Money Laundering GTOs Expanded

NOTE: Dallas and Tarrant Counties have been added to the reporting entities, which affects REALTORS and title companies that deal with transactions over $300K. Unlike previous guidelines, the new reporting requirements affect ALL transactions over $300K, not just certain transactions.
The Financial Crimes Enforcement Network (FinCEN), one of the U.S. Treasury’s leading agencies in the fight against money laundering and financing of terrorism, has renewed the Geographic Targeting Orders (GTOs) that impose data collection and reporting requirements on title companies involved in certain residential real estate transactions, effective November 17, 2018, through May 15, 2019.
The GTOs cover the geographic areas listed below for residential non-financed transactions of $300k and above (no longer just certain high-end transactions).
  • California – San Diego, Los Angeles, San Francisco, San Mateo, and Santa Clara Counties
  • Florida – Miami-Dade, Broward, and Palm Beach Counties
  • Hawaii – City and County of Honolulu
  • Illinois – Cook County (new addition)
  • Massachusetts – Suffolk and Middlesex County (new addition)
  • Nevada – Clark County (new addition)
  • New York – Brooklyn, Queens, Bronx, Manhattan, and Staten Island
  • Texas – Bexar, Tarrant (new addition), and Dallas (new addition) Counties
  • Washington – King County (new addition)

While the GTOs do not impose any new obligations on real estate professionals, the title company subject to the GTO may need to consult with the real estate professional to obtain information necessary to maintain their compliance with the order. GTO compliance should not affect the real estate sales transaction or timeline for closing as title companies are required to report GTO covered transactions to FinCEN within 30 days of the closing.

The GTOs require certain title companies to identify natural persons with a 25 percent or greater ownership interest in a legal entity purchasing residential real property. A legal entity is defined as a corporation, limited liability company, partnership, or other similar business entity, whether formed under the laws of a state, or of the United States, or a foreign jurisdiction. Title companies, and their agents, must file a report with FinCEN regarding covered purchases of residential real property meeting the requirements above when such purchases are made:

  • Without a bank loan or similar external financing, and
  • is paid at least in part by using currency or a cashier’s check, a certified check, a traveler’s check, a personal check, a business check, a money order in any form, a funds transfer, or virtual currency (new addition).

The GTOs are helpful to FinCEN’s efforts to crack down on money laundering and the financing of terrorism through various illicit enterprises including foreign corruption, organized crime, fraud, narcotics trafficking, and other violations. NAR continues to be helpful and support these efforts, but opposes any mandatory reporting regulations on real estate professionals that would prove burdensome and unnecessary given the existing anti-money laundering regulations that already apply to U.S. financial institutions.

Read(link is external) FinCEN’s FAQs and announcement.

For background on this issue, visit the NAR homepage on money laundering.

For real estate professionals’ responsibilities under the law, check out NAR’s voluntary guidelines(link is external) developed with the help of FinCEN.

To learn more about anti-money laundering and FinCEN’s efforts, see NAR’s Window to the Law: New Effort to Combat Money Laundering.

For help recognizing suspicious money laundering activities, see this video created by NAR in partnership with U.S. Treasury Department.