For those who are laundering ill-gotten gains via real estate transactions, regulators are about to make life much, much harder. 

Geographic Targeting Orders (GTO) are temporary regulations put in place by the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). The overall point of the orders is to understand and curtail money laundering, tax evasion, and terrorism financing on certain types of transactions. “Geographic” means the orders target specific areas versus the entire country.

On Nov. 15, FinCEN expanded a GTO on residential real estate transactions purchased in cash (actual cash, various checks, and virtual currencies) by foreign shell companies and domestic LLCs mostly. This latest expansion now includes the Dallas-Fort Worth area along with 11 other metros – Boston; Chicago; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle.

The GTO requires Title Companies to not only report on the transaction, but the actual selling price and the identity of the beneficial owner of the property (person with over 25 percent ownership of the LLC) and the person representing the LLC. Identities are verified via copies of passports, driver’s license, or other government-issued I.D. The country of origin of the LLC or shell company is immaterial with reporting required regardless of the LLC’s incorporation location. Why title companies? They’re a common element in real estate transactions and so act as a clearing house for information.

(more…)