The Federal Financial Crimes Enforcement Network (FinCEN) Has Issued a Geographic Targeting Order (GTO) Impacting 14 Colorado Counties
Frequently Asked Questions
With the FinCEN Geographic Targeting Order going into effect on May 24, 2023, we want to share helpful questions and answers about the mandate. If you have additional questions please reach out to your Land Title closer or sales representative. You can also visit these two websites to learn more:
What is the FinCEN GTO?
The Federal Financial Crimes Enforcement Network (FinCEN), which resides in the US Treasury Department, issued a Geographic Targeting Order (GTO) in late April 2023. Different versions of this GTO have been in effect in other counties across the country since 2016, but this is the first time that Colorado counties are affected. Currently, the FinCEN GTO impacts approximately 40 counties in 12 states (including 14 Colorado counties).
The GTO requires that all underwriters and title agents licensed to do business in any of the impacted counties report additional transactional and beneficial ownership information for any “qualified transaction” that closes on or after May 24, 2023 to FinCEN. If the agent closes a transaction without reporting, as required by the GTO, the agent and/or underwriter could face significant criminal and civil penalties.
Why has FinCEN been issuing GTO’s?
FinCEN explains that their goal in issuing GTO’s is to gather data that it will use to combat financial crimes, such as money laundering. Many other industries (banking and lending, car dealerships) are already under similar mandates to disclose transactional information, or suspicious activity, that could help FinCEN fight these crimes. This GTO is also intended to pair with the new Corporate Transparency Act, which requires many business entities to provide similar disclosures to the Treasury Department.
When does the GTO go into effect in Colorado?
It is effective May 24, 2023. This means it is applicable to any closing taking place on May 24 or thereafter, even if the title order was submitted prior to that date. The current GTO expires on October 21, 2023, but historically, FinCEN has extended previous GTO’s for consecutive 6-month periods. We expect that this GTO will be extended for the foreseeable future.
What types of transactions are impacted?
According to the current GTO, in order to qualify for this mandatory disclosure, the transaction must meet the following criteria:
- Is residential
- An all cash deal (as defined in the GTO)
- The purchase price is $300,000 or more
- The buyer in the transaction is a “legal entity” (excluding trusts)
- Property is located in one of the following counties:
- Clear Creek
- El Paso
I am using a loan to purchase my transaction, so why am I being asked to comply with the GTO, which applies only to “cash” transactions?
The criteria that are used to determine whether or not a transaction qualifies for mandatory disclosure under the GTO are complex. Although the GTO applies only to “cash” deals, FinCEN generally treats any loans made by lenders that are not considered banks or financial institutions as “cash.” Therefore, if your seller is financing your purchase, or if you are using some other form of private financing, you might not be excluded from the GTO.
How is the additional information required by FinCEN collected by Land Title?
Land Title will send the buyers a form provided by ALTA (American Land Title Association) to collect the information. The ALTA form will be delivered to buyers when the commitment is produced and when Land Title becomes aware that the buyer is involved in a “qualifying” transaction. The individual acting on behalf of the buyer entity will fill out and sign the form, acknowledging that the information provided will be used to comply with the GTO. The closing staff will review the ALTA form and supplemental documents for completeness, but will not independently verify the information provided.
How will Land Title report this information back to FinCEN?
Land Title is required to submit the information by filling out a Currency Transaction Report and submitting it to FinCEN directly via a dedicated, restricted access portal. The GTO requires the Currency Transaction Report be made by the title entity – not by the buyer, or other real estate or legal professional on behalf of a buyer.
Will my information be secure? Who, other than FinCEN, will have access to the information provided?
Some of the information that title entities are required to collect includes personal identifying information. Land Title will ensure that once the information is received, it will be maintained securely and distributed only as required by the GTO and our underwriting partners. The information collected will be entered into an electronic Currency Transaction Report and submitted to FinCEN through a dedicated, restricted access portal. Additionally, some of our underwriting partners, who are also subject to the GTO, may request copies of these reports in order to confirm compliance. We are being told by FinCEN and our underwriters that the information provided will not be available to open data/records requests.
Will FinCEN approve the information prior to Land Title closing the transaction?
FinCEN will not confirm the sufficiency of the information provided on a transactional basis, nor will they provide or withhold permission to close. However, it would violate the GTO and the restrictions imposed by our underwriting partners to close a transaction without collecting and entering the buyer information.
What happens if a buyer delays providing some of the information requested in the form?
Buyers that are unable to provide the required information in a timely manner will have their closing delayed or rescheduled. Land Title is not able to close the transaction without collecting the required information. Whether you are a buyer, seller, or lender, you may consider reaching out to an attorney if you have questions about how a failure to close may impact your rights and obligations under your purchase and sale agreement, and other closing or loan documents.
What information pertaining to “Purchase Funds” will Land Title be requesting?
The buyer is required to disclose the amount of the purchase price that each buyer is contributing, and the form that the purchase funds will take (ex: wire transfer, cashier’s check, etc.).
What happens if a buyer does not want to comply with this new mandatory disclosure?
All underwriters prohibit agents and their direct operations from closing “qualifying” transactions without collecting and providing FinCEN with the needed information. If the information is not collected for FinCEN, Land Title will not be able to close the transaction.