As reported in a post to CRE Insider on March 29, 2016, the United States Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued Geographic Targeting Orders (GTO) on January 13, 2016 requiring “certain U.S. title insurance companies to identify the natural persons behind companies used to pay ‘all cash’ for high-end residential real estate in the Borough of Manhattan in New York City, New York, and Miami-Dade County, Florida.” Those GTOs were effective March 1, 2016 and, unless extended, they expire on August 27, 2016.

On July 22, 2016, FinCEN issued further GTOs expanding the scope of the requirements to also include Bexar County, Texas, Broward and Palm Beach counties in Florida, the Boroughs of Brooklyn, Queens, the Bronx and Staten Island in New York City, and San Diego, San Francisco, San Mateo and Santa Clara counties in California. The new GTOs are effective on August 28, 2016 and, unless extended, expires on February 23, 2017. 

A Covered Transaction under the GTOs is a transaction in which a legal entity, wherever formed, purchases residential real property, including an individual condominium or cooperative unit designed principally for the occupancy of one-to-four families, in, as of August 28, the locations noted below, when the purchase price exceeds the specified amount, the purchase is made without a bank loan, and the purchase is made, at least in part, using currency, a cashier’s check, a certified check, a traveler’s check, a money order in any form or, under the July 22, 2016 GTOs, a personal check or a business check.

Under the July 22, 2016 GTOs, the expanded requirements impact transactions n Bexar County, Texas for a total purchase price of $500,000 or more, in Miami-Dade, Broward and Palm Beach Counties, Florida for a total purchase price of $1,000,000 or more, in the Boroughs of Brooklyn, Queens, the Bronx, and Staten Island in New York City for $1,500,000 or more, in the Borough of Manhattan in New York City for $3,000,000 or more, and in San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara Counties, California for $2,000,000 or more.

As previously noted, title insurance companies, and their agents, when conducting a settlement or performing a service in connection with a Covered Transaction involving a property subject to the GTOs are required to report certain information on IRS Form 8300/FinCEN Form 8300 (“Report of Cash Payments Over $10,000 Received in a Trade or Business”).  The information must include the identity of the Purchaser, of the Beneficial Owners of the Purchaser, and of the individual primarily responsible for representing the Purchaser. A “Beneficial Owner” is an individual who owns, directly or indirectly, 25% or more of the equity interests in the Purchaser.