FinCEN Geographic Targeting Orders (GTOs) Require Reporting

NOTE: The information in this post is outdated due to passage of time. Please review our updated post from August 2017.

On July 22, 2016, FinCEN issued “Geographic Targeting Orders” (GTOs) requiring “Covered Businesses” in various jurisdictions to collect and report information about certain “residential real property” transactions.

The GTOs temporarily require U.S. 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 jurisdictions are listed at the bottom of this post.] FinCEN is requiring title insurance companies to comply with the GTOs because title insurance is a common feature in the vast majority of real estate transactions. Title insurance companies therefore play a central role that can provide FinCEN with valuable information about real estate transactions of concern.

The first GTO is applicable only to properties in Manhattan and Miami-Dade County only and applies to closings beginning on March 1, 2016, and continuing through August 27, 2016.  A separate set of GTOs expand the jurisdictions to include properties in Miami-Dade, Broward and Palm Beach Counties and applies to closings beginning on August 28, 2016, and continuing through February 23, 2017 (unless extended by FinCEN).  A sample of the new GTOs can be found here.

For South Florida transactions**, a “Covered Transaction” is any real estate transaction: (i)  involving residential real estate in Miami-Dade, Broward or Palm Beach counties (see closing dates above); (ii) with a purchase price of $1 million or more; (iii) where the purchaser is a corporation, limited liability company (LLC), partnership, or other similar legal entity [but excluding natural persons or trusts]; (iv) and the purchaser purchases the real estate without a bank loan or other similar form of external financing; and (v) the purchaser pays any part of the purchase price, including a deposit, of the purchase price using currency, or a cashier’s check, certified check, traveler’s check, personal check, business check or money order.

If a transaction meets all the elements above, the Covered Business (i.e., the title insurance underwriter and its agent) must complete and file FinCEN Form 8300 within thirty days of the closing.  The information required on FinCEN Form 8300 includes identifying information for: (1) each natural person owning at least 25 percent or more of the business entity purchasing the property, or (2) all natural persons (members) if the purchaser is an LLC.

A  blank FinCEN Form 8300 form can be downloaded here in fillable .pdf format.  A sample Form 8300 with the necessary information completed can be found here.

FAQs for the GTOs can be found here.  Any other questions about the Orders should be directed to the FinCEN Resource Center at 800-767-2825.  Each of the major title insurance underwriters will also be able to provide information about the GTOs and the underwriter’s requirements for compliance with the GTOs.

**  Note:  This blog is concerned primarily with South Florida real estate issues, but the renewed GTOs include the following major U.S. geographic areas:  (1) all boroughs of New York City; (2) Miami-Dade County and the two counties immediately north (Broward and Palm Beach); (3) Los Angeles County; (4) three counties comprising part of the San Francisco area (San Francisco, San Mateo, and Santa Clara counties); (5) San Diego County; and (6) the county that includes San Antonio, Texas (Bexar County).  The monetary thresholds for each geographic area can be found in this table on FinCEN’s website.