RISMedia's Real Estate Magazine

FEB 2019

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

Issue link: http://remag.rismedia.com/i/1073841

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Page 17 of 110

RISMedia's REAL ESTATE February 2019 13 {Policy Matters} T he Financial Crimes En- forcement Network (Fin- CEN), one of the U.S. Trea- sury's leading agencies in the fight against money laundering and financing of terrorism, has re- newed and expanded the Geograph- ic Targeting Orders (GTOs) that im- pose data collection and reporting requirements on title companies in- volved in certain residential real es- tate transactions, effective through May 15, 2019. The GTOs cover the geographic areas listed below for residential, non-financed transactions of $300k and above (no longer only high-end transactions): • California - San Diego, Los Ange - les, San Francisco, San Mateo and Santa Clara counties • Florida - Miami-Dade, Broward and Palm Beach counties • Hawaii - City and County of Honolulu • Illinois - Cook County • Massachusetts - Suffolk and Middlesex counties • Nevada - Clark County • New York - Brooklyn, Queens, Bronx, Manhattan and Staten Island • Texas - Bexar, Tarrant and Dallas counties • Washington - King County While the GTOs do not impose any new obligations on real estate pro - fessionals, title companies sub- ject to the GTO may seek help in obtaining information necessary to maintain their compliance with the order. GTO compliance should not affect the sales transaction or time - line for closing, as title companies must report GTO-covered transac - tions to FinCEN within 30 days of the closing. The GTOs require certain title companies to identify natural per - sons with a 25 percent or greater ownership interest in a legal entity purchasing residential real proper - ty, such as a corporation, LLC, part- nership, or other similar business entity, whether formed under the laws of a state, of the U.S., or a for - eign jurisdiction. Title companies, and their agents, must file a report with FinCEN regarding covered pur - chases of residential real property meeting the requirements above when such purchases are made: • Without a bank loan or similar external financing, and • Are paid at least in part by using currency or a cashier's check, a certified check, a traveler's check, a personal check, a busi - ness check, a money order in any form, a funds transfer, or virtual currency. The National Association of REAL - TORS® (NAR) supports FinCEN's ef- forts to reduce money laundering, but opposes any mandatory report - ing regulations on real estate profes- sionals that are burdensome and unnecessary given the existing anti- money laundering regulations that al - ready apply to financial institutions. NAR collaborated with the U.S. Treasury to develop voluntary guide - lines to increase awareness of mon- ey-laundering risks. The guidelines educate real estate professionals about red flags, such as large, unex - plained distances between the loca- tion of the property and the buyer, unusual involvement by third par - ties, or a seller unreasonably under- valuing a property. If red flags are present, a real estate professional may request additional information from the cus - tomer to confirm their identity and basis for the transaction. If a legal entity, such as an LLC, is involved, a real estate professional may try to identify who controls or owns the entity. Real estate professionals may also discuss with their senior management situations that raise red flags. Real estate professionals may re - port suspicious activity to local law enforcement or the FBI. In addition, real estate professionals may also file a suspicious activity report, or SAR, directly to FinCEN. The Treasury Department also recently released an updated strat - egy for combating money launder- ing threats to the U.S. financial system, which highlights actions by complicit professionals, includ - ing real estate agents. The report is helpful for understanding how to more effectively prevent, recog - nize and combat money-laundering schemes. RE For more information, including links to voluntary guidelines, go to NAR's homepage at https:// www.nar.realtor/money-laundering-and-terrorism- financing. Christie DeSanctis is NAR's director of Federal Banking, Lending and Housing Finance Policy. What You Need to Know About FinCEN's Ongoing Anti-Money Laundering Efforts This column is brought to you by the NAR Real Estate Services group. by Christie DeSanctis

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