Bulletin: FL2016002

Dear Associates:

On January 13, 2016, the FinCEN issued a Geographic Targeting Order (GTO) on several title underwriters, including the Stewart Family of Underwriters. The GTO places a reporting requirement on all covered businesses to report to FinCEN a form 8300 on all covered transactions.

FinCEN was established in 1990 by the United States Department of Treasury to “safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis and dissemination of financial intelligence and strategic use of financial authorities.” FinCEN is authorized by the Currency and Financial Transaction Reporting Act of 1970 as amended by the USA Patriot Act of 2001. FinCEN can issue orders to institutions like title insurers to assist them in gathering information about transactions. The GTO places a reporting requirement on the covered business.

The GTO has defined Stewart Title Guaranty Company, its employees and its authorized title agents as a covered business. The GTO defines a covered transaction as any transaction that will close from March 1, 2016, to August 27, 2016, involving:

1. Residential real property located in Miami-Dade County, Florida. 
2. The proposed insured/ buyer: is a Legal Entity, defined under the GTO as a corporation, limited liability company, partnership or other similar business entity whether formed under the laws of Florida, any other state, the United States or a foreign jurisdiction; 
3. Consideration of more than $1 million. 
4. Without a loan or similar form of external financing from a financial institution; the reporting exclusion is only triggered by loans financed by a financial institution. If financing is provided by a private lender, seller or other business the transaction is reportable. 
5. Any portion of the purchase price is paid using currency, cashier’s check, certified check, traveler’s check, or money order. There is no de minimus amount below which the reporting is not triggered.
   
   a. A personal or business check does not trigger the reporting requirement.
    
   b. Payment of settlement services by any of the listed methods does not trigger the reporting requirement.

A wire transfer also does not trigger the reporting requirement but, again, if any amount of the purchase, including a de minimus amount, is funded by using one of the types of payments listed in the order, then it would be subject to the reporting requirements. 

In the event a transaction meets the above criteria, the following must be reported to the FinCEN on a form IRS/FinCEN 8300. A copy of the form is attached as well as a link to file the form on line. Click here to file form online.  

1. Identity of the individual primarily responsible for representing the Legal Entity;
    
   a. A description of the identification (driver’s license, passport or other similar identifying document) obtained from the individual primarily responsible for representing the Purchaser with a copy retained in the file; 
2. Identity of the Purchaser and any Beneficial Owner(s) of the Purchaser’s;
    
   a. A description of the type of identification, driver’s license, passport or other similar identifying document, obtained from the Beneficial Owner with a copy retained in the file;
    
   b. Any person or entity owning 25% or more of the purchasing entity is a “beneficial owner” and must be reported. If an entity is a member of the purchasing entity, members of that entity must be reported 
3. Date of closing of the Covered Transaction; 
4. Total amount transferred in the form of a Monetary Instrument; 
5. Total purchase price of the Covered Transaction; and 
6. Address of the real property involved in the Covered Transaction; 
   a. Also include the term “REGTOMIA” as a unique identifier for this GTO in the Comments section.

Failure to report can subject the company or any of its employees to a fine and/or penalty. Penalties can be assessed any time within six years from the date of the Covered Transaction. Civil actions may be commenced within two years of the date of the penalty or criminal conviction.

Stewart suggests, at this time, that you begin informing your customers and title closers of the reporting requirement and begin raising as a requirement in your Miami-Dade County, Florida title reports/Commitments the following:

As a result of a Geographic Targeting Order issued by the United States Department of Treasury, Financial Crimes Enforcement Network, the following additional reporting requirements will be required at or before closing for the following transactions closing between: March 1, 2016, to August 27, 2016: 

1. The proposed insured/ buyer: is a Legal Entity, defined under the GTO as a corporation, limited liability company, partnership or other similar business entity, whether formed under the laws of Florida, any other state, the United States or a foreign jurisdiction;  
2. The Proposed insured property is Residential real property located in Miami-Dade County, Florida, 
3. Total Consideration of more than $1 million;
4. The consideration is paid without a loan or similar form of external financing from a financial institution; and  
5. Any portion of the purchase price is paid using currency, cashier’s check, certified check, traveler’s check, or money order. 

In the event a transaction meets the above criteria, the following must be reported to the IRS/FinCEN on a form 8300.

1. Identity of the individual primarily responsible for representing the Legal Entity;  
   a. A description of the identification (driver’s license, passport or other similar identifying document) obtained from the individual primarily responsible for representing the Purchaser with a copy retained in the file;  
2. Identity of the Purchaser and any Beneficial Owner(s) of the Purchaser’s;  
   a. A description of the type of identification, driver’s license, passport or other similar identifying document, obtained from the Beneficial Owner with a copy retained in the file;  
3. Date of closing of the Covered Transaction;  
4. Total amount transferred in the form of a Monetary Instrument;  
5. Total purchase price of the Covered Transaction; and  
6. Address of the real property involved in the Covered Transaction; 
    
   a. Also include the term “REGTOMIA” as a unique identifier for this GTO in the Comments section. 

Title closers will need to be advised of this new disclosure requirement in the event the transaction fits the GTO and the transaction has not been identified prior to closing. In the event a party will not provide the information on a covered transaction, you may not issue the title insurance policy without written authority from Stewart.

Stewart is working with FinCEN directly as well as through ALTA and the FLTA to provide information to its offices and agents. Attached to this bulletin is a link to the Frequently Asked Questions published by FinCEN as well as the ALTA Fact Sheet. FinCEN and ALTA will be providing further guidance and educational information, through telephone calls. A schedule of the first calls is attached here. Stewart strongly encourages you to participate. 

Stewart will require all offices and agents to file the form 8300 within thirty (30) days on all covered transactions for as long as the order is in place directly with FinCEN. All agents and offices should report evidence of the filing to Stewart via the over limits/high liability system. A copy of the form 8300 completed and signed together with the required beneficial owner identification and copies of the proofs taken should be attached to an over limits form and submitted to: HighLiPolicy@stewart.com. You will not receive an approval of the submission. This submission is for record keeping purposes.  

In the event you have any questions, please contact the Stewart Title Guaranty Company- Houston Legal Department at (713) 625-8225.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

EXHIBIT1 – FDS Unlawful Inducements Title Rule 2 9 16 

IRS/FinCEN 8300 
Frequently asked Questions 
ALTA Fact Sheet 
First Calls Schedule