Bulletin: NY000590

Date:
August 25, 2016
To:
All New York State Agents
RE:
US Department of Treasury: Financial Crimes Enforcement Network (FinCEN) Geographic Targeting Order, Manhattan, Brooklyn, Bronx, Queens and Staten Island NY

This bulletin is further guidance on the January 13, 2016  FinCEN Geographic Targeting Orders (GTO) which was issued on several title underwriters, and subsequently expanded to all underwriters,  including the Stewart Family of Underwriters .  As a reminder, the GTO has defined a covered business to include Stewart Title Insurance Company, its employees and its authorized title agents.   As suggested in Bulletin NY00578, Stewart advised you to begin to alert your customers and proposed insured of the GTO reporting requirements which commenced on March 1, 2016.  The NEW REPORTING REQUIREMENTS ARE EFFECTIVE AUGUST 28, 2016.  The initial GTO has been amended to extend the reporting period and expand the scope of the reporting requirements. 

The amended GTO has defined a covered transaction as any transaction that would close from August 27, 2016 to February 23, 2017 involving:

  1. Residential real property located in the Boroughs of Manhattan, Bronx, Brooklyn, Queens and Staten Island in the City of New York(Note the additional boroughs)  
  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 or any other state in the United States or a foreign jurisdiction.
  3. Consideration of more than $3,000,000 in Manhattan and $1,500,000 in Bronx, Brooklyn, Queens and Staten Island.  (Note the change in the amount)
  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.  Financing from a private lender, seller or other business is considered a reportable transaction.
  5. Any portion of the purchase price is paid using currency, cashier’s check, certified check, traveler’s check, money order, personal check or business check. (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.  Payment of only the settlement services by any of the listed methods does not trigger the reporting requirement.  (Note the additional checks)

In the event a transaction meets the above criteria, the IRS/FinCEN 8300 form must be completed and reported to FinCEN within thirty (30) days of the closing and must include the following:

  1. Identity of the individual primarily responsible for representing the Legal Entity.
    • A description of the identification (driver’s license, passport or other similar identifying document) 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 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.
    • 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.
  6. Address of the real property involved in the Covered Transaction.
  7. Also include the term “REGTO” as a unique identifier for this GTO in the Comments section.  (Note Change)

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.

As a covered business, all offices and agents are required to file IRS/FinCEN form 8300 directly with FinCEN, within thirty (30) days of closing on all covered transactions for as long as the order is in place.  All offices and agents are required to report evidence of the filing, including the identification of the beneficial owner, to Stewart via the over limits/high liability system prior to closing or if not known prior to closing, then post-closing. 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 and auditing purposes. 

In our continuing effort to advise you on this matter and to assist in the reporting, attached please find the ALTA Real Estate Geographic Targeting Orders Fact Sheet and FinCEN Certification Form to be used at or prior to closing.  This form is available in a Print-and-Write form and a Fill-In form.  In addition to being attached to this bulletin, it is also available to download from our web site.

All offices and agents must retain all records relating to compliance with the Order for a period of five (5) years from the last day that this order is effective (including any renewals of the 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 (6) years from the date of the Covered Transaction.  Civil actions may be commenced within two (2) years of the date of the penalty or criminal conviction.

Stewart suggests that the following exception/requirement be included in every title report for a transaction involving property located within the City of New York:

As a result of the Geographic Targeting Order (GTO) the IRS Form 8300 must be completed and delivered prior to or at the closing if the transaction meets the following criteria:

  1. The residential property to be insured is located in the Boroughs of Manhattan, Bronx, Brooklyn, Queens or Staten Island;
  2. 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 Unites States or foreign jurisdiction;
  3. Consideration of more than $3 million in Manhattan and $1.5 million in Brooklyn, Bronx, Queens and Staten Island; 
  4. It is an all cash transaction (including cashier’s check, certified check, traveler’s check or money order, personal or business check) or financing is provided by a private lender, seller or other business.

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

Forms: IRS/FinCEN 8300; Cert Fill-In; Cert Print and Write

Attachments: Updated Geographic Targeting Order; Fact Sheet

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.