U.S. Treasury Renews Targeting In South Florida For Transactions Over 10K

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According Idsupra.com FinCEN (Treasury Department Financial Crimes Enforcement Network) just extended its Geographic Targeting Order (GTO), which is focused on trade-based money laundering schemes in South Florida.

What Is a GTO?

A GTO is an order issued by the US Secretary of the Treasury. The order instructs all domestic financial institutions within specific geographic coordinates, to report transactions above a specified amount. The instructions are authorized by the Bank Secrecy Act in 31 U.S.C.§ 5326(a).  The USA Patriot Act extended the 60-day limitation of § 5326(a) to 180-days.

Under Normal Conditions

Under normal conditions non-financial trade or businesses that receive more than $10,000 in cash in a single transaction or multiple related transactions are required to file Form 8300 with FinCEN.

The GTO lowers the amount from $10,000 to $3,000.  Covered businesses have to report these transactions along with details about the deals and the persons involved.  The companies are all notified via personal service or certified mail, and failure to adhere to the instructions result in significant criminal and civil penalties.

 

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The Original GTO

When the GTO was first announced it was related to the investigation of trade-based money laundering on behalf of drug cartels like Sinaloa and Los Zetas. The laundering took place through firms in South Florida. FinCEN served the original GTO on an estimated 700 electronics exporters in Miami.  These firms were criminally investigated by the US Immigration and Customs Enforcement’s Homeland Security Investigations and the Miami Dade State Attorney’s Office South Florida Money Laundering Strike Force.

The investigation uncovered that some of these exporters are exploited for money laundering purposes. Drug proceeds in the US are converted into goods shipped to South America, where it is sold for local currency, which is then transferred to the drug cartels.

The GTO Of May 14TH 2019

Now FinCEN extended its geographic targeting order that requires titles insurance companies to report covered transactions (qualified real estate transactions) in South Florida and many other locations.

This GTO originated in 2016 with the stated goal to detect the acquisition of residential real estate by persons involved in illicit enterprises to help to track the illegal funds and further criminal activity.

What Will Trigger The Obligation To Report?

A title insurance company must report a transaction only if:

  • The deal is an all-cash and no finance sale
  • It is for the acquisition of residential real estate
  • It s for an amount of $300,000 or more
  • It is concluded by a legal entity (a corporation, limited liability company, partnership, or any business entity formed under the laws of any domestic or foreign jurisdiction).

When a report is triggered, it must:

  • Be filed within 30 days after the closing of the deal
  • It must include details of the legal entity buying the property
  • It must include details of the person representing the legal entity
  • It must consist of the beneficial owner of the legal entity
  • It must include a currency transaction report which reports details of all parties involved – including third parties.

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Put Differently

What it boils down to are that secret shell companies that buy luxury homes with cash in South Florida amongst other areas. Disclose their actual owners to the government.

Drug dealers and money launderers often use shell companies which do not have to disclose its owners to buy expensive real estate, while keeping their identities hidden from law enforcement.  In South Florida for example, illicit money is pouring in at such a rate that it is partly responsible for the rising house prices in the area.

Suspicious Individuals

Over the past year more than 30 percent of home deals that were reported under GTOs were linked to individuals subject to suspicious activity reports filed by banks. Initially the GTO was limited due to its legal inability to monitor wire transfers. An Act of Congres changed this in the meantime, and now Treasury can legally watch wire transfers, which is the financial mechanism used by most wealthy buyers when they purchase new homes.

In South Florida

In South Florida the rules kick in when shell companies buy homes valued above $1,000,000.  The feds are watching buyers of expensive homes with lots of cash and plenty of foreign owners.  In February of 2019, according to the Miami Association of Realtors, sales of condos priced above $1 million rose 31 percent; in January, it rose 58%. Click here to email us and start your project.

Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services.  This article cannot serve as a substitute for such professional services or advice.  Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation.  This article is subject to change at any time and for any reason.

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Fulton Abraham Sanchez, CPA

Fulton Abraham Sánchez, CPA I am Certified Public Accountant, specialized in Tax Planning & Offshore Strategies for Real Estate, Hedge/Equity Funds, Fintech, Crypto, Expats, IRS Debt Resolution. You can email me fa@fascpaconsultants.com and follow us on Facebook : FAS CPA & Consultants.

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