US FinCEN Continues to Renew and Expand Real Estate GTOs
On October 26, 2022, the Financial Crimes Enforcement Network (“FinCEN”) renewed and expanded geographic targeting orders (“GTOs”) for certain “all-cash” purchases of residential real estate (“October 2022 GTOs”).1 The October 2022 GTOs remain in effect until April 24, 2023, but are likely to be renewed based on FinCEN’s prior practices.
Since 2016, FinCEN has issued a series of increasingly expansive GTOs that require US title insurance companies to identify the natural persons behind legal entities (US and non-US) used in certain “all-cash” purchases of residential real estate. (Please see our earlier Legal Updates for background on the real estate GTOs.2)
October 2022 GTOs
The October 2022 GTOs further expand the scope of the earlier GTOs by adding the counties that encompass the Texas cities of Houston and Laredo to the identification and reporting requirements for all-cash transactions of a certain dollar value. The requirements become effective in the new areas on November 25, 2022.
Takeaway
The October 2022 GTOs are consistent with FinCEN’s broader initiative to identify and remediate vulnerabilities in the US real estate market and track with the GTOs issued since 2016. Further, they may be a semi-permanent action while FinCEN considers a separate rulemaking for permanent recordkeeping and reporting requirements for certain persons participating in transactions involving the non-financed purchase of real estate nationwide.3 That rulemaking remains in its early stages and will likely involve at least one more round of public comment. Therefore, we expect more extensions of the real estate GTOs and other similar piecemeal actions until FinCEN completes the rulemaking process.
1 FinCEN Renews and Expands Real Estate Geographic Targeting Orders (Oct. 26, 2022), https://www.fincen.gov/news/news-releases/fincen-renews-and-expands-real-estate-geographic-targeting-orders-0.
2 FinCEN Continues to Renew and Expand Real Estate GTOs (May 11, 2022), https://www.mayerbrown.com/en/perspectives-events/publications/2022/05/us-fincen-continues-to-renew-and-expand-real-estate-gtos; FinCEN Adds Virtual Currency to High-End Real Estate Reporting Regime (Nov. 20, 2018), https://www.mayerbrown.com/en/perspectives-events/publications/2018/11/fincen-adds-virtual-currency-to-highend-real-estat.
3 For more information, please refer to our previous Legal Update New Real Estate Reporting Requirements Under Consideration by FinCEN (Dec. 8, 2021): https://www.mayerbrown.com/en/perspectives-events/publications/2021/12/new-real-estate-reporting-requirements-under-consideration-by-fincen.
