As we described in the March 2023 issue, when the money launderer reaches the integration stage, the shell entities provide the means to clean the money and conceal the identity of the individual making the purchase, which integrates the funds back into the U.S. Financial System.

The Financial Crimes Enforcement Network (FinCEN) issued a Geographic Targeting Order (GTO) requiring U.S. title insurance companies to report certain sales of U.S. Real Property. The goal is to identify the individuals behind shell companies purchasing residential real property without a new loan from a financial institution. The first GTO was issued in 2016 and has been extended and/or expanded many times since then. 

A GTO is limited to certain geographic areas. On October 27, 2022, FinCEN renewed the GTOs that cover certain counties within the following major U.S. metropolitan areas: 

• Boston
• Chicago
• Dallas-Fort Worth
• Las Vegas
• Los Angeles
• Miami
• New York City
• San Antonio
• San Diego
• San Francisco
• Seattle
• District of Columbia
• Northern Virginia
• Maryland (DMV) area

FinCEN also renewed the GTOs for:

• City and County of Baltimore
• County of Fairfield, Connecticut
• Hawaiian counties of Honolulu, Maui, Hawaii, and Kauai; or the city of Honolulu

FinCEN also expanded the geographic coverage of the GTOs to counties encompassing: 

• Texas cities of Houston and Laredo

FinCEN is currently utilizing the GTO to collect data to understand cash only transactions. It generates leads which are then provided to local law enforcement. 

According to FinCEN, the collected information provides law enforcement with the assistance it needs to track illicit funds and other criminal activities on the purchase of residential real estate properties by persons possibly involved in said illicit activities. 

Based on the information gathered so far, FinCEN believes other areas of the real estate market, such as commercial real estate and certain real estate purchases by natural persons (known as beneficial owners) associated with shell companies may merit regulatory coverage as well. 

The information provided herein does not, and is not intended to, constitute legal advice; instead, all information, and content, in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.

Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
Fidelity National Title Group
National Escrow Administration