FinCEN Expands Scope of Geographic Targeting Orders

The Financial Crimes Enforcement Network today expanded the scope of its Geographic Targeting Orders temporarily requiring certain U.S. title insurance companies in targeted areas to identify the individuals behind companies used to conduct high-end, all-cash real estate transactions.

First issued in January for the borough of Manhattan in New York City and for Miami-Dade County, Fla., the GTOs will now cover all boroughs of New York City; Miami-Dade, Broward and Palm Beach counties in Florida; Los Angeles, San Diego, San Francisco, San Mateo and Santa Clara counties in California; and Bexar County, Texas, where San Antonio is located. All GTOs take effect for 180 days from Aug. 28, when the previous two GTOs were set to expire.

“The information we have obtained from our initial GTOs suggests that we are on the right track,” said FinCEN Acting Director Jamal El-Hindi. “By expanding the GTOs to other major cities, we will learn even more about the money laundering risks in the national real estate markets, helping us determine our future regulatory course.”

FinCEN identified all-cash real estate transactions as an area particularly vulnerable to money laundering, as individuals may use shell companies to purchase high-value properties. Since title insurers typically play a central role in real estate transactions, FinCEN will require the companies to record and report the “beneficial ownership” information of entities making these purchases without external financing.