FinCEN Geo-Targeting Orders – Corporate and Company Law

FinCEN Geo-Targeting Orders (or “GTOs”) are specialized administrative orders issued by FinCEN pursuant to its authority under the Bank Secrecy Act.

Readers of these pages will know that our primary focus is on the Corporate Transparency Act (the “CTA”) and upcoming FinCEN requirements for beneficial ownership reporting. Still, it’s helpful to understand how geotargeting orders work and how they differ from what FinCEN will do under the CTA.

Under the Bank Secrecy Act, FinCEN has the authority to require parties to handle financial transactions to identify the beneficial owner of the parties to a transaction. Anyone who has opened a bank account for a business knows the “Know Your Customer” or “KYC” requirements of banks. These KYC requirements are a consequence of the FinCEN regulations applicable to banks.

FinCEN’s geo-targeting orders are somewhat analogous to KYC requirements, except that they apply to title companies and similar intermediaries in real estate transactions.

So far, FinCEN has used geo-targeting orders to compel securities companies in jurisdictions that FinCEN believes pose a high risk to receive investments from money launderers and other parties with funds. illicit.

One such jurisdiction is Miami, which has been the target of FinCEN GTOs.

A Miami-area newspaper writes:

“The dirty secret of Miami’s latest luxury apartment boom? Some of these sky-high penthouses are being bought up by international criminals and other shady individuals to launder money. How much? Well, the Department’s Financial Crimes Enforcement Network Treasury wants to find out.

Take, for example, Spanish drug lord Álvaro López Tardón. He ran an international cocaine ring, and to help hide his money, he set up shell companies to buy 14 apartments in Miami. Tardón is currently serving a 150-year prison sentence, but authorities suspect he may just be the tip of the iceberg when it comes to funneling shady money into luxury real estate in Miami.

FinCEN Geographic Targeting Order 2021: Covers nine U.S. metropolitan areas:

1. Bexar, Tarrant and Dallas County, Texas;

2. Miami-Dade, Broward, or Palm Beach counties in Florida;

3. The boroughs of Brooklyn, Queens, Bronx, Staten Island or Manhattan in New York City, New York;

4. California counties of San Diego, Los Angeles, San Francisco, San Mateo or Santa Clara;

5. The City and County of Honolulu in Hawaii;

6. Clark County Nevada;

7. King’s County in Washington;

8. The Massachusetts counties of Suffolk, or Middlesex; and

9. Cook County, Illinois.

As written, the geotargeting order applies to any “covered business,” which the GTO defines as title insurance companies.

The GTO offers:

“If the Covered Firm is involved in a Covered Transaction, then the Covered Firm must report the Covered Transaction to FinCEN by filing a FinCEN Currency Transaction Report, within 30 days of the closing of the Covered Transaction. currency transaction filed hereunder The order must be: (i) completed in accordance with the terms of this order and the instructions of the currency transaction report (where these terms conflict, the terms of this order apply ), and (ii) filed electronically through the BSA electronic filing system.”

FinCEN expanded and expanded the GTO in April 2022 to also cover (1) Maryland counties of Montgomery, Anne Arundel, Prince George’s, or Howard, (2) Virginia counties of Arlington or Fairfax, or cities of ‘Alexandria, Falls Church , or Fairfax, (3) the county of Fairfield in Connecticut and (4) the district of Columbia. FinCEN’s GTO imposes KYC-type obligations on title insurance companies in covered jurisdictions. FinCEN’s CTA regulations will apply to all non-exempt businesses operating in the United States and will significantly expand the information collected by FinCEN.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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