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FinCEN Targets All Cash, Real Estate Money Laundering in New York and Miami

This week, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced new measures to crack down on “all cash” high-end real estate transactions in New York City and Miami, Florida.

In a move to curtail suspected money laundering, FinCEN issued Geographic Targeting Orders (GTO) that will temporarily require certain U.S. title insurance companies to identify the people behind companies used to purchase expensive real estate in the two cities.

FinCEN stated it was concerned that the purchases may be conducted by people seeking to hide their assets and identities through purchasing residential properties through limited liability companies and other types of opaque structures.

“We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money,” said FinCEN Director Jennifer Shasky Calvery. “Over the years, our rules have evolved to make the standard mortgage market more transparent and less hospitable to fraud and money laundering. But cash purchases present a more complex gap that we seek to address. These GTOs will produce valuable data that will assist law enforcement and inform our broader efforts to combat money laundering in the real estate sector.”

FinCEN is working cooperatively with the American Land Title Association and title insurance companies covered by the temporary order, and stated in the release announcing the temporary GTOs that a company being covered by one in no way implies “any derogatory finding by FinCEN.”

The National Association of Realtors has also called the move by the Treasury Department “reasonable” as a way to combat money laundering through real estate transactions.

The GTOs will be in effect for 180 days beginning on March 1, 2016. They will expire on August 27, 2016.

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