FinCEN Updates: Beneficial Ownership and GTOs
April 30, 2024
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) in recent weeks unveiled updates to information on Beneficial Ownership Information (BOI) Reporting and issued the periodic renewal of Geographic Targeting Orders (GTOs) for certain all-cash residential real estate transactions.
Why it matters: FinCEN oversees and implements many of the anti-money laundering (AML) and illicit financial activity regulations and policies.
- FinCEN is also implementing the Corporates Transparency Act, which puts a nationwide requirement on certain legal entities to report natural person beneficial owners to a federal database.
- Reporting requirements have begun for certain legal entities, though access to the FinCEN database for financial instructions is not expected until Spring 2025 (more below).
On April 17, FinCEN renewed its GTO that requires title companies to collect beneficial ownership information on legal entities party to all cash residential real estate transactions in certain metropolitan areas.
- The GTOs cover all cash residential transactions above $300,000 in certain counties and major U.S. metropolitan areas in California, Colorado, Connecticut, Florida, Hawaii, Illinois, Maryland, Massachusetts, Nevada, New York, Texas, Washington, Virginia, and the District of Columbia.
- FinCEN has considered expanding GTOs to all cash commercial real estate transactions, but has not yet done so.
Beneficial Ownership FAQ Updates: FinCEN updated and issued additional responses in its BOI Frequently Asked Questions.
Notably, the agency outlined timing for access to the federal database for federal agencies and financial institutions. FinCEN will take a phased approach to providing access to beneficial ownership information, but financial institution access is more than a year out.
- The first phase, expected to begin in the spring of 2024, will be a pilot program for a handful of Federal agency users.
- The second phase, expected in the summer of 2024, will extend access to Treasury offices and other Federal agencies engaged in law enforcement and national security activities that already have memoranda of understanding for access to Bank Secrecy Act information.
- The third phase, expected in the fall of 2024, will extend access to additional Federal agencies engaged in law enforcement, national security, and intelligence activities, as well as to State, local, and Tribal law enforcement partners.
- The fourth phase, expected in the winter of 2024, will extend access to intermediary Federal agencies in connection with foreign government requests.
- The fifth phase, expected in the spring of 2025, will extend access to financial institutions subject to customer due diligence requirements under applicable law and their supervisors.
Yes, but: The BOI reporting requirements are currently in legal jeopardy as a federal district court in the Northern District of Alabama ruled that the Corporate Transparency Act exceeds the Constitution’s limits. The Justice Department is appealing the ruling, and FinCEN has suspended compliance obligations just for the parties to the lawsuit.
- Congressional Democrats led by Rep. Maxine Waters (D-CA) are urging the Eleventh Circuit to resurrect the law.
- Waters and four Senators filed an amicus brief on Monday supporting the IRS and pushing for the lower court’s decision to be reversed, calling the CTA a “routine exercise of core authorities enumerated in Article I of the Constitution.”
Contact David McCarthy (dmccarthy@crefc.org) with questions.