On August 28, 2016 the Financial Crimes Enforcement Network (“FinCEN”) issued a Geographic Targeting Order (“Order”) which requires title insurance companies in the United States to collect certain information in order to identify the natural persons behind companies that are used to paying all cash in residential real estate purchases over a certain amount in certain cities throughout the U.S. Residential real estate is real property (including condominium units and cooperative apartments) designated as a one- to four-family usage. The purpose of the Order was to combat against illegal money laundering in the U.S. The Order was to run for 180 days.
U.S. locations affected by this Order include the Boroughs of Manhattan, Brooklyn, Queens, Bronx, and Staten Island in New York City, State of New York, the counties of San Diego, Los Angeles, San Francisco, San Mateo, and Santa Clara, State of California, the counties of Miami-Dade, Broward, and Palm Beach, State of Florida, and the county of Bexar, State of Texas. Each had to meet a certain purchase price threshold for the Order to be applicable.
Additionally, the Order only targeted purchases which did not include a bank loan and were made, at least in part, by using currency or a cashier’s check, certified check, traveler’s check, personal check, business check, or money order. The Order did not apply to electronic fund transfers.
On August 22, 2017 FinCEN announced that the Order would be extended and two new requirements would become effective as of September 22, 2017. The first new requirement will include purchases in a new U.S. city – Honolulu, Hawaii – with a total purchase price of $3 million or more. The second new requirement will now require reporting for purchases which do not include a bank loan and are made, at least in part, by electronic fund transfers, including wires.
The renewed Order continues to require title insurance companies in the United States to collect certain information in order to identify the natural persons behind shell companies that make covered transactions. The renewed and extended Order will run from September 22, 2017 until March 20, 2018.