Title Alert September 14, 2016 FinCEN Geographic Targeting Order

Transcription

1 TITLE ALERT Title Alert September 14, 2016 FinCEN Geographic Targeting Order PA - STANDARD Please review the attached republication of First American s Corporate Underwriting Department Communication NA Standard (PA Standard). This information is important because this federal government directive could be expanded to encompass other cities, including ones located in Pennsylvania. On July 22, 2016, the United States Department of the Treasury s Financial Crimes Enforcement Network ( FinCEN ) issued a Geographic Targeting Order ( GTO ) (attached as Exhibit A) creating new reporting requirements that will affect residential real estate transactions involving real property in the Counties of Bexar, Texas; Miami-Dade, Broward and Palm Beach, Florida; San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara, California; and the Boroughs of Manhattan, Brooklyn, Queens, Bronx and Staten Island, New York. These new reporting requirements apply to Covered Transactions (as defined below) that occur from August 28, 2016 until February 23, The GTO requires First American Title Insurance Company ( First American or Company ) and First American s issuing agents to collect and report information about the persons involved in certain residential real estate transactions ( Covered Transactions ) in which First American is involved (i.e. the Company insures a party in the transaction with a policy of title insurance, conducts a settlement or performs a service). The GTO states that First American and First American s issuing agents may be liable, without limitation, for civil or criminal penalties for violating any of the terms of the GTO. Please refer to the attachment for the details. If you have any questions, feel free to contact us. Republication of First American s Corporate Underwriting Department Communication PA Standard. First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. NOTE: This Title Alert is intended solely for the employees of Penn Attorneys/Ohio Bar Title Insurance Company and its Approved Attorneys, is not to be distributed to third parties, and any reliance by any other person or entity is unauthorized. This Title Alert is intended solely for the purpose of underwriting policies of Ohio Bar Title Insurance Company. NOTE TO APPROVED ATTORNEYS: Under the Approved Attorney system, the scope of our relationship is limited to the functions of underwriting and the issuance of title insurance policies on your behalf and does not include closing or escrow services. We sometimes provide information and recommendations with regard to your closing or escrow business as a courtesy to you. Moreover, some communications, depending on whether noncompliance could impact on liability under our policies or closing protection letters, should be considered directives. This Title Alert is being provided to you with those considerations in mind. * * * This Title Alert should become a permanent part of your records to assure compliance with its requirements. * * * 1250 Tower Lane, Suite 202, Erie, PA (800) FAX (800)

2 PA Standard NA Standard UNDERWRITING COMMUNICATION Issued by First American Title Insurance Company Title: FinCEN Geographic Targeting Order Written By: Pennsylvania Underwriting Department** Date: September 1, 2016 On July 22, 2016, the United States Department of the Treasury s Financial Crimes Enforcement Network ( FinCEN ) issued a Geographic Targeting Order ( GTO ) (attached as Exhibit A) creating new reporting requirements that will affect residential real estate transactions involving real property in the Counties of Bexar, Texas; Miami-Dade, Broward and Palm Beach, Florida; San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara, California; and the Boroughs of Manhattan, Brooklyn, Queens, Bronx and Staten Island, New York. These new reporting requirements apply to Covered Transactions (as defined below) that occur from August 28, 2016 until February 23, The GTO requires First American Title Insurance Company ( First American or Company ) and First American s issuing agents to collect and report information about the persons involved in certain residential real estate transactions ( Covered Transactions ) in which First American is involved (i.e. the Company insures a party in the transaction with a policy of title insurance, conducts a settlement or performs a service). The GTO states that First American and First American s issuing agents may be liable, without limitation, for civil or criminal penalties for violating any of the terms of the GTO. The GTO defines a Covered Transaction as one in which: i. A Legal Entity, whether formed under the laws of a state or of the United States or a foreign jurisdiction, defined in the GTO as: 1. Corporation; 2. Limited Liability Company; 3. Partnership; or 4. Other similar business entity ii. Purchases residential real property, defined by FinCEN as real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families, located in the Counties/Boroughs described in the GTO; iii. For a total purchase price of 1. $500,000 or more in Bexar County, Texas 2. $1,000,000 or more in Miami-Dade, Broward or Palm Beach Counties, Florida 3. $1,500,000 or more in the Boroughs of Brooklyn, Queens, Bronx or Staten Island, in New York City, New York 4. $2,000,000 or more in San Diego, Los Angeles, San Francisco, San Mateo or Santa Clara Counties, California; or 5. $3,000,000 or more in the Borough of Manhattan in New York City, New York. iv. Such purchase is made without a bank loan or other similar form of external financing 1 ; and 1 Loans financed by a U.S. financial institution, such as a bank or credit union that is required to have an antimoney laundering policy.

3 First American Title Insurance Company PA Standard NA Standard Page 2 of 3 v. Such purchase is made, at least in 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. The GTO requires that IRS/FinCEN Form 8300 ( Form 8300 ) be used to report certain information that is more fully described in the GTO at paragraph II.B.2. That information includes such things as (1) the identity of the Purchaser; (2) the identity of the Beneficial Owner(s) 2 of the Purchaser; and (3) the identity of the individual primarily responsible for representing the Purchaser. The GTO sets out specific instructions for completing Form 8300, many of which supersede the preprinted instructions on the Form Keep in mind, when the reporting instructions in the GTO conflict with the Form 8300 preprinted instructions, the terms of the GTO apply. Standard: FinCEN is requiring First American, its subsidiaries, direct operations and issuing agents to comply with the FinCEN GTO for Covered Transactions beginning August 28, 2016 and ending February 23, THEREFORE, UNLESS AND UNTIL YOU POSSESS THE INFORMATION NECESSARY TO COMPLY WITH THE GTO PRIOR TO CLOSING THE TRANSACTION, YOU ARE PROHIBITED FROM ISSUING FIRST AMERICAN TITLE INSURANCE POLICIES IN A COVERED TRANSACTION. In addition, First American requires you to do the following: 1. Commitment and/or Preliminary Report Requirement Every Commitment For Title Insurance and/or Preliminary Report, involving residential property in the Counties or Boroughs described above, where the purchase price is unknown or where the purchase price meets the threshold stated in the GTO, must contain the following exception in the preliminary report or the following requirement in the requirements section in Part 1 of Schedule B of the commitment: This transaction may be subject to the FinCEN Geographic Targeting Order affecting residential sale transactions. This issuing agent must be provided with information prior to closing sufficient to determine if IRS/FinCEN Form 8300 must be completed and filed and must be provided information sufficient to meet the records retention requirements of the FinCEN Geographic Targeting Order. This transaction will not be insured, and this issuing agent and/or its underwriter will not be involved in a Covered Transaction (as defined by the FinCEN Geographic Targeting Order) until this information is submitted and reviewed by the issuing agent. 2. Determining and Reporting Covered Transactions Title issuing agents must use the Bank Secrecy Act E-Filing System to report all Covered Transactions as required by the GTO. For your convenience, a FinCEN Geographic Targeting Order Covered Transaction Determination Worksheet ( Determination Worksheet ) is provided as Exhibit B. It is recommended that you fill out and keep a copy of this Worksheet in each residential file, even if filing of the Form 8300 is not required. If filing is required as stated in the GTO, a copy of the filed Form 8300 must be submitted to First American along with a copy of the Bank Secrecy Act E-Filing System acknowledgment for the filing to Fincen.8300@firstam.com. Instructions for completing Form 8300 are provided in Exhibit C. The GTO requires a copy of all records relating to compliance with the GTO to be maintained for a period of five years from the last day the GTO is effective (including any renewals of this GTO). 3. Gathering Reporting Information and Documents When the settlement agent is not the issuing agent (i.e. the settlement agent is a lawyer or an independent escrow company) the issuing agent must gather the information and documents sufficient for it to meet the reporting and document retention requirements of the GTO. For your convenience, First American has 2 Beneficial Owner means each individual who, directly or indirectly, owns 25% or more of the equity interests of the Purchaser (Order at III.A.1.i.). However, if the purchaser involved in the Covered Transaction is a limited liability company, then the Covered Business must provide the name, address, and taxpayer identification number of all its members, to the extent not otherwise provided on the Form 8300 (Order at II.B.vi.2.).

4 First American Title Insurance Company PA Standard NA Standard Page 3 of 3 created a FinCEN Geographic Targeting Order Information Transmittal Worksheet that you may use for this purpose. (Attached as Exhibit D). The GTO requires a copy of all records relating to compliance with the GTO to be maintained for a period of five years from the last day the GTO is effective (including any renewals of this GTO). **Republication of Corporate Underwriting Department Communication NA Standard. Contact Info. for Questions: Stacie Wagner Patterson, Esq. John Casaldi, Esq. Lynn Greto, Esq. James Gupko, Esq. Lisa McEntee, Esq. Cynthia Millhouse, Esq. swpatterson@firstam.com jcasaldi@firstam.com lgreto@firstam.com jgupko@firstam.com lmcentee@firstam.com cmillhouse@firstam.com NOTE: This Underwriting Communication is intended for use by title issuing offices, title insurance agents, and approved attorneys of First American Title Insurance Company and any reliance by any other person or entity is unauthorized. While the scope of agency of First American Title Insurance Company agents is limited to the functions of underwriting and the issuance of title insurance policies on First American s behalf and does not include closing or escrow services, First American sometimes provides information and recommendations with regard to its agent s ancillary closing or escrow business as a courtesy to them. Moreover, some communications, depending on whether noncompliance could impact on liability under First American s title insurance policies or closing protection letters, should be considered directives. This Communication is being provided to First American agents with those considerations in mind. This Underwriting Communication should become a permanent part of your records to assure compliance with its requirements.

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9 FinCEN Geographic Targeting Order Covered Transaction Determination Worksheet - Agent Transaction Information Name of Title Issuing Agent Person completing worksheet Phone: Cell Phone: Fax: Title Issuing Agent ejacket or Jacket #: First American Policy # Date of Closing: Property Name of outside settlement agent or attorney (if any) Person providing information Order Number: Phone: Fax: Copies of identification documents and other relevant information must be saved in the Issuing Agent s file. Covered Transaction Determination (A transaction is a covered transaction if all 5 questions contain at least one Yes answer.) Note: If a No answer is given to any of questions 1-4 it is not necessary to answer the remaining questions. 1. Is the subject property in one of the following Counties and the purchase price equal to or over the amount shown? Yes No CA Los Angeles - $2 million FL Broward - $1 million NY Bronx - $1.5 million CA San Diego - $2 million FL Miami-Dade - $1 million NY Brooklyn - $1.5 million CA San Francisco - $2 million FL Palm Beach - $1 million NY Manhattan - $3 million CA San Mateo - $2 million NY Queens $1.5 million CA Santa Clara - $2 million TX Bexar - $500,000 NY Staten Island - $1.5 million 2. Is the subject property residential? 1 Yes No 3. Is the purchaser a corporation, limited liability company, partnership or similar business entity, whether formed under the laws of a state or the United States or a foreign jurisdiction? Yes No 4. Is the purchase made without a loan from an institutional lender? Yes No 5. Was any of the purchase price, including the earnest money deposit, paid through the use of the following? a. Currency (bills or coins); Yes No b. Cashier s check; Yes No c. Certified check; Yes No d. Traveler s check; Yes No e. Money order in any form; Yes No f. Business Check; or Yes No g. Personal Check Yes No Note: Payments from the purchaser to a party representing the seller or purchaser (i.e. an attorney or real estate agent) or directly to the seller using one of the listed forms of payment require a Yes answer. Check the item below that applies and send any required documents to First American: (1) by secure to Fincen.8300@firstam.com; (2) by U.S.P.S. to First American, P.O. Box 27751, Santa Ana, CA 92799; or (3) by FAX to Form 8300 Submission Required If questions 1 to 5 above ALL contain at least one Yes answer then a FinCEN Form 8300 must be completed and submitted to FinCEN via the Bank Secrecy Act E-filing system. Additionally, to evidence compliance to First American, send the following to First American within 5 business days of closing: (a) A copy of Form 8300 with Parts I, II, III and IV completed; and (b) A copy of the Bank Secrecy Act E-Filing System acknowledgment for the filing. You must provide to the purchasing entity s beneficial owner(s) the annual statement required by 26 C.F.R I -1 on or before January 31 of the year following the calendar year in which the transaction closed. No Form 8300 Submission Required If questions 1 to 5 above DO NOT ALL contain at least one Yes answer, then Form 8300 need not be submitted to FinCEN. It is recommended that a copy of this worksheet be retained in your file. 1 Residential property is defined as real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families.

10 Sample with Instructions - 3 Member LLC Page 1 Top Parts I and II Part II Purchasing Entity s Name and Address GTO Para. II.B.2.ii. Note: The purchaser will always be an entity pursuant to GTO Para. II.A.2.i. Check this box because the Beneficial Owners of the purchasing entity will be listed in additional Part II sections on Page 2 and in the comments section GTO Para. II.B.2.ii. Part I - Individual Primarily Representing Purchaser. Identity of the individual primarily responsible for representing the Purchaser. The individual primarily responsible for representing the Purchaser means the individual authorized by the entity to enter legally binding contracts on behalf of the entity. (See FinCEN FAQs 2/1/2016.) The Covered Business must obtain and record a copy of this individual s driver s license, passport, or other similar identifying documentation. A description of such documentation must be provided in Field 14. GTO Para. II.B.2.i.

11 Field 28 Date of Closing GTO Para. II.B.2.iv.1. Sample with Instructions 3 Member LLC Page 1 Bottom Parts III and IV Field 29 Total Amount Transferred in form of Monetary Instrument GTO Para. II.B.2.iv.2. Note: Business checks and personal checks are included. GTO Para II.A.2.iv. Field 30 Multiple Monetary Payments. Check box if amount in Item 29 was received in more than one payment. Form 8300 instructions. Field 31 Total Purchase Price of Covered Transaction GTO Para. II.B.2.iv.3. Part IV The Covered Business that reported the transaction. GTO Para. II.B.2.v. Field 33 Type of Transaction Check box b Real property purchased. Form 8300 Instructions. Field 42 The form must be signed by an individual who has been authorized to sign for the Covered Business (i.e. First American or its agent). Form 8300 Instructions. Fields 43, 44 and 45 must also be completed. Field 32 Amount of Monetary Instruments Enter the type and amount of the Monetary Instrument in U.S. Dollars. Form 8300 Instructions. Note: Currency is bills and coins. Caution: Don t forget Issuer s names and serial numbers. Because business checks and personal checks do not appear in field 32 it is suggested that they be included in the Comments section of the form with a reference to the Comments section in field 32. Field 34 Address of Real Property involved in the Covered Transaction GTO Para. II.B.2.iv.4.

12 Sample with Instructions 3 Member LLC Page 2 Top Additional Part I Additional Parts I It is unlikely the additional Parts 1 will be needed because the GTO requires Part I to contain the identity of the individual primarily responsible for representing the Purchaser.

13 Sample with Instructions 3 member LLC Page 2 Bottom Additional Parts II and Comments Additional Parts II - Beneficial Owner(s) of the Purchaser Name and Address. (See an example multi-tiered entity on the next page.) Enter the required information. See Form 8300 Instructions for guidance when a TIN is unavailable and for exceptions to the requirement to provide a TIN. Must obtain and record a copy of the Beneficial Owner(s) driver s license, passport, or other similar identifying documentation and provide a description of such documentation in Field 27. GTO Para. II.B.2.iii. Beneficial Owner means each individual (including the individual listed in Part I) who, directly or indirectly, owns 25% or more of the equity interests of the Purchaser. GTO Para. III.A.1.i. For LLCs all Beneficial Owners must be reported. For corporations put the first 2 Beneficial Owners names in Part II and the names of all the remaining Beneficial Owners in the comments section. GTO Para. II.B.2.iii. For limited liability companies put the first 2 members names in Part II and then list all the members in the comments section (including those listed in Part II) GTO Para. II.B.2.iii and II.B.2.vi.2. See the charts on the following pages for examples. If three or more Beneficial Owners must be reported use the Comments section. Form 8300 Instructions. Comments Section: 1. Unique identifier for the GTO = REGTO Enter REGTO as a unique identifier. GTO Para II.B.2.vi.1. (The same identifier is used for all counties.) 2. LLC Purchasers If the Purchaser is a LLC then the name address and taxpayer identification number of all its members must be provided. GTO Para II.B.2.vi.2. (This must be done even if the first 2 names were provided in the additional Parts II above.) 3. Covered Business Name If the Form 8300 is being filed by an agent of the Covered Business, then the name of the covered business must be included. GTO Para II.B.2.vi Business and Personal Checks Because business checks and personal checks do not appear in field 32 it is suggested they be included in the comments section.

14 Sample Corporation 3 Beneficial Owners (i.e. over 25%) Page 1

15 Sample Corporation 3 Beneficial Owners (i.e. over 25%) Page 2

16 ABC Corporation 8300-Part II-Pg.1 Sam Smith (30%) 8300-Part II-Pg.2 First Entry ABC LLC (50%) 8300-Not Reported Joe Jones (20%) 8300-Not Reported Tom Lee (10%) 8300-Part II-Pg.2 Second Entry Mary Lee (10%) 8300-Comments-Pg.2 First Entry Rick Ramos (80%) 8300-Comments-Pg. 2 Second Entry 1. ABC Corporation is the Legal Entity purchasing the property and is reported in Part II on Page 1 of Form Sam Smith is an individual who directly owns 25% or more of the equity interest of the purchaser and is reported in Part II on Page 2 of Form ABC LLC is not an individual and is therefore not reported. 4. Joe Jones is an individual who directly owns less than 25% of the equity interest of the purchaser and is not reported. 5. Tom Lee, Mary Lee and Rick Ramos each indirectly own an interest in the purchaser because they are members of ABC LLC. Because all members of an LLC must be reported Tom is reported in Part II on Page 2 and Mary and Rick are reported in the Comments section of Page 2.

17 ABC LLC 8300-Part II-Pg.1 Sam Smith (30%) 8300-Part II-Pg.2 First Entry ABC Corp. (50%) 8300-Part II-Pg.2 Second Entry Joe Jones (20%) 8300-Comments-Pg.2 First Entry Tom Lee (50%) 8300-Comments-Pg.2 Second Entry Mary Lee (40%) 8300-Comments-Pg.2 Third Entry Rick Ramos (10%) 8300-Comments-Pg.2 Fourth Entry 1. ABC LLC is the Legal Entity purchasing the property and is reported in Part II on Page 1 of Form Sam Smith is a member of the LLC and is reported in Part II on Page 2 of Form ABC Corporation is a member of the LLC and is reported in Part II of Page 2 of Form Joe Jones is a member of the LLC and is reported in the Comments section on Page 2 of Form Tom, Mary and Rick are shareholders of ABC Corporation and thus are indirect members of ABC LLC and are all reported in the Comments section on Page 2 of Form 8300.

18 FinCEN Geographic Targeting Order Information Transmittal Worksheet (Note: It is NOT necessary to complete the address fields if the information is on a legible copy of the government issued ID that will be submitted.) SETTLEMENT AGENT INFORMATION (i.e. Law Firm, Escrow Company, etc.) Settlement Agent Entity Name Settlement Agent Individual s Name Phone Number Address I declare that to the best of my knowledge the information I have furnished is true, correct, and complete. Signature Date REPORTING IS NOT REQUIRED UNDER THE FinCEN GEOGRAPHIC TARGETING ORDER - REASON Reporting is not required because: INDIVIDUAL PRIMARILY REPRESENTING PURCHASER (Defined as the individual authorized by the entity to enter into legally binding contracts.) Legible copy of government issued identification (i.e. passport, driver s license, etc.) Taxpayer Identification Number (if none check none) Occupation None Last Name First Name M.I. Date of birth Country of Address (if not U.S.) If address or ID information is not shown (or is not legible) on the government issued identification, please complete below Alien identification description Alien ID Issued by Alien ID number PURCHASING ENTITY S NAME & ADDRESS Taxpayer Identification Number (if none check none) Name of purchasing entity None Type of Legal Entity Ltd. Liability Co., Corporation, Partnership, Other Doing business as (DBA) name Country of Address (if not U.S.) DATE OF CLOSING AMOUNTS PAID WITH IDENTIFIED MONETARY INSTRUMENTS PURCHASE PRICE Date of Closing Total Amt. Paid by below instruments Paid in more than 1 payment Total Purchase Price $ Yes No $ Amount of Monetary Instrument (in U.S. dollar equivalent) U.S. currency $ Amt. in $100 bills or higher $ Foreign currency $ Country: Cashier s check(s) $ Money order(s) $ Certified check(s) $ Traveler s check(s) $ Business check(s) $ Personal check(s) $ Issuer s name(s) Serial number(s) 1 1 For Business Checks or Personal Checks enter the account number and check number. Page 1 of 4

19 PROPERTY ADDRESS County Block & Lot Number (NY only) NAMES OF BENEFICIAL OWNERS (AS DEFINED) & NAMES OF ALL MEMBERS OF LIMITED LIABILITY COMPANIES 1. For Corporations, Partnerships or Similar Business Entities each INDIVIDUAL who, directly or indirectly, owns 25% or more of the equity interests of the Purchaser must be listed below. 2. For Limited Liability Companies all members must be listed below. (Note: It is NOT necessary to complete the address fields if the information is on a legible copy of the government issued ID submitted to the title underwriter.) Legible copy of government issued identification (i.e. passport, driver s license, etc.) Taxpayer Identification Number (if none check none) Occupation None Last Name First Name M.I. Date of birth Country of Address (if not U.S.) If address or ID information is not shown (or is not legible) on the government issued identification, please complete below Alien identification description Alien ID Issued by Alien ID number Legible copy of government issued identification (i.e. passport, driver s license, etc.) Taxpayer Identification Number (if none check none) Occupation None Last Name First Name M.I. Date of birth Country of Address (if not U.S.) If address or ID information is not shown (or is not legible) on the government issued identification, please complete below Alien identification description Alien ID Issued by Alien ID number Legible copy of government issued identification (i.e. passport, driver s license, etc.) Taxpayer Identification Number (if none check none) Occupation None Last Name First Name M.I. Date of birth Country of Address (if not U.S.) If address or ID information is not shown (or is not legible) on the government issued identification, please complete below Alien identification description Alien ID Issued by Alien ID number Legible copy of government issued identification (i.e. passport, driver s license, etc.) Taxpayer Identification Number (if none check none) Occupation None Last Name First Name M.I. Date of birth Country of Address (if not U.S.) Page 2 of 4

20 If address or ID information is not shown (or is not legible) on the government issued identification, please complete below Alien identification description Alien ID Issued by Alien ID number Legible copy of government issued identification (i.e. passport, driver s license, etc.) Taxpayer Identification Number (if none check none) Occupation None Last Name First Name M.I. Date of birth Country of Address (if not U.S.) If address or ID information is not shown (or is not legible) on the government issued identification, please complete below Alien identification description Alien ID Issued by Alien ID number Legible copy of government issued identification (i.e. passport, driver s license, etc.) Taxpayer Identification Number (if none check none) Occupation None Last Name First Name M.I. Date of birth Country of Address (if not U.S.) If address or ID information is not shown (or is not legible) on the government issued identification, please complete below Alien identification description Alien ID Issued by Alien ID number Legible copy of government issued identification (i.e. passport, driver s license, etc.) Taxpayer Identification Number (if none check none) Occupation None Last Name First Name M.I. Date of birth Country of Address (if not U.S.) If address or ID information is not shown (or is not legible) on the government issued identification, please complete below Alien identification description Alien ID Issued by Alien ID number Legible copy of government issued identification (i.e. passport, driver s license, etc.) Taxpayer Identification Number (if none check none) Occupation None Last Name First Name M.I. Date of birth Country of Address (if not U.S.) If address or ID information is not shown (or is not legible) on the government issued identification, please complete below Alien identification description Alien ID Issued by Alien ID number Page 3 of 4

21 If there are more names to enter complete pages 2 and 3 of an additional worksheet or photocopy this sheet. Page 4 of 4