Beneficial Ownership Legislation and Geographic Targeting Orders

Abstract

This paper is updated to include the Geographic Targeting Order issued by FinCEN in November 2018. Over the last twenty years or so, state and Federal legislators have proposed a variety of beneficial ownership laws, to target money laundering and other illegal activities. Commencing in 2016 and most recently in November 2019, that effort has expanded into the real estate transaction market. “Geographic Targeting Orders” sounds ominous and, depending on your political views, may be especially so when coupled with the federal Department of Treasury agency – the Financial Crimes Enforcement Network (“FinCEN”). What is the government doing now, and who is it targeting? This paper discusses proposed (but not yet enacted) beneficial ownership legislation in the United States and looks at foreign issues, such as the International Financial Action Task Force and its anti-money laundering requirements. This paper then discusses geographic targeting orders instituted in the United States by FinCEN, most recently in November 2019, which attempt to identify money laundering transactions in real estate in certain (but definitely not all) regions of the United States. The areas targeted include major metropolitan areas in California, Florida, Hawaii, Illinois, Nevada, New York, Texas, and the state of Washington. The transactions focused on are non-bank financed real estate transactions exceeding certain thresholds which are completed without bank financing through cash or check transactions, or where funds are transferred by wire. FinCEN advises that of the reports received in the first 18 months, 30 percent have involved persons who previously had suspicious activity reports lodged against them.