On October 20, 2023, the Financial Crimes Enforcement Network (FinCEN) announced new updates to renew and expand Geographic Targeting Orders (GTOs) requiring U.S. title insurance companies to identify natural persons behind companies used in non-financed residential real estate purchases. These updates have significant impacts to real estate transactions in Florida. For this reason, it is crucial to understand the FinCEN regulations to ensure proper compliance with its rules.
What is FinCEN?
The FinCEN is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions. Its mission is to combat money laundering, terrorist financing, and other financial crimes by identifying opportunities where money derived from illicit activities could enter the mainstream financial system. FinCEN regulations are designed to enhance transparency in various industries, including real estate.
Recent Updates to FinCEN Regulations
The recent updates to FinCEN regulations renew and expand GTOs that require U.S. title insurance companies to identify natural persons behind companies used in non-financed residential real estate purchases. In Florida, FinCEN renewed the GTOs that covered Miami-Dade, Broward and Palm Beach Counties and expanded the geographic coverage to include the counties of Hillsborough, Pasco, Pinellas, Manatee, Sarasota, Charlotte, Lee, and Collier. Title insurance companies handling transactions in the impacted counties will be responsible for identifying whether a transaction meets the FinCEN Criteria and, if it does, for filing a Currency Transaction Report (CTR) with Department of Treasury.
FinCEN Criteria
If a transaction meets all the following criteria, the title insurance company must complete and file the CTR:
- The transaction involves the purchase of one or more residential real property in Miami-Dade, Broward, Palm Beach, Hillsborough, Pasco, Pinellas, Manatee, Sarasota, Charlotte, Lee, or Collier Counties; and
- The total purchase price is $300,000.00 or more; and
- The purchaser is a corporation, limited liability company (LLC), partnership, business trust or other similar legal entity; and
- The purchaser purchases residential real property without a bank loan or other similar form of institutional financing; and
- The purchaser pays any part of the purchase price using currency, cashier’s checks, certified checks, traveler’s checks, money orders, business or personal checks, wire transfers, or virtual currency.
How Will This Impact Real Estate Transactions?
In response to the FinCEN updates, title insurance companies may require additional information and documentation to identify beneficial owners of any legal entities used in the transaction. Buyers and sellers should be prepared to provide detailed personal information of the beneficial owners of any such entities involved in the transaction, such as names, addresses, social security numbers, and tax identification numbers. This information will be necessary to ensure compliance with the FinCEN reporting requirements. Failure to timely report or filing an inaccurate or incomplete report can result in civil and criminal penalties. For this reason, it is absolutely crucial that all parties are transparent and cooperative during the transaction process to avoid delays or impasses.
If you have any questions on FinCEN and its effects on real estate transactions, please do not hesitate to reach out to your trusted local real estate attorney.
