Beginning November 17, 2018, the Treasury Department required title insurance companies to disclose the identity of LLC purchasers spending $300,000 or more on real estate purchases. This Geographic Targeting Order is active until May 15, 2019. It also requires that covered purchases using virtual currencies be reported.
It’s the most dramatic escalation yet in the Treasury Department’s effort to combat the use of LLCs to launder money through real estate.
Prior to November 2018, the Geographic Targeting Order applied to cash purchases above $3m in Manhattan, $1.5m in New York City’s other boroughs, $2m in Los Angeles, $1m in Miami-Dade, Broward and Palm Beach counties, and $500,000 in San Antonio, Texas.
We wrote about the first GTO targeting luxury real estate in NY in January 2016, about the GTOs expansion to other states in September 2017, and about the secretive GTO announced in March of last year.
Now the beneficial owners of anonymous LLCs are facing their greatest challenge yet, this time on the legislative front.
The Corporate Transparency Act of 2019, which was presented to Congress by Congresswoman Carolyn Maloney, would require that corporations and LLCs disclose the names of their beneficial owners to the Financial Crimes Enforcement Network, or FinCEN, which would then share that information with financial institutions and law enforcement.
The bill is basically a rehashing of the Corporate Transparency Act of 2017, which had bipartisan support but not enough to ultimately become law. Multiple proposals were discussed in the initial hearing on the Corporate Transparency Act of 2019.
One would authorize the Secretary of the Treasury to provide monetary rewards to anyone who assists in investigations of foreign government corruption. A laundry list of proposals that would close loopholes in existing anti-money laundering legislation were also proposed.
Another bill proposed by Congressman French Hill of Arkansas would function similarly to Maloney’s, but the Internal Revenue Service would be the point of collection instead of FinCEN.
Bipartisan support for an LLC transparency law is extremely strong, and it’s likely a law will be passed in the near future. What remains to be seen is where the burden of compliance will lay.
About World Wide Land Transfer
World Wide Land Transfer is a service-oriented title company offering NY title insurance and PA title insurance from our offices in New York City and Philadelphia.
We work with realtors, investors, lenders, REO providers, law firms, attorneys, and consumers. We have extensive experience closing everything from multimillion dollar commercial transactions to complex reverse mortgage transactions.
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