Cadwalader attorneys analyzed the recent Geographic Targeting Order ("GTO") that the FinCEN released in their continuing effort to "combat money laundering within the real estate sector" (see previous coverage).
The new GTO was characterized as "one of FinCEN's most aggressive exercises of its GTO powers to date." The GTO expands applicability to an additional market (in Hawaii) and "applies not only to non-financed transactions paid in cash but also to those paid by check, money order, or wire transfer." The GTO also imposes additional filing requirements for title insurance companies.
In addition, the Cadwalader attorneys examined a FinCEN Advisory that details risks related to real estate transactions and "encourages real estate brokers, escrow agents, title insurers, and other real estate professionals who are not required to file [suspicious activity reports] to do so voluntarily."
These actions highlight "FinCEN's continued interest in identifying money laundering risks inherent in the purchase of luxury residential real estate through shell companies." The actions also may indicate FinCEN's commitment to applying an elevated level of scrutiny to title insurance companies and their advisers, as well as FinCEN's expanding use of GTOs:
"FinCEN is surely going to continue aggressive GTO efforts, potentially continuing to expand to new markets and applying it to commercial as well as residential transactions."
The Financial Crimes Enforcement Network ("FinCEN") expanded its efforts to combat money laundering in the luxury residential real estate market. FinCen also issued guidance on the risks associated with "all-cash" transactions in that market.