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FinCEN to Continue to Monitor S.D. Residential Real Estate Purchases for Possible Money Laundering Activity

Federal regulators remain concerned about money laundering activity in the San Diego real estate market.

The Financial Crimes Enforcement Network (FinCEN) announced Aug. 22 it has again extended its order requiring U.S. title insurance companies to identify who is behind purchases of luxury homes through shell companies.

In San Diego, that means title insurance companies must identify those who make buy residential property valued at $2 million or more.

“Such transactions are vulnerable to abuse by criminals seeking to launder illegal proceeds and mask their identities,” the agency said.

FinCEN also announced it had added the city and county of Honolulu, Hawaii, to its list of geographic areas targeted by its orders. In addition to San Diego, the areas targeted include the boroughs of New York City; Miami-Dade County and the two counties immediately north, Broward and Palm Beach; Los Angeles County; San Francisco, San Mateo and Santa Clara counties; and Bexar County in Texas, which includes San Antonio.

The agency also expanded the type of transactions captured by its order to include those involving wire transfers.

“Through this advisory and other outreach to the private sector, FinCEN, industry, and law enforcement will be better positioned to protect the real estate markets from serving as a vehicle to launder illicit proceeds,” said Jamal El-Hindi, acting director of FinCEN.

The first such rules, called geographic targeting orders (GTOs), were issued in January of 2016. Then they covered just certain types of purchases in Manhattan and Miami. Six months later the agency reissued those orders and extended coverage to the areas currently targeted, including San Diego.

Data gathered about transactions covered by the orders reveal about 30 percent of the transactions reported involve someone who was previously the subject of a suspicious activity report, FinCEN said.

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