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Did you know that the federal government has called upon title companies to monitor all cash purchases for money laundering?

March 4, 2016

Did you know…that the federal government has called upon title companies to monitor all cash purchases for money laundering?

Effective March 1, title companies will have to report to U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) who the actual purchaser is when a company or entity purchases high-end property for all cash in Manhattan (properties over $3 million must be reported) and Miami-Dade County (properties over $1 million must be reported). The term cash or currency includes a cashier’s check (by whatever name called, including “treasurer’s check” and “bank check”), bank draft, traveler’s check or money order. The geographic targeting orders (“GTOs”) issued by FinCEN are temporary, but could be renewed and other geographic areas could be added. The purpose of the GTOs are to flesh out criminals that are using shell companies to hide earnings from criminal activity. The actual purchaser of a property can be obscured by buying in the name of limited liability companies or other corporate entities, trusts or multiple layers of either or both.

For example, ABC Company may be the purchasing entity, but the owner of ABC Company is Alpha Company, and the owner of Alpha Company is Bravo Company, and the owner of Bravo Company is Charlie Trust. In such scenarios, finding the actual individual behind all the layers of companies is difficult. 

Currently, all trades and businesses, no matter where they are located in the United States, are required to report cash payments of more than $10,000 (or two or more related cash payments totaling more than $10,000)  to the Internal Revenue Service and FinCEN. Real estate professionals should be wary of multiple cash payments under $10,000, for which there may also be reporting requirements. If a brokerage or title company is concerned that there may be suspicious activity, it can file a suspicious activity report.

If you have any questions regarding suspicious activity, call one of the attorneys listed here.

For more information regarding our Residential Real Estate Settlements Group or our general real estate transactions and litigation practice, please contact the Group Chair at 301-230-6574 or settlements@shulmanrogers.com.

This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.  

Residential Real Estate Practice

CONTACT

Matthew D. Alegi
301-230-6574

Sarah D. Cline
301-945-9245

David M. Kochanski
301-230-5211

Marc D. Lipman
301-231-0953