In an e-communication dated February 4, 2016 (New Disclosures Required in High-End Residential
Real Estate Transactions in Manhattan and Miami), we reported
that the Financial Crimes Enforcement Network (FinCen) of the U.S.
Treasury Department had established a temporary program that
requires new disclosures by title insurance companies. The program
is part of FinCen's effort to gather data that will assist law
enforcement agencies in combating money laundering in cities where
high-end real estate acquisitions have become increasingly common.
Under this program, title insurance companies must disclose the
identities of the individuals behind shell companies (including
limited liability companies, corporations and partnerships) that
buy high-end residential properties (1 to 4 family dwellings,
condominium units or cooperative units) in Manhattan and Miami-Dade
County without lender financing. This program was effective March
1, 2016 and was scheduled to expire on August 27, 2016.
In addition to the reporting currently required in Manhattan and
Miami-Dade County, on July 22, 2016, FinCen extended the scope of
this program to require such reporting for transactions in the
Boroughs of Brooklyn, Queens, the Bronx and Staten Island in New
York City; San Francisco, San Diego, San Mateo and Santa Clara
counties in California; San Antonio, Texas; Broward and Palm
Beach counties in Florida.
The extended program is effective on August 28, 2016 and, unless
further extended, expires on February 23, 2017.
As noted in the e-communication referred to above, the program
requires the reporting of the identities of the ultimate beneficial
owners of 25% or more of the direct or indirect equity or
beneficial interests in the purchasing entities in "all
cash" sales of more than US$3 million in Manhattan. In
Miami-Dade County, the identities of the beneficial owners must be
reported on all-cash sales of more than US$1 million. Different
reporting thresholds apply to each of the newly covered
jurisdictions. Note that only transactions that do not involve any
bank financing are covered. Furthermore, this reporting requirement
applies only when a portion of the purchase price is paid by
currency or monetary instrument, which includes cashier's
check, certified check, traveler's check or money order. The
reporting requirement does not apply if the purchase price is paid
entirely by wire transfer or if no title insurance company is
As noted in the previous e-communication, although the
information regarding beneficial owners being reported to FinCen
will be available to the federal government, it will not appear in
any public records or databases.
Please note that we may not continue to announce these changes,
but we will continue to monitor these developments.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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