Treasury issues new LLC disclosure law

But Uncle Sam won't release details of rule

TRD New York /
May.May 17, 2018 06:00 PM

The Treasury Department has re-upped rules meant to crack down on money laundering in real estate — but don’t ask Uncle Sam for details.

The Financial Crimes Enforcement Network (FinCEN) has released another set of rules requiring title companies to disclose the identity of all-cash buyers who purchase luxury property under the guise of an LLC, sources told The Real Deal. But FinCEN has instructed title companies not to disclose details of the new geographic targeting order (GTO).

“The terms of the GTO Order are CONFIDENTIAL and therefore we are not at liberty to share the details of the GTO Order with you,” according to a memo circulated by Fidelity National Title. “Please note that we are only requesting information that is required and we may be liable for civil and criminal penalties if terms of the GTO Order are not complied with.”

The memo said the new GTO takes effect May 21.

“The GTOs issued to date have provided FinCEN and law enforcement important information about money laundering vulnerabilities in the real estate sector,” FinCEN said in a statement, without further elaboration. “GTOs are a valuable tool and FinCEN will continue its efforts to study this vulnerability.”

FinCEN initially launched the LLC disclosure rule in March 2016 in an attempt to stop the flow of dirty money into real estate. And since July 2016, the rule has covered deals in all five boroughs of New York City; Miami, Broward and Palm Beach counties in Florida; Los Angeles; San Francisco; San Diego; and San Antonio, Texas. The rule applies to cash deals above $3 million in Manhattan and $1.5 million in the other boroughs.

But until last year, critics said FinCEN’s rules contained gaping loopholes.

Last August, the Treasury officials added teeth to a GTO that was extended to Hawaii. The revised GTO included wire transfers, which were previously excluded.


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