FinCEN Tightens Real Estate Cash-Buyer Reporting Threshold

The Financial Crimes Enforcement Network (FinCEN) announced that it has issued revised Geographic Targeting Orders (GTOs), which will now require U.S. title insurance companies to identify the individuals behind shell companies involved in all-cash purchases of residential real estate.

While the previous purchase amount threshold varied by city, it’s now set at $300,000 for each metropolitan area, covering certain counties within the following major locations: Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco and Seattle.

“Previous GTOs provided valuable data on the purchase of residential real estate by persons implicated or allegedly involved in various illicit enterprises, including foreign corruption, organized crime, fraud, narcotics trafficking and other violations. 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,” the agency wrote in a press release.

In addition, FinCEN is requiring for purchases via virtual currencies to be reported. Earlier this year, it was reported that FinCEN would be keeping a closer eye on cryptocurrency because it was receiving 1,500 complaints per month about suspicious activity.

FinCEN Director Kenneth A. Blanco stated that “we now receive over 1,500 SARs per month describing suspicious activity involving virtual currency, with reports coming from both MSBs in the virtual currency industry itself and other financial institutions.” He added that “we see the industry developing new techniques for identifying suspicious activity in virtual currency,” so stakeholders can make efforts to eradicate what he said are the “negative perceptions of virtual currency as the coinage of the dark web and bad actors.”

Blanco stated FinCEN has issued a number of rules over the last few years that have helped clarify how firms should operate within cryptocurrency spheres.

“FinCEN’s rules apply to all transactions involving money transmission, including the acceptance and transmission of value that substitutes for currency, [such as] virtual currency. Thus, our regulations cover both transactions where the parties are exchanging fiat and convertible virtual currency, but also … transactions from one virtual currency to another virtual currency.

He continued, “Whether a business is operating as an individual peer-to-peer [P2P] exchanger of one virtual currency, or a large, multinational trading platform offering numerous virtual currencies, we expect you to comply with your AML/CFT regulatory obligations.”