FinCEN Reporting Requirements

FinCEN Reporting Requirements

New Reporting Requirements for Sarasota-Manatee Business Entities Purchasing Residential Property in Sarasota and Manatee Counties

This article is meant for educational purposes only. It is not intended to serve as legal advice and should not be used as a substitute for consultation with an attorney.

Posted by: Garret T. Barnes, Esq. on Thursday, June 20, 2024
Source: ELEVATE Magazine, Real Estate Association of Sarasota and Manatee

The Financial Crimes Enforcement Network (FinCEN) is primarily responsible for safeguarding the financial system of the U.S. FinCEN enforces and oversees laws to combat money laundering, terrorism, and related crimes. This article outlines two reporting requirements, The Currency Transaction Report (CTR) and The Corporate Transparency Act (CTA).

FinCEN’s Geographic Targeting Order (GTO) extends to incorporate 8 more Florida counties, including our surrounding area of Sarasota and Manatee County. This GTO requires closing companies to file a CTR if all 6 elements apply to the transaction. These elements are:

  1. The purchased property is residential. This includes single-family homes, individual condominium units, and cooperatives primarily designed to be occupied by one to four families.
  2. The property is located in Miami-Dade, Broward, or Palm Beach County and is purchased on or after October 22, 2023, or is located in Hillsborough, Pasco, Pinellas, Manatee, Sarasota, Charlotte, Lee, and Collier County and is purchased on or after November 21, 2023.
  3. The purchase price of the property is $300,000 or greater.
  4. The buyer is a legal business entity. For purposes of the CTR, a business entity is a corporation, LLC, similar entity, or foreign entity registered to do business in the U.S. However, a business entity with common stock listed on a securities exchange regulated by the SEC, or a self-regulatory organization that is registered with the SEC, or an entity that is solely owned by such a business is not considered a legal business entity that must complete this report.
  5. The property is purchased without a bank loan and without another source of external financing given by a financial institution that is under the duty to sustain an anti-money laundering program and the obligation to report any suspicious transactions under FinCEN regulations.
  6. Any portion of the transaction, including the earnest money deposit, is paid for by wire, money order, cash, virtual currency, cashier’s check, traveler’s check, business check or personal check. Therefore, if a transaction meets the criteria outlined above, the closing company must file a CTR within 15 calendar days of the transaction’s completion with FinCEN’s BSA E-Filing System. Failure to oblige may result in both civil and criminal penalties.

The CTA is a federal law designed to detect and prevent money laundering and other illegal activities conducted through business entities. The CTA requires reporting companies to submit a report known as the Beneficial Ownership Information Report (BOIR) to FinCEN that discloses each beneficial owner and company applicant. From these reports, an aggregate database will be created to identify and isolate shell companies that have been used to conduct illegal activities.

For purposes of the BOIR, a reporting company is virtually every corporation, limited liability company, limited partnership, and other business entities created/registered in the US, except entities that are already registered with, licensed by, or regulated with a federal government agency. The entities exempt from this requirement can be found in CFR 1010.380(c)(2). Entities in existence before January 1, 2024, have until January 1, 2025, to file the BOIR. Entities formed on January 1, 2024, and after, have 90 days from the date of formation to file this report.

The reporting company must disclose each beneficial owner, that is any individual who owns or controls 25% or more of the ownership interest of the company or any individual who exercises substantial control over the company. The CTA’s definitions of beneficial owner and substantial control can be found in 31 CFR 1010.380(d). The reporting company must also disclose the company applicant, which is the individual who directly files the formation document of a U.S. reporting company or who directly files the registration document in the US for a foreign reporting company.

If the BOIR reporting obligations are violated, the reporting company, its senior officers, and the individual who willfully files a fraudulent BOIR may be subject to both civil and criminal penalties.

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