Bulletin: NY000578

Date:
February 11, 2016
To:
All New York State Agents
RE:
US Department of Treasury: Financial Crimes Enforcement Network (FinCEN) Geographic Targeting Order, New York County, NY and Miami-Dade County Florida

On January 13, 2016 the FinCEN issued two Geographic Targeting Orders (GTO) to several national and regional title underwriters, including the Stewart family of underwriters (Stewart).  One GTO affects residential real property in New York County NY, and the another affects residential real property in Miami-Dade County, Florida.  The GTO places a reporting requirement on all covered businesses to report to FinCEN a form 8300 on all covered transactions. If you also do business in Miami-Dade County, Florida, you will receive additional instructions from Stewart. 

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 New York County GTO has defined Stewart Title Insurance 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 the Borough of Manhattan, County of New York, N.Y.

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 New York, any other state, the  United States or a foreign jurisdiction;

3.    Consideration of more than $3 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

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 “REGTONYC” 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 New York County 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 New York, any other state, the United States or a foreign jurisdiction;

2.    The Proposed insured property is Residential real property located in the Borough of Manhattan, County of New York N.Y.,

3.    Total Consideration of more than $3 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 “REGTONYC” 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 NYSLTA 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 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 the Stewart Title Insurance Company- New York Legal Department at (212) 922-0050.

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

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None