Geographic targeting orders (GTO) is a tool used by the Financial Crimes Enforcement Network (FinCEN) to detect money laundering and other illegal activities through real estate purchases. Real estate purchases have been a successful tool for money laundering for many years, especially through shell companies, and this GTO aims to break this down. The GTO, the Bank Secrecy Act (BSA), has been given the authority to determine by these activities.
Furthermore, the GTO, an order requiring the Commission to report on this process when you bring higher value transactions occurred from a specified geographical area in the US domestic financial institutions. As part of FinCEN's ongoing anti-money laundering efforts, GTOs must identify individuals behind companies that pay for high-quality real estate in the two markets identified. The Financial Crimes Enforcement Network (FinCEN) Geographic Targeting Orders (GTOs) issued in January 2016.
Originally published by The Financial Crimes Enforcement Network (FinCEN) in January 2016, GTO was renewed in November 2019, and this new order was reported to be valid between 12 November 2019, and 9 May 2020. Finally, on May 8, 2020, FinCEN once again expanded its Geographic Targeting Order ("GTO"), which required title insurance companies to report residential property purchases in certain major metropolitan areas.
After the last congress, the geographic regions in which the GTO was authorized with a $ 300,000 monetary threshold did not change. As a result, no new jurisdiction was added to the pre-existing scope of GTOs. This new revision remained the same as the November 2019 GTOs. On May 8, 2020, FinCEN extended the GTOs for six months as they were. GTO asked insurance companies in some geographic regions to report their purchase of residential properties in the metropolitan areas.
GTOs address a problem with individuals who purchase high-end residential properties anonymously. An insurance company under GTO should report unfinished housing sales ($ 300,000 or more) to legal entity buyers within 30 days of closing. The purchaser must include ownership information at a threshold of 25% for the legal entity, and the insurance company must verify the identity of the rights holders and their representatives using documentary tools.
While GTOs previously worked exclusively with money-related activities, they now cover not only money but also transactions involving “funds.” If institutions do not comply with GTO, FinCEN may impose fines on institutions or individual prison sentences of 5-10 years. GTOs determine which companies should comply with their record-keeping and reporting obligations. GTOs are regulated for a limited period, which is valid for up to 60 days in the 2000s, while this period is now extended to 180 days under the U.S. Patriot Act. Some possible situations may also extend this time by FinCEN.
As we mentioned earlier, there were nine geographical regions that were included in the jurisdiction of GTO. You can find these regions below:
• New York: Boroughs of Brooklyn, Queens, Bronx, Staten Island, and Manhattan
• Massachusetts: Suffolk and Middlesex Counties
• Illinois: Cook County
• Washington: King County
• California: San Diego, Los Angeles, San Francisco, San Mateo, and Santa Clara Counties
• Nevada: Clark County
• Texas: Bexar, Tarrant, and Dallas counties
• Hawaii: City and County of Honolulu
• Florida: Miami-Dade, Broward, and Palm Beach Counties
Insurance companies must submit FinCEN Forms in their comprehensive transactions within 30 days from the closing date. This form should contain information such as:
• The identity of the individual responsible for representing the recipient
• Documents that authenticate the person
• Documents confirming the identity of the beneficial owners of the recipient and the identity of the individual
• Purchase price and transaction date
• The address of the residential property
GTOs and FinCEN Consulting raised the profile of money laundering problems in the real estate industry and emphasized the importance of offering SARs if a buyer or seller is suspected of being involved in money laundering. Thus, it was ensured that the processes were integrated into existing AML / CFT compliance programs. As a result, companies should already have Customer Due Diligence and Transaction Monitoring processes to identify customers and beneficial owners so that they can align these targets with GTO for efficiency and accuracy.
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