Friday, October 28, 2016


If you are not in the real estate business, you may think that a GTO is a 1960s-era muscle car. The original FinCEN Geographic Targeting Order required title insurance companies to vet and report all-cash transactions ($1m in Miiami-Dade County, $3m in New York City-Manhatten); it has since been expanded to include other areas of the United States, where real estate often fetches unusually high sales prices. The identity of the beneficial owner must be verified by the title company before the transaction can close.

For those who thought this was a temporary measure, which would expire, think again. Here in Miami, we are hearing that the GTOs will not only be extended, they will become permanent regulations. Sales of big-ticket real estate items have declined a bit in Miami; was that due to the new reporting requirement ?

Not only that but, the story is it will be expanded. Currently, cash, cashier's checks, money orders and endorsed travelers' checks are covered. It is anticipated that it will shortly include wire transfers (which many buyers have resorted to, to evade the GTO),  and payment by personal & business checks.

The GTO is here to stay, which means that dodgy foreign buyers will either purchase in a non-GTO city, or be forced to qualify for a mortgage, to avoid the disclosure requirements, and you know how commercial banks are about Know Your Customer, when they lend large sums of money, against pricey, (and perhaps overpriced) real estate, where the buyer will not be residing on the premises. The answer is, they won't.

I tip my hat to FinCEN, for a program that actually works.

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