WASHINGTON—One U.S. senator wants the Financial Crimes Enforcement Network to strengthen rules around Geographic Targeting Orders (GTOs) in certain real estate transactions.
Specifically, Sen. Sheldon Whitehouse (D-RI) is calling for greater disclosure requirements related to GTOs for all-cash real estate transactions conducted through shell companies.
“The United States is engaged in a ‘clash of civilizations’ between rule-of-law nations and those governed by autocracy, kleptocracy, and criminality,” Whitehouse stated in his letter. “Regrettably, in that clash rule-of-law nations like the United States continue to aid and abet our adversaries by providing sanctuary for their stolen wealth, including by allowing anonymous transactions in the $60 trillion U.S. real estate market.
Stopping ‘Kleptocrats’
“FinCEN must use this rulemaking as an opportunity to prevent kleptocrats and corrupt actors from hiding their illicit gains in the U.S. real estate market, to plug holes through which illicit cash can flow, and to protect the U.S. financial system,” added Whitehouse.
FinCEN instituted GTOs in 2016 as a six-month pilot program in the New York and Miami metro areas to respond to the growing concern over money laundering through American real estate. The program requires property title insurers to report to FinCEN beneficial ownership information—the real person or interest—of shell companies that use cash to purchase high-priced real estate. The program has since expanded to a dozen jurisdictions around the country.
Other Changes Requested
Whitehouse’s letter asks FinCEN to codify the reporting requirements and implement several changes to the GTO program. Those changes include:
- Making the rules permanent and expanding the coverage to the entire United States
- Eliminating the dollar thresholds for coverage and adding commercial transactions
- Aligning the definition of beneficial owner with the newly-enacted Corporate Transparency Act and collecting beneficial ownership information for certain sellers
- Documenting the source of funds
- Ensuring someone is always responsible for filing