UNDERWRITING COMMUNICATION Issued by First American Title Insurance Company

UNDERWRITING COMMUNICATION Issued by First American Title Insurance Company NA-2016-016–Standard (AGENTS ONLY) Title: FinCEN Geographic Targeting Ord...
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UNDERWRITING COMMUNICATION Issued by First American Title Insurance Company

NA-2016-016–Standard (AGENTS ONLY) Title: FinCEN Geographic Targeting Order Issued By: Corporate Underwriting Department Date Issued: August 4, 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, 2017. 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

Standard - FinCen Geographic Targeting Order Page 2 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 financing1; and 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 8300. 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, 2017. 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:

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. 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.).

Standard - FinCen Geographic Targeting Order Page 3 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 [email protected] 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 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). Contact for Additional Information: Contact your First American State Underwriter or Operations Counsel.

Exhibit A

Exhibit B FinCEN Geographic Targeting Order Covered Transaction Determination Worksheet - Agent Transaction Information Name of Title Issuing Agent

Phone:

Person completing worksheet

Cell Phone:

Fax:

E-Mail

Title Issuing Agent eJacket or Jacket #:

First American Policy #

Date of Closing:

Property Address

City

State

Name of outside settlement agent or attorney (if any)

Order Number:

Phone:

Zip

Person providing information

Fax:

E-Mail:

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? 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 1

2.

Is the subject property residential?

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?

5.

Was any of the purchase price, including the earnest money deposit, paid through the use of the following? a. b. c. d. e. f. g.

Currency (bills or coins); Cashier’s check; Certified check; Traveler’s check; Money order in any form; Business Check; or Personal Check

Yes Yes Yes Yes Yes Yes Yes

Yes

Yes

No No No No No No No

Yes

No

No

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 e-mail to [email protected]; (2) by U.S.P.S. to First American, P.O. Box 27751, Santa Ana, CA 92799; or (3) by FAX to 877-255-1972. 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. § 1.6050I -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.

Exhibit C

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.

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.

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 31 – Total Purchase Price of Covered Transaction – GTO Para. II.B.2.iv.3.

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.

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.

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.3. 4. 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.

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

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

ABC Corporation 8300-Part II-Pg.1

Sam Smith (30%) 8300-Part II-Pg.2 First Entry

ABC LLC (50%)

Joe Jones (20%)

8300-Not Reported

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 8300. 2. 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 8300. 3. 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.

ABC LLC 8300-Part II-Pg.1

Sam Smith (30%)

ABC Corp. (50%)

Joe Jones (20%)

8300-Part II-Pg.2

8300-Part II-Pg.2

8300-Comments-Pg.2

First Entry

Second Entry

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 8300. 2. Sam Smith is a member of the LLC and is reported in Part II on Page 2 of Form 8300. 3. ABC Corporation is a member of the LLC and is reported in Part II of Page 2 of Form 8300. 4. Joe Jones is a member of the LLC and is reported in the “Comments” section on Page 2 of Form 8300. 5. 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.

Exhibit D

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 First Name

Settlement Agent Individual’s Name Date of birth Country of Address (if not U.S.) City

Address Phone Number

State

Zip

E-Mail Address Alien ID number

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 Address City

State

Alien identification description

Alien ID number

Alien ID Issued by

Zip

PURCHASING ENTITY’S NAME & ADDRESS Taxpayer Identification Number (if none check none)

None

Type of Legal Entity

Ltd. Liability Co.,

Corporation,

Partnership,

Other

Name of purchasing entity Country of Address (if not U.S.) Doing business as (DBA) name

Country of Address (if not U.S.)

Address

City

State

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

Yes

No

Total Purchase Price

$

Amount of Monetary Instrument (in U.S. dollar equivalent)

U.S. currency Foreign currency

$ $

Amt. in $100 bills or higher $ Country: Issuer’s name(s)

Cashier’s check(s) Money order(s) Certified check(s) Traveler’s check(s) Business check(s) Personal check(s) 1

$ $ $ $ $ $

For Business Checks or Personal Checks enter the account number and check number.

Page 1 of 4

Serial number(s)1

Zip

PROPERTY ADDRESS Address

City

State

County

Block & Lot Number (NY only)

Zip

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) Last Name

None

First Name

Occupation 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 Address City

State

Alien identification description

Alien ID number

Alien ID Issued by

Zip

Legible copy of government issued identification (i.e. passport, driver’s license, etc.) Taxpayer Identification Number (if none check none) Last Name

None

First Name

Occupation 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 Address City

State

Alien identification description

Alien ID number

Alien ID Issued by

Zip

Legible copy of government issued identification (i.e. passport, driver’s license, etc.) Taxpayer Identification Number (if none check none) Last Name

None

First Name

Occupation 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 Address City

State

Alien identification description

Alien ID number

Alien ID Issued by

Zip

Legible copy of government issued identification (i.e. passport, driver’s license, etc.) Taxpayer Identification Number (if none check none) Last Name

Page 2 of 4

First Name

None

Occupation 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 Address City

State

Alien identification description

Alien ID number

Alien ID Issued by

Zip

Legible copy of government issued identification (i.e. passport, driver’s license, etc.) Taxpayer Identification Number (if none check none) Last Name

None

First Name

Occupation 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 Address City

State

Alien identification description

Alien ID number

Alien ID Issued by

Zip

Legible copy of government issued identification (i.e. passport, driver’s license, etc.) Taxpayer Identification Number (if none check none) Last Name

None

First Name

Occupation 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 Address City

State

Alien identification description

Alien ID number

Alien ID Issued by

Zip

Legible copy of government issued identification (i.e. passport, driver’s license, etc.) Taxpayer Identification Number (if none check none) Last Name

None

First Name

Occupation 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 Address City

State

Alien identification description

Alien ID number

Alien ID Issued by

Zip

Legible copy of government issued identification (i.e. passport, driver’s license, etc.) Taxpayer Identification Number (if none check none) Last Name

None

First Name

Occupation 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 Address City

State

Alien identification description

Alien ID number

Page 3 of 4

Alien ID Issued by

Zip

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

Page 4 of 4

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