FINCEN - and Residential Real Estate!

Beginning in late 2025 and early 2026, sweeping new federal reporting requirements will fundamentally change how certain residential real estate transactions are handled across the United States. The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, has finalized its Residential Real Estate Reporting Rule—commonly referred to as the RRE Rule—targeting money laundering risks in non-financed property transfers.

The new framework significantly expands anti-money laundering (AML) oversight into areas of the real estate market that historically operated with limited federal reporting obligations, per Miguel Benevides Jr., Senior Business Development at Stewart Title.

A Long-Awaited Shift in Real Estate Oversight

The rule’s origins trace back decades. The Bank Secrecy Act of 1970 established anti-money laundering and counter-terrorism financing programs for financial institutions – per Kyra Krick Smith, Vice President of Business Development at Alamo Title.

In 1988, “persons involved in real estate closings and settlements” were included in the Anti-Drug Abuse Act, though rulemaking was deferred for years, per Smith.

In 2024, FinCEN finalized the Residential Real Estate Reporting Rule, requiring settlement agents to report specific transaction information or face civil and criminal penalties, including potential imprisonment, per Smith.

The rule represents a major policy expansion. Unlike prior Geographic Targeting Orders (GTOs), which applied only in select high-risk markets, the new requirements will apply nationwide, per Denise Vincent Dodd, Business Development at First American Title.

When the Rule Applies

According to industry guidance, the reporting obligation is triggered when three conditions are met:

• The transaction involves residential property.

• The buyer (transferee) is a legal entity or trust.

• The transaction is non-financed, meaning there is no traditional bank mortgage with an AML program in place, per Heather Rice, Vice President of Sales at Priority Settlement Group of Texas.

The rule targets all-cash purchases and non-conventional financing, including private, hard money, or seller financing, per Dodd.

Starting December 1, 2025, settlement agents will report qualifying residential real estate transactions when the buyer is an entity or trust and no lender with an AML program is involved, per Smith.

Other industry materials emphasize a March 1, 2026 implementation date for required filings nationwide, per Smith

Regardless of the exact transition timeline, the message to industry professionals is clear: preparation must begin now.

Who Must File?

Under the rule’s hierarchy, the settlement agent is generally designated as the primary “Reporting Person”, per Smith.

However, the regulation outlines six additional potential reporting parties, including:

• The person preparing the closing statement

• The individual filing the deed

• The title insurance underwriter

• The party disbursing the largest amount of funds

• The title evaluator

• The deed preparer.

The settlement agent may designate another party in the hierarchy, but the designation must be made in writing for each transaction and agreed to by both parties, says Smith.

Industry guidance warns that compliance cannot be optional. Settlement agents “do not have a choice,” and non-compliance can result in civil and criminal penalties, says Smith.

What Information Must Be Reported?

The rule requires significantly expanded data collection. Settlement agents will gather information beyond what is traditionally required at closing.

Required data includes:

• Reporting person information

• Closing date

• Property address and legal description

• Buyer (transferee) information

• Authorized signers and beneficial owners

• Seller (transferor) information

• Trustee information if the seller is a trust

• Purchase price

• Payment information, including bank account details used to source funds

• Detailed payment data for funds paid on behalf of the buyer. Says Smith

A separate compliance guide clarifies that at least one transferee must be a legal entity, LLC, corporation, partnership, trust, trustee, or other non-natural person, says Smith

For entity buyers, reporting must include individuals who own 25% or more or who exercise substantial control, says Rice.

If another company owns part of the entity, the real individuals behind that company must also be identified, says Rice

Trust buyers face similar transparency requirements. Trustees, certain beneficiaries, and grantors who retain revocation powers must be disclosed, says Rice

For sellers, basic identifying information—including taxpayer identification numbers—may also be required, says Rice.

The Trigger Decision Process

A visual compliance flow chart provided in industry materials outlines how professionals determine whether a FinCEN report is required, per Dodd.

The process begins by confirming whether the transaction involves residential property (including 1–4 family structures, condos, townhomes, co-ops, or land intended for such development), per Dodd.

Next, professionals evaluate whether the transaction is non-financed and whether a lender with an AML program is involved. If a qualifying AML lender participates, reporting may not be required, per Dodd.

There are exemptions, including transfers due to death, divorce, bankruptcy, court supervision, or certain 1031 exchanges, per Dodd.

Additionally, specific entity exemptions apply for banks, credit unions, securities issuers, governmental authorities, and other regulated financial entities, per Dodd.

If no exemption applies and the buyer is an entity or trust without AML-backed financing, the transaction becomes reportable, per Dodd.

Impact on Agents, Attorneys and Investors

The rule affects multiple stakeholders.

Real estate agents are not responsible for filing reports, but they must educate buyers using entities or trusts that personal ownership information will be required, per Dodd.

Industry guides suggest agents use clear talking points, emphasizing that “LLC or trust buyer plus no bank mortgage usually means a FinCEN report”

Attorneys preparing deeds or handling closings may also fall within the reporting hierarchy, per Smith.

Frequently purchase through LLCs or trusts will experience the most noticeable changes. All-cash purchases—often favored for speed and privacy—now trigger federal transparency requirements.

Industry notices stress that transactions cannot close until required information is collected, per Rice.

Missing or incorrect information could delay closings

FinCEN’s New Real Estate Report…

Operational Changes Underway

Title companies and settlement providers are developing new workflows, internal compliance leads, and fee structures in anticipation of implementation, per Smith.

Some providers are partnering with secure third-party platforms to collect required information electronically. Buyers and sellers receive secure links to short online forms, designed to take approximately five minutes for simple structures, per Rice

The information is not public record but is filed directly with FinCEN

A National Compliance Era

FinCEN estimates that nearly one million transactions per year could be affected, per Rice.

Unlike earlier targeted enforcement efforts, the new reporting framework standardizes AML oversight across all states, per Dodd.

Industry stakeholders describe the rule as “a significant shift” but emphasize readiness efforts to avoid disruption, per Dodd.

As the real estate industry moves closer to full implementation, professionals are advising clients early, updating internal processes, and reinforcing documentation standards.

The message from regulators and industry leaders alike is unambiguous: transparency in residential real estate transactions is no longer optional. For entity and trust buyers operating without traditional bank financing, federal reporting will soon become a routine part of closing, per Benevides.

The writer, Ojas Taskar, would like to give Special thanks to:

Kyra Krick Smith, Vice President of Business Development at Alamo Title

Heather Rice, Senior Vice President of Sales at Priority Settlement Group of Texas

Denise Drexler Dodd, Business Development at First American Title

Miguel Benevides, Jr. Senior Business Development at Stewart Title