Bulletin: NY000629

This bulletin is continuing guidance on the FinCEN Geographic Targeting Orders (GTO) which were issued to all underwriters. A New GTO has been issued, extending the effective date of the reporting requirement to May 9, 2020.  FINCEN has advised Stewart further, stating:  “To the extent that your business may not be collecting and reporting social security numbers where available and as requested in the form, FinCEN expects that Covered Businesses will collect and report such information in Part I of the Currency Transaction Report.  FinCEN will provide a 30-day implementation period, beginning today, for you to update your training and procedures as necessary”.  Accordingly, if you have not been reporting social security numbers on part I of the CTR, please report as requested.

As a reminder, the GTO has defined a covered business to include Stewart Title Insurance Company, Stewart Title Guaranty Company (the Stewart family), its employees and its authorized Title Agent. The amended GTO has defined a covered transaction as any transaction that would close from November 12, 2019 through May 9, 2020. involving:

• Residential real property located in the
  1. Boroughs of Manhattan, Bronx, Brooklyn, Queens and Staten Island in the City of New York, State of New York
  2. Counties of Bexar, Tarrant and Dallas in the State of Texas *
  3. Counties of Miami-Dade, Broward and Palm Beach in the State of, Florida
  4. Counties of San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara in the State of California
  5. City and County of Honolulu Hawaii.
  6. Clark County, Nevada *
  7. King County, Washington *
  8. Counties of Suffolk and Middlesex in Massachusetts *
  9. Cook County, Illinois *
• The proposed insured/buyer is a Legal Entity, defined as a corporation, limited liability company, partnership or other similar business entity whether formed under the laws of a State or any other state, in the United States or a foreign jurisdiction, and;

• Consideration of more than $300,000.00 or more in all Counties, and;

• 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.  Financing from a private lender, seller or other business is considered a reportable transaction, and
• Any portion of the purchase price is paid using currency, cashier’s check, certified check, traveler’s check, money order in any form, personal check, business check, funds transfer or virtual currency. (An attorney trust or escrow check is considered a business check for reporting purposes). There is no de minimus amount below which the reporting is not triggered

In the event a transaction meets the above criteria, (remember, the transaction must meet the current 4 prong test (covered location, improved residential property, over $300,000.00, and without institutional financing-in cash) then the covered transaction shall be reported to FinCEN by filing the Currency Transaction Report (“CTR”) within thirty (30) days of the closing and must include the following:

• The CTR can be found at https://bsaefiling.fincen.treas.gov/docs/GTO/RealEstate_GTO_Template.pdf (The CTR works best by copying and pasting the link and using Internet Explorer)

Key Changes:

• Part IV of the CTR shall contain formation about the Covered Transaction as follows:
  
  • The Covered Business shall ensure the term “REGTO1119” remains in Field 45 of Part IV.
    
• “Beneficial Owner” means each individual who, directly or indirectly, owns 25% or more of the equity interests of a Legal Entity purchasing real property in the Covered Transaction.
• “Legal Entity” means a corporation, limited liability company, partnership or other similar business entity, whether formed under the laws of a state, or of the United States, or a foreign jurisdiction, other than a business whose common stock or analogous equity interests are listed on a securities exchange regulated by the Security Exchange Commission (SEC) or a self-regulated organization registered  with the SEC, or an entity solely owned by such a business.

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.

All offices and agents must (1) retain all records relating to compliance with the Order for a period of five years from the last day that this order is effective (including any renewals of the Order), (2) store such records in a manner accessible within a reasonable period of time, and (3) make sure such records are available to FinCEN, or any other appropriate law enforcement or regulatory agency, upon request. Stewart, as part of our normal auditing process, will audit your compliance with this GTO, and subsequent GTO’s as modified or amended.  We encourage the use of the ALTA forms to certify that the transaction is reportable and the ALTA forms to collect the information to assist in the reporting and compliance with this GTO. ALTA forms are being updated and will be sent once available.

Failure to report can subject the company or any of its employees to civil and criminal penalties.

Stewart suggests the following:

We encourage you to review prior FinCEN GTO bulletins and orders since many of the requirements are the same.  Advise your clearance and legal staff of the criteria on the reportable transactions as well as a script for discussing the requirements with clients/customers based upon the below exception language.  Utilize the ALTA forms to collect the information.  Attend an upcoming Stewart Web Ex. Include the following exception/requirement in every title report or commitment for a transaction involving property located in the areas listed above.

EXCEPTION/REQUIREMENT:

This Company is required by Federal Law to collect certain additional information from you and the parties representing you regarding the purchase of real property.  US Code Title 31-Sec 5326 authorizes the U.S Department of Treasury to collect information about certain transaction as specified in various geographic targeting orders for the purpose of preventing evasion of the Bank Secrecy Act.  As a result of a Geographic Targeting Order ("GTO") issued by the United States Department of Treasury, Financial Crimes Enforcement Network ("FinCen"), on May 16, 2019 this transaction may be responsive to the requirements of the GTO.  You may be required, as a condition of the issuance of the policy to provide additional information that will be reported to FinCEN.  Please contact this company and provide the details of this transaction in order to comply with the GTO.

If the transaction meets the reporting requirement, you will be asked to provide information on the identity of the parties to the transaction, which will be reported to FinCEN. This company is prohibited from issuing its policy if the transaction is reportable and the information is not provided for reporting.  Additional exceptions and/or requirements may be raised.

In the event you have any questions, please call the Stewart Title Insurance Company – New York legal Department at (212) 922-0050.

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

Forms: CTR; ALTA Form WORD; ALTA Form PDF
Attachments: FinCEN GTO