On January 13, 2016, Financial Crimes Enforcement Network (FinCEN) issued Geographic Targeting Orders requiring “certain U.S. title insurance companies to identify the natural persons behind companies used to pay ‘all cash’ for high-end residential real estate in the Borough of Manhattan in New York City, New York and Miami-Dade County, Florida.” This information will be required of any individual owning, directly or indirectly, 25% or more of the equity interests of the purchaser. These orders will take effect on March 1st, 2016 and expire on August 27, 2016, unless extended.
Under the new orders, a title insurance company conducting a settlement or performing services in connection with a “Covered Transaction” must receive a written statement from purchaser’s counsel or the settlement agent stating that no part of the purchase price was funded by the use of currency, a cashier’s check, a certified check, a traveler’s check, or a money order, or information sufficient to enable the completion of IRS Form 8300. Further information regarding IRS Form 8300 may be found on the IRS website at https://www.irs.gov/pub/irs-pdf/f8300.pdf.
The new Orders define a Covered Transaction as one in which a legal entity purchases a one to four family residential real property (including individual units of condominiums and cooperatives) located in New York, NY for a total purchase price in excess of $3,000,000.00 without a bank loan or some other form of external financing, such purchase being made, at least in part, using currency or a cashier’s check, certified check, traveler’s check or money order in any form. Wire transfers and personal or business checks do not trigger the reporting requirement. Purchases with financing by a private lender, seller or other business are not exempted from reporting.