,000
Los Angeles County $2,000,000
San Francisco County $2,000,000
San Mateo County $2,000,000
Santa Clara County $2,000,000
Bexar County $500,000
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