FinCEN Extends and Expands Money Laundering Prevention Effort, Adds Wire Transfers

August 22, 2017

The Financial Crimes Enforcement Network (FinCEN) renewed and expanded existing Geographic Targeting Orders (GTO) that require U.S. title insurance companies—along with their subsidiaries and agents—to identify the individuals behind companies used to conduct high-end, all-cash real estate transactions in certain major jurisdictions.

Following the recent enactment of the Countering America’s Adversaries through Sanctions Act, FinCEN revised the GTOs to capture a broader range of transactions, including those involving wire transfers. The order also includes transactions above $3 million conducted in the city and county of Honolulu, Hawaii. FinCEN also issued an advisory that provides information on how to detect and report these transactions to FinCEN.

In January 2016, FinCEN originally ordered GTOs requiring certain underwriters to identify and report the true “beneficial owner” behind a legal entity involved in certain high-end deals in Manhattan and Miami-Dade County. FinCEN broadened and extended the GTO in July 2016 and February 2017.

The latest GTO goes into effect Sept. 22 and runs through March 20, 2018. For closing scheduled between Aug. 23 and Sept. 21, the GTO will not apply—although FinCEN will accept voluntary filings.

“Through this advisory and other outreach to the private sector, FinCEN, industry, and law enforcement will be better positioned to protect the real estate markets from serving as a vehicle to launder illicit proceeds,” said FinCEN Acting Director Jamal El-Hindi.  “FinCEN also thanks Congress for its modification of the Geographic Targeting Order authority, the first use of which will enable FinCEN to collect further information to combat the potential misuse of shell companies to purchase luxury real estate.” 

 According to FinCEN, the data collected indicate that about 30 percent of reported transactions involve a beneficial owner or purchaser representative that was also the subject of a previous suspicious activity report.  This corroborates FinCEN’s concerns about this small segment of the market in which shell companies are used to buy luxury real estate in “all-cash” transactions. 

A beneficial owner is an individual or entity who directly or indirectly owns 25 percent or more of the equity interest in the legal entity. FinCEN provides the information to law enforcement investigators as part of FinCEN’s database.

In its advisory, FinCEN provides several examples of investigations involving money laundering and real estate stemming from the GTO. One a high-profile case illustrating money laundering risks in the real estate sector involves 1Malaysia Development Berhad (1MDB), a Malaysian sovereign wealth fund. In 2016, the U.S. Department of Justice sought forfeiture of over $1 billion in assets—including luxury real estate—associated with funds stolen by corrupt foreign officials from 1MDB. This included a hotel, two homes, and a mansion in Beverly Hills; a home in Los Angeles; a condominium, two apartments, and a penthouse in New York; and, a townhouse in London, England; all with a collected value estimated at approximately $315 million.

“Since January 2016, ALTA members have collected this essential information to help FinCEN identify money laundering schemes and the illegal purchase of real estate,” said Michelle Korsmo, ALTA’s chief executive officer. “So far, the data collected has helped the government identify suspicious transactions and advanced criminal investigations. FinCEN continues to recognize the essential role title insurance companies play in providing information about real estate transactions of concern. We will continue to work with our members and FinCEN to collect the needed information as efficiently as possible.”

In a release, FinCEN said it appreciates the continued assistance and cooperation of title insurance companies and ALTA in protecting the real estate markets from abuse by illicit actors.

The extended GTO includes these areas and price thresholds:

  • Borough of Manhattan, N.Y.; $3 million
  • Borough of Brooklyn, Queens and Bronx, N.Y.; $1.5 million
  • Miami-Dade, Broward and Palm Beach counties, Florida; $1 million
  • Los Angeles, San Francisco, San Mateo, Santa Clara and San Diego counties, California; $2 million
  • City and County of Honolulu; $3 million
  • Bexar County, Texas (San Antonio); $500,000

A currency transaction report must be filed with FinCEN if these things occur:

  • Location (deal occurs in one of the areas included in the GTOs)
  • All-cash deal (no financing)
  • Purchase price exceeds threshold determined for each jurisdiction (see below)
  • There’s a corporate buyer
  • Purchase price paid via monetary instrument

The report must include:

  • Information about the identity of the individual primarily responsible for representing the buyer. The title company must obtain a record of the individual’s driver’s license, passport of other similar identification
  • Date of closing of the covered transaction
  • Total amount transferred in the form of a monetary instrument
  • Total purchase price of the covered transaction
  • Address of real property involved

If the purchase involved in the covered transaction is a limited liability company, the underwriter must provide the name, address and taxpayer identification number of all its members. Additionally, covered title companies must retain all records relating to compliance with the order for five years, store the records so they are accessible with a reasonable period of time and make the data available to FinCEN or other law enforcement or regulatory agency, upon request.

ALTA has developed several tools to help members comply with the order, including:

Contact ALTA at 202-296-3671 or