Is investing in high–end real estate through a limited liability company the loophole criminals have been utilizing to launder their dirty money? The Financial Crimes Enforcement Network (FinCEN) is concerned it might be.

Per their website, FinCEN's mission is, "…to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis and dissemination of financial intelligence and strategic use of financial authorities."

They have identified a very specific transaction type and geographic area of the investment in U.S. real property as a potential risk. The risk involves the ability for corrupt foreign officials or transnational criminals to launder dirty money through the purchase of high–end U.S. real estate.

FinCEN recently issued a press release discussing new requirements for certain title insurance companies to comply with Geographic Targeting Orders (GTO) to report specific real estate transactions. According to the press release they have identified three components which are their focus:

• Limited liability companies or other entities used to conceal the names of individuals who make up the entity.
• Properties are located in the Borough of Manhattan in New York City and Miami, Florida.
• Cash purchases.

These GTOs are effective for 180 days and took effect March 1, 2016. They will expire on August 27, 2016. The specific details of the types of transactions and reporting requirements are described in the GTOs. The list of title insurance companies was not published by FinCEN, so it is important for employees and agents to look to their underwriter for guidance when handling cash purchases of properties located in New York and Miami.

FinCEN identified title insurance companies as the best source to collect this information from since title insurance is usually purchased as a part of a real estate transaction — even if the buyer is paying cash and not utilizing bank financing. The reporting will include requirements to disclose the true beneficial owner of the entity purchasing the property. Per FinCEN, "These GTOs will produce valuable data that will assist law enforcement and inform our broader efforts to combat money laundering in the real estate sector."