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Geographic Targeting Order Extended to Wire Transfers

by | Sep 5, 2017 | Advisories and Forms

BROKER RISK MANAGEMENT

WEEKLY PRACTICE TIP


Geographic Targeting Order Extended to Wire Transfers


NOTE:  THIS TIP AND THE GEOGRAPHIC TARGETING ORDER APPLIES ONLY TO RESIDENTIAL SALE TRANSACTIONS OF $2,000,000 OR MORE IN SAN FRANCISCO, SAN MATEO, SANTA CLARA, LOS ANGELES AND SAN DIEGO COUNTIES.

On July 22, 2016, the Financial Crimes Enforcement Network (“FinCEN”), an agency of the United States Treasury Department, issued a Geographic Targeting Order directing Title Insurers and their agents (in California, that would be Escrow Companies) to collect and report information about certain residential real estate transactions. The purpose of the Geographic Targeting Order is to assist law enforcement and regulatory agencies to identify potential money laundering.  That Order has been extended to March 20, 2018, and has been expanded to include wire transfers.

 

The Geographic Targeting Order applies only to transactions involving residential real estate on sale transactions where the purchase price is $2,000,000 or more in San Francisco, San Mateo, Santa Clara, Los Angeles and San Diego Counties; and only applies to purchase transactions that meet all four (4) of the following criteria:

 

  1. The property is a residential, not a commercial, property.
  2. The purchaser is a corporation, limited liability company, partnership or similar legal or business entity, as opposed to a person or trust.
  3. The purchase is made without a bank loan or another similar form of institutional financing (absence of financing by a financial institution that is required to have an anti-money laundering policy).
  4. ANY portion of the purchase price (including earnest money) is paid using currency, a cashier’s check, a certified check, a traveler’s check, a personal check, a business check, or a money order in any form; and wire transfers to escrow (a new requirement).

 

For transactions meeting all four of these criteria, title companies are required to report to FinCEN within 30 days of the close of escrow some of the Buyer’s non-public personal information, specifically to identify the beneficiaries behind the legal entity being used to purchase the property.  If such information is not provided by the representative of the buyer entity prior to COE, FinCEN has instructed title companies not to close the transaction.

 

PRACTICE TIP:  If you are involved as a listing or buyer agent in a sale transaction that comes within the criteria of the FinCEN Geographic Targeting Order then:

 

1.  Provide a copy of the “Advisory Regarding Federal Geographic Targeting Order” to your client; and,

 

2.  As a Listing Agent, issue a Counter-Offer specifying the following with a time frame for compliance included: “The person signing in the Representative Capacity for the Buyer shall complete and return to the Title/Escrow Company the information required to comply with the FinCEN Geographic Targeting Order within __ Days of receipt of the request from Title/Escrow Company for that information.”

 

WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS.  This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents.  It may not be reproduced or distributed without the express written consent of Broker Risk Management.  The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.

© Copyright Broker Risk Management 2017                                                                                          09/01/2017


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