To fight money laundering, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is now requiring title companies to collect and file information identifying the buyers of residential real estate for at least $300,000 (less in Baltimore) whenever the buyer does not procure a bank loan to make the purchase—at least in geographical areas where FinCEN thinks money launderers are likely to be operating, such as in New York City.
For purposes of the reporting requirement, “residential real estate” includes condos and co-ops, as well as free-standing one-to-four family homes. If the buyer does not secure bank financing to make the purchase, the reporting requirement is triggered—regardless of whether the medium of exchange is cash, a bank check, or virtual currency.
The title company’s report should include identifying information, such as images of drivers’ licenses and passports, for the person acting for the entity as well as for any person who owns 25% or more of the entity’s equity interests. The scope of the information is generally consistent with the information called for by the Corporate Transparency Act, which went into effect at the beginning of this year. The title company’s obligation to collect this information, however, is independent of whether the entity has already complied with the Corporate Transparency Act. Moreover, an entity’s provision of that information to the title company does not satisfy the entity’s obligation under the Corporate Transparency Act.
The current FinCEN order is effective for the listed counties, none of which is in New Jersey, until October 15 of this year. The title company must retain the information for at least five years.
For additional information, see: https://www.fincen.gov/news/news-releases/fincen-renews-and-expands-real-estate-geographic-targeting-orders-1
