GTOs aim to identify natural persons behind shell companies in all-cash real-estate buys
The Financial Crimes Enforcement Network (FinCEN) announced in early November the renewal of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. These renewed GTOs are identical to the May 2020 GTOs. The purchase amount threshold remains $300,000 for each covered metropolitan area.
Global Witness, in a September 2020 article, detailed how lax AML Compliance regulations related to real estate around the globe–and especially in the U.S.–facilitate money laundering via all-cash purchases of high-end real estate.
“Real estate has long been a preferred vehicle for money laundering. All too often, the proceeds of crime and corruption is used to purchase homes. Once the real estate is re-sold, the capital involved becomes legally acquired. The trick is to mask where the money comes from: Criminal networks do this by setting up anonymous companies to hide their connection to the purchase of the property,” according to the Global Witness article.
FinCEN’s Geographic Targeting Orders work to require the identification of the ‘natural persons’ behind the shell companies making these all-cash purchases. The terms of this FinCEN Order took effect November 6, 2020 and end on May 4, 2021. GTOs continue to provide data on the purchase of residential real estate by persons possibly involved in various illicit enterprises. According to FinCEN, reissuing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector.
These GTOs cover certain counties within the following major U.S. metropolitan areas: Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco, and Seattle.
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