Dear Editor,

Recently, in the United States, the Financial Crimes Enforcement Network (FinCEN), which is akin to the Financial Investigations Division (FID) in Jamaica, renewed previous geographic targeting orders (GTOs) through to April 2023 and added some specific cities in the state of Texas.

The geographic areas covered in the GTOs include the Florida counties of Miami-Dade, Broward, and Palm Beach; all five boroughs of New York City; and the California counties of San Diego, Los Angeles, San Francisco, San Mateo, and Santa Clara.

The GTOs require that title insurance companies that are integral to the US real estate market ecosystem obtain and document identifying and other information of the legal entity and the beneficial owner(s) of certain real estate purchases in the specified geographic locations. The beneficial owner in the transaction refers to each individual of a legal entity who, directly or indirectly, owns 25 per cent or more of the equity interests of the legal entity making the purchase.

The requirement to report to FinCEN is limited to cash purchases of residential properties of $US300,000 or more, which are made without a bank loan or other similar form of external financing, and where such purchases are made, at least in part, using currency, a cashier’s check, a personal cheque, a business cheque, a money order, a funds transfer, or virtual currency.

Globally influential bodies, such as the Financial Action Task Force (FATF), the Wolfsberg Group, the World Bank, the Bank for International Settlements (BIS), the Egmont Group et al, and most jurisdictions, including Jamaica, have established that real estate transactions, in general, have inherently high money laundering risk. This is not to say that most real estate transactions are undertaken by people with criminal intent, such an assertion would be ridiculous in the extreme. However, the empirical evidence, both globally and in Jamaica, points to real estate purchases as a growing concern as a vehicle for laundering illicit funds from both domestic and overseas sources.

When real estate transactions are conducted as cash sales, wherein the buyer wants to make the purchase without a mortgage loan or other established secured financing mechanisms, the money laundering risk is very high.

If it is to be believed that Jamaica is, for good reason or not, a highly cash-intensive economy, and that without more, there are few known legitimate reasons for cash purchases of local real estate, especially in the moderate to high-end luxury brackets, should we expect that the FID will be pressing the Parliament to pass legislation that allows for the implementation of “yaad-style” geographic targeting orders?

Christopher Pryce

christopherjmpryce@yahoo.com