Update to FinCEN Geographic Targeting Order

US Dept of Treasury, Financial Crimes Enforcement Network (FinCEN) updates the Geographic Targeting Order to Include 4 Boroughs

On January 13, 2016 the FinCEN issued a Geographic Targeting Order (GTO) on title underwriters. The original GTO would expire on August 27, 2016, however FinCEN has continued the GTO until February 23, 2017.  In addition to the requirements in the initial GTO, the amended GTO extends the reporting period and expands the scope of the reporting requirements.  The initial GTO covers property in Manhattan (New York) as well as Miami Dade (Florida).  The continued GTO, in addition to Manhattan and Miami Dade, covers residential property in Bexar County Texas, Broward and Palm Beach Counties Florida, Brooklyn, Bronx, Queens and Richmond (Staten Island) counties, New York, and the counties of San Diego, Los Angles, San Francisco, San Mateo and Santa Clara in California

This Amended GTO places reporting requirements on all Title Insurance Underwriters and their Agents operating in New York State and other jurisdictions to report on covered transactions that take place in New York, Bronx, Brooklyn, Queens and Richmond (Staten Island) Counties.  Please read below for the changes to the reporting requirements.

The GTO defines a covered transaction as any transaction that will close from August 27, 2016 to February 23, 2017 involving:

1. Residential real property located in the Boroughs of Manhattan, Bronx, Brooklyn, Queens and Staten Island in the City of New York, N.Y., (NOTE CHANGE IN COUNTIES)
2. The proposed insured/ buyer: is a Legal Entity, defined under the GTO as a corporation, limited liability company, partnership or other similar business entity whether formed under the laws of New York, any other state, the United States or a foreign jurisdiction.
3. Consideration of more than $3,000,000 in Manhattan and $1,500,000 in Brooklyn, Bronx, Queens and Staten Island.  (NOTE CHANGE IN AMOUNT)
4. Without a loan or similar form of external financing from a financial institution; the reporting exclusion is only triggered by loans financed by a financial institution. If financing is provided by a private lender, seller or other business the transaction is reportable.
5. Any portion of the purchase price is paid using currency, cashier’s check, certified check, traveler’s check or money order, personal check or business check. There is no de minimus amount below which the reporting is not triggered.  NOTE: a personal or business check NOW triggers the reporting requirement. Payment of only the settlement services by any of the listed methods does not trigger the reporting requirement.

In the event a transaction meets the above criteria, the following must be reported within thirty (30) days of the closing to the FinCEN on a form IRS/FinCEN 8300:  The information is the same as the initial reporting requirements:

1. Identity of the individual primarily responsible for representing the Legal Entity;
   1. A description of the identification (driver’s license, passport or other similar identifying document) responsible for representing the Purchaser with a copy retained in the file;
2. Identity of the Purchaser and any Beneficial Owner(s) of the Purchaser’s;
   1. A description of the type of identification, driver’s license, passport or other similar identifying document, obtained from the Beneficial Owner with a copy retained in the file;
   2. Any person or entity owning 25% or more of the purchasing entity is a “beneficial owner” and must be reported. If an entity is a member of the purchasing entity, members of that entity must be reported.
3. Date of closing of the Covered Transaction;

4. Total amount transferred in the form of a Monetary Instrument;

5. Total purchase price of the Covered Transaction; and

6. Address of the real property involved in the Covered Transaction;

7. Also include the term “REGTO” as a unique identifier for this GTO in the Comments section (NOTE CHANGE)

In the event a party will not provide the information on a covered transaction, the Title Agent cannot issue the title insurance policy.

This bulletin is sent courtesy of CB Title Agency of NY, LLC and Stewart Title Insurance Company.  This article is for informational purposes only and is not intended to provide legal advice, but rather to provide insight into legal developments and issues that may be useful to our clients and friends.  In no circumstance is this article intended to be a full treatment of the above subject matter.  Reader is advised to obtain additional information as noted.