Bulletin: MU2016003

Date:
August 26, 2016
To:
All California, Florida and Texas Issuing Offices
RE:
UNDERWRITING - US Department of Treasury: Financial Crimes Enforcement Network (FinCEN) - Geographic Targeting Order

Dear Associates:

This bulletin is a follow-up to the previous bulletin regarding the FinCEN Geographic Targeting Order (GTO) that was issued on August 10, 2016. Below is a link to the prior bulletin.

Please allow this to serve as a reminder that the Order becomes effective on August 28, 2016, and ends on February 23, 2017. The order now covers certain transactions involving real property in Bexar County in Texas; Miami-Dade, Broward, and Palm Beach Counties in Florida; the Borough of Brooklyn, Queens, the Bronx, Manhattan and Staten Island in New York City, New York; and San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara Counties in California.

The American Land Title Association (“ALTA”) has provided a number of resources which may be found by visiting their website at www.alta.org/fincen. The site contains, among other items, links to the recording of previously conducted webinars for California, Texas and Florida.

ALTA has also released two new forms for use in determining whether or not the transaction is a “Covered Transaction” under the GTO and in collecting necessary information to complete the Form 8300.

Covered Transaction Determination Form

Information Collection Form

ALTA also released an Infographic that may be helpful in speaking with Real Estate Agents about the requirements of the GTO.

FinCEN has released an FAQ addressing the Order which may be found here.    

What you must do:

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 (Stewart Access). 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:Policyapprovalrequest@stewart.com. You will not receive an approval of the submission. This submission is for record keeping purposes.

The following requirement should be included in all preliminary reports/commitments in the subject jurisdictions:

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: August 28, 2016, to February 23, 2017:

  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 a state or of the United States or a foreign jurisdiction;
     
  2. The Proposed insured property is Residential real property located in a jurisdiction subject to the GTO;
     
  3. Total Consideration is at or more than the amount designated for the subject jurisdiction in the GTO;
     
  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, personal check, business check, or any form of 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 forrepresenting the Purchaser with a copy retained in the file;
     
  2. Identity of the Purchaser and any Beneficial Owner(s) of the Purchaser;

    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;

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.

Covered transactions:

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 August 28, 2016, to February 23, 2017, where

  1. A “Legal Entity” defined in the order as 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; AND
     
  2. Purchases residential real property
     
    a. For a total purchase price of $500,000 or more in Bexar County, Texas; OR
     
    b. For a total purchase price of $1,000,000 or more in Miami-Dade County, Broward County or Palm Beach County, Florida; OR
     
    c. For a total purchase price of $1,500,000 or more in the Borough of Brooklyn, Queens, Bronx, or Staten Island in New York City, New York; OR
     
    d. For a total purchase price of $2,000,000 or more in San Diego County, Los Angeles County, San Francisco County, San Mateo County, or Santa Clara County, California; OR
     
    e. For a total purchase price of $3,000,000 or more in the Borough of Manhattan in New York City, New York; AND
  3. The purchase is made WITHOUT a bank loan or other similar form of external financing; AND
     
  4. The purchase is made, in any part, using currency or a cashier’s check, a certified check, a traveler’s check, a personal check, a business check, or a money order in any form.

A wire transfer 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.

For transactions in Miami-Dade County Florida previously subject to the prior order, please note that a personal or business check NOW triggers the reporting requirement.

In the event a transaction meets the above criteria, certain information 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.

The term “REGTO” should be included in the “Comments” section of the 8300 as a unique identifier for the GTO order.

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.

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

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

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:
MU2016002 UNDERWRITING - US Department of Treasury: Financial Crimes Enforcement Network (FinCEN) - Geographic Targeting Order
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None