On November 8, 2019, the Financial Crimes Enforcement Network (FinCEN) reissued their Geographic Targeting Orders (GTOs) for 12 metropolitan areas. GTOs are authorized under the Bank Secrecy Act to detect money laundering and other illicit activity through the purchases of real estate. As a reminder, the purchase threshold for real estate transactions is $300,000 and includes virtual currency purchases. One modification was made with this reissued GTO: real estate purchases made by publicly-traded U.S. companies do not have to be reported.
The GTO requires U.S. title insurance companies, their subsidiaries and agents, to determine the beneficial owners (natural person) behind certain entities used in “covered” residential real estate transactions (cashier’s checks, certified checks, traveler’s checks, personal checks, business checks, money orders, funds transfers, or virtual currency). Previous GTOs have provided valuable information to law enforcement by following the funds used for various criminal activities, including foreign corruption, organized crime, and drug trafficking.
Real estate purchases have been a successful vehicle for laundering money for many years, particularly through shell companies and this GTO looks to further crack down on that.
Under the FinCEN reissued GTO, the purchase price of residential real estate property has been lowered to $300,000, which was previously set by each individual city to specifically target luxury real estate. Lowering the threshold amount states that money laundering is widespread in accessible real-estate, not only on higher-end properties.
New York City and Miami were the original targets under the first order in 2016, but it has expanded periodically since then. The newest order now includes the counties which house some of the largest metropolitan areas in the U.S. including: