FinCEN’S New Real Estate Reporting Rule: Historical Context, Compliance Requirements, Legal Challenges and What ACMA Members Need to Know

In August 2024, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) published a sweeping new rule1 aimed at increasing transparency in residential real estate transactions—marking a significant evolution in America’s decades-long effort to combat money laundering and other financial crimes. FinCEN’s Residential Real Estate Rule (RRE Rule) requires certain industry professionals to report information to FinCEN about non-financed transfers of residential real estate to a legal entity or trust.

The RRE Rule is scheduled to take effect on December 1, 2025. The rule will have profound implications for ACMA members, as title companies, settlement agents, and other real estate industry professionals are now on the frontlines of the federal government’s fight against real estate-based money laundering. Industry leaders have criticized the RRE Rule as an onerous and costly administrative burden that will yield few results. Despite a recent federal lawsuit challenging the rule, companies must be prepared to comply.

The Evolution of Anti-Money Laundering Laws and Geographic Targeting Orders in America

To appreciate the significance of the RRE Rule, it is essential to understand the history and evolution of anti-money laundering (AML) laws in the United States. The Bank Secrecy Act (BSA),2 enacted in 1970 and strengthened by subsequent laws like the USA PATRIOT Act,3 established the foundation for financial transparency and reporting obligations to detect and deter money laundering. Over the decades, these laws have expanded in scope to cover a wider range of financial institutions and transactions. The RRE Rule is the latest development in a 55-year evolution of AML laws in the United States and represents a natural progression in this historical trajectory.

So, let’s begin with a brief history.

The Bank Secrecy Act – The Cornerstone of American AML Legislation

In the late 1960s, Congress held a series of hearings into organized crime in the United States. Led by Arkansas Senator John McClellan, the hearings served as the inspiration for Francis Ford Coppola’s fictional account in The Godfather Part II when crime boss Michael Corleone, played by Al Pacino, testifies before Congress. The hearings exposed the extent to which organized crime exploited anonymous financial transactions to conceal illicit profits and ultimately led to the passage of the BSA to improve financial transparency and aid law enforcement.

The BSA was the first comprehensive framework for combating money laundering in the United States. It required financial institutions to assist government agencies in detecting and preventing financial crimes. Its key provisions included mandatory recordkeeping and reporting requirements for certain types of transactions, most notably the Currency Transaction Report (CTR), which requires banks to file reports for any cash transaction exceeding $10,000. The BSA also required banks to maintain records of customers’ identities and transactions that could be useful in criminal, tax, or regulatory investigations. By imposing these obligations, the BSA aimed to create a paper trail that law enforcement could use to uncover patterns of illicit activity, disrupt organized crime networks, and enhance the federal government’s ability to track the movement of funds through the U.S. financial system.

AML’s Legal Maturation: 1986 through September 10, 2001

The BSA sat largely dormant for 15 years until 1985 when First National Bank of Boston pleaded guilty to willfully failing to comply with the BSA by not reporting more than $1 billion in reportable cash transactions. The case exposed the weaknesses of existing financial regulations and spurred Congress to enact stronger anti-money laundering legislation.

In 1986, Congress passed the Money Laundering Control Act (MLCA),4 which established money laundering as a federal crime and the concept of a BSA/AML “program” by directing banks to maintain policies and procedures to monitor BSA compliance. The MLCA also prohibited structuring (engaging in cash transactions just below the $10,000 limit to avoid and evade CTR filings) and introduced civil and criminal forfeiture for BSA violations.

Despite the passage of the MLCA, Congress remained concerned about banks’ permissive approach to money laundering prevention. The threat was particularly acute in the late 1980s and early 1990s with the rise of transnational drug cartels. The clearest example of this threat was embodied by the Bank of Credit and Commerce International (BCCI). BCCI, a global bank with U.S. operations, allegedly banked Iraqi dictator Saddam Hussein, Panamanian dictator Manuel Noriega, and the Medellín Cartel, among other criminals. BCCI was the subject of a salacious U.S. Senate Foreign Relations Committee report detailing the bank’s involvement in money laundering, bribery of foreign officials, arms trafficking, and even the sale of nuclear technologies. The bank was liquidated in 1991 after criminal investigations shed light on the full extent of its fraud, manipulation, and money laundering.

In the wake of the BCCI scandal, Congress passed the Annunzio-Wylie Anti-Money Laundering Act of 1992,5 which required banks to file Suspicious Activity Reports (SARs) and enabled regulators to terminate federal deposit insurance and revoke charters of banks convicted of criminal money laundering. While modest AML advancements continued through the 1990s, in 2000 bank regulators and industry discussed rollbacks to BSA/AML requirements. Those reforms would be forever tabled in September 2001.

The USA PATRIOT Act to the Present

The terrorist attacks of September 11, 2001, prompted Congress to enact the USA PATRIOT Act, which dramatically expanded the scope and rigor of American AML laws. Specifically, Title III of the Act, the International Money Laundering Abatement and Financial Anti-Terrorism Act introduced some of the most significant and far-reaching changes to the AML and counter-terrorist financing framework since the enactment of the BSA. Specifically, the USA PATRIOT Act criminalized terrorism financing, strengthened customer identification procedures, prohibited financial institutions from dealing with foreign shell banks, and required enhanced due diligence for certain accounts. Before the USA PATRIOT Act, the BSA focused on money laundering from crimes like drug trafficking or fraud. The Act made counter-terrorist financing a central goal, requiring institutions to identify and disrupt the movement of funds tied to terrorist organizations and monitor foreign and domestic transactions more rigorously.

The most significant overhaul of the BSA/AML regime since the USA PATRIOT Act came with the Anti-Money Laundering Act of 2020 (AMLA 2020).6 AMLA 2020’s central theme was security through transparency. It introduced the Corporate Transparency Act (CTA), requiring corporations, limited liability companies, and similar entities to report beneficial ownership information to FinCEN. While the CTA’s implementation has been subject to delays and litigation, its intent is clear: to pierce the veil of anonymity that shields illicit actors in the financial system.

The Role of FinCEN

In April 1990, between the passage of the MLCA and the Annunzio-Wylie Anti-Money Laundering Act, the Treasury Department established FinCEN to safeguard the financial system from illicit use, combat money laundering, and promote national security. FinCEN’s role and responsibilities have expanded over time. The Secretary of the Treasury delegated administration of the BSA to FinCEN, which is now an official Bureau of the Treasury Department.7

FinCEN’s remit is vast. The bureau is responsible for collecting and analyzing financial data, such as SARs and CTRs from financial institutions, and maintains the world’s largest financial crime intelligence database. Along with other regulators like the Office of the Comptroller of the Currency (OCC), FinCEN regulates and enforces the BSA to ensure financial institutions comply with AML laws. The bureau also serves as the United States’ Financial Intelligence Unit (FIU), collaborating with domestic and international agencies.

The Rise of Geographic Targeting Orders

The statutory history is important context, but the RRE Rule’s true origin rests in the history of FinCEN’s geo-graphic targeting orders (GTO). GTOs are temporary orders that impose additional reporting requirements on financial institutions. They usually last 180 days and are subject to renewal. FinCEN issued its first GTO in 1996 subjecting money remitter agents in New York City to report remittances of cash to Colombia of $750 or more.8 This was a significant expansion of BSA enforcement to the non-bank financial sector and set a precedent for real estate GTOs. At the time of the first GTO, the then-FinCEN Director, Stanley Morris, stated “[b]ased on the success of the GTO, and the analysis that FinCEN is conducting in cooperation with other law enforcement agencies, it is clear that we need to consider other applications of geographical targeting orders, as well as broader, more permanent regulatory steps to address vulnerabilities in the money remitter industry.”9

In January 2016, FinCEN began using GTOs to target all-cash luxury real estate purchases in New York and Miami.10 The 2016 GTO followed a multi-series exposé by the New York Times entitled the “Towers of Secrecy,” which documented how criminals, kleptocrats, and corrupt officials were buying millions in U.S. real estate anonymously. FinCEN has repeatedly renewed and expanded real estate GTOs to include certain counties and major metropolitan areas across 14 states and a purchase price threshold of $300,000. FinCEN most recently renewed the GTO on April 14, 2025, effective through October 9, 2025.11 This expansion of GTO authorities brings us to the present day and the enactment of the RRE Rule.

The New Residential Real Estate Reporting Rule – What ACMA Fellows Must Know

The RRE Rule seeks to increase transparency in all-cash real estate transactions by requiring certain professionals to report information, including the identities of beneficial owners behind purchases, in the hopes of preventing money laundering through anonymous property deals. The following is a brief overview of the new RRE Rule.

Covered Transactions

The RRE Rule applies to all non-financed (i.e., all-cash, or financing from lenders without AML program requirements and SAR reporting obligations) transfers of residential real property to legal entities (e.g., LLCs, corporations) or trusts, subject to certain exceptions.12 The rule requires that the “reporting person” (typically the settlement or closing agent, but determined by a cascading hierarchy) file a “Real Estate Report” with FinCEN, disclosing among other information, (1) the identities and details of the transferor and transferee, (2) beneficial ownership information for the transferee, (3) information on individuals signing on behalf of the transferee, (4) property details, and (5) transaction details, such as the purchase price, payment method, and account informa-tion.13 Notably, at the time of writing, FinCEN has not yet published the Real Estate Report template, however, on June 5, 2025, it did issue a 30-day request for comment in the Federal Register.14 This request for comment summarizes the 111 distinct data points that may need to be reported under the RRE Rule. While not every transaction will require the reporting of all those data points, there is still a much greater burden on the industry than under the current GTOs.

The RRE Rule envisions four categories of residential property subject to the rule. First, real property located in the United States that includes a structure designed principally for occupancy by one to four families. Second, land in the United States on which the transferee intends to build a structure designed principally for occupancy by one to four families. Third, a unit designed principally for occupancy by one to four families within a structure on land located in the United States. Fourth, and finally, a share in a cooperative housing corporation for which the underlying property is located on land within the United States.

Rule Carve Outs and ‘Reporting Persons’

The RRE Rule is not a panacea. It is designed, in theory, to ensure that AML efforts are focused where risk is highest—without imposing unnecessary burdens on low-risk buyers, sellers, or industries. As such, the rule carves out several categories of low-risk or routine transactions, including: (1) grants, transfers, or revocations of easements, (2) transfers resulting from life events, such as inheritance or divorce, (3) court-supervised transfers, (4) 1031 exchanges, and (5) no consideration transfers of property to a trust.15 According to FinCEN, the carve outs are strategic exclusions aimed at ensuring the rule targets high-risk activity, especially anonymous, cash-based transactions, avoids duplicating efforts where other AML safeguards already exist, and minimizes disruption to the broader real estate market.

The carve outs notwithstanding, the RRE Rule impacts several categories of real estate professions responsible for reporting in-scope transactions. The requirement to file a Real Estate Report rests with the “reporting person,” one of a small number of persons who play specified roles in the reportable transfer. Only one business is designated to be the reporting person. The reporting person can be identified in one of two ways: (1) by way of the reporting cascading hierarchy described below, or (2) by way of a written “designation agreement” between the real estate businesses in the hierarchy.

The cascading hierarchy16 is as follows:

1. The Closing or Settlement Agent: The agent has primary responsibility for filing the Real Estate Report due to their direct involvement in the transaction.
2. The Settlement Statement Preparer: If no agent is designated, the individual preparing the settlement statement assumes responsibility.
3. The Deed Filer: In the absence of the above, the person responsible for filing the deed must file the Real Estate Report.
4. Title Insurance Underwriter: While admittedly unlikely in most transactions, the underwriter assumes responsibility if the previous roles are unfilled in the covered transaction.
5. Largest Fund Disburser: The fifth responsible party is the entity disbursing the most funds in the transaction.
6. Title Evaluator: The penultimate responsibility lies with the person assessing the title's validity.
7. Deed or Legal Instrument Preparer: Finally, if none of the above roles apply, the person responsible for drafting the transfer documents will file the report.

Designation Agreements

Critically, the default reporting person in the cascading hierarchy above may shift the responsibility to another, subject to a “designation agreement.”17 In effect, parties can contract to shift the filing requirements. Designation agreements allow parties to designate a specific individual or entity as the reporting person. This aspect of the RRE Rule is designed to enable customization based on the particulars of a given transaction and ensure clarity in reporting obligations.

Designation agreements are designed to reduce the over-all burden on reporting persons by enabling flexibility and choice, but a separate designation agreement is required for each reportable transfer. All parties to a designation agreement must retain a copy of the agreement for a period of five years. However, the reporting person is not required to file the designation agreement as part of the Real Estate Report.

While there is no required format for the designation agreement, it must meet certain minimal criteria: the agreement must identify (1) the date of the agreement, (2) the name and address of the transferor, (3) the name and address of the transferee entity or trust, (4) the property, (5) the name and address of the designated reporting person, and (6) the name and address of all parties to the designation agreement.

FinCEN’s Reasonable Reliance Standard

Despite the RRE Rule’s complexity and onerous reporting requirements, the rule does permit reporting persons to rely in good faith on information provided by others—such as the purchaser or their representative—for general information about the transaction and when identifying the beneficial owner(s) of legal entities or trusts involved in the trans-action.18 When relying on information about the identity of the beneficial owner(s) in particular, the RRE Rule includes an additional step and requires the person providing the information to certify the accuracy of the information in writing and to the best of the person’s knowledge. This rea-sonable reliance standard allows reporting persons to rely on details obtained from involved parties without independent verification, unless there are red flags or inconsistencies that suggest the information might be inaccurate. For example, if a title insurance company is required to file a report under the new rule and the trustee of a revocable trust provides a certification stating the names of the beneficial owners, the company may rely on that certification without investigating, unless something about the certification raises suspicion.

Industry Criticism & Legal Challenges

Real estate industry professionals and trade groups lobbied against several aspects of the RRE Rule during the rulemaking process. While acknowledging the importance of combating money laundering in real estate, the industry raised concerns about the scope, burdens, and implications of the proposed rule. More than 150 organizations filed public comments, including the American Land Title Association and the National Association of Realtors.

Critics argued that the rule’s nationwide application, in comparison to prior GTOs, was too expansive and would encompass many low-risk transactions and instead advocated for a more targeted, risk-based approach. Industry groups also emphasized the cost and operational burden of collecting and verifying beneficial ownership information, particularly for small businesses and independent title agents. While others highlighted privacy and confidentiality concerns about the sensitive nature of trust ownership structures and the potential for unintended legal liabilities.

FinCEN acknowledged industry concerns and amended the final RRE Rule accordingly, perhaps most notably with the inclusion of the reasonable reliance standard discussed above. However, with only a few months before implementation, companies are challenging the rule in federal court.

Fidelity National Financial Files Suit

On May 21, one of the industry’s biggest players—Fidelity National Financial (FNF)— filed a lawsuit in the Middle District of Florida to block the RRE Rule.19 United States District Judge Wendy Berger, a Trump appointee, will now consider whether FinCEN has exceeded its statutory authority.

In its suit, FNF contends the RRE Rule should be vacated pursuant to the Administrative Procedure Act because it exceeds FinCEN's statutory authority under the BSA, which limits reporting obligations to “suspicious transactions relevant to a possible violation of law or regulation.” FNF argues that the rule's blanket requirement for reporting all non-financed transfers to legal entities and trusts, without specific indicia of suspicious activity, violates this statutory limitation. Plaintiff notes that FinCEN has never claimed that all, or even most, of the estimated 850,000 transactions that will be reported annually are likely connected with illegal activity, and that the rule will result in millions of lawful transactions being “swept into FinCEN’s dragnet.”

While FNF’s anchor argument focuses on FinCEN’s lack of statutory authority, it also raises constitutional concerns, including that: (1) the rule violates the Fourth Amendment's prohibition of unreasonable searches by mandating the col-lection of private information without articulable suspicion or connection to illegal activity; (2) the rule infringes on the First Amendment's prohibition on compelled speech by requiring the disclosure of extensive personal and financial information for all covered transactions, regardless of any criminal nexus; and (3) Congress did not delegate authority to the Treasury Department to regulate such transactions under the Commerce Clause or other Article I powers.

Of course, FNF leans heavily on the RRE Rule’s financial and compliance burden. Using FinCEN’s own compliance cost estimates of between $428.4 million and $690.4 million in the first year, FNF argues the rule is arbitrary and capricious due to FinCEN's failure to conduct a proper cost-benefit analysis. Plaintiff argues that in the face of staggering costs, FinCEN has made no serious effort to estimate the economic benefits or estimate the anticipated reduction in illicit activity.

It is too early to predict the outcome of the FNF suit, but the issue illustrates the tension between two Trump administration priorities. On the one hand, the administration has generally advocated for a deregulatory, pro-industry agenda. On the other hand, the administration remains focused on anti-money laundering and financial crime, particularly as it relates to foreign adversaries and drug cartels who are most likely to exploit the residential real estate market to launder illicit gains. Affected businesses should be preparing to comply with the RRE Rule to ensure they are not caught off guard should legal challenges fail.

So– What Do We Do? A Practical Guide for ACMA Fellows

The evolution of FinCEN’s regulation of residential real estate transactions—from the BSA through the GTOs and now to a comprehensive nationwide reporting rule—reflects a growing recognition of the sector’s vulnerability to money laundering and the need for greater transparency. The new rule represents a paradigm shift for real estate professionals, who must now play a central role in the fight against illicit finance.

With the new rule set to take effect on December 1, 2025, industry professionals—including settlement agents, title insurers, attorneys, and others involved in real estate closings—must prepare for significant changes in compliance obligations. Waiting and hoping Judge Berger strikes down the rule is not the prudent course of action. So, what can companies and professionals do to prepare?

1. Assess Applicability and Identify Covered Transactions. Businesses need to determine if they are involved in non-financed transactions of residential real estate to entities or trusts and familiarize themselves with the exceptions to avoid unnecessary reporting.
2. Establish Internal Policies and Procedures. Organizations should assign responsibility for compliance and document processes for identifying reportable transactions, collecting required information, and filing reports.
3. Securely Collect and Verify Information. Businesses need to develop protocols for obtaining and retaining beneficial ownership information, including ensuring secure IT systems are in place to retain and transmit the requirement transaction, payment, and personal information.
4. Leverage Designation Agreements. Where appropriate, organizations should use written designation agreements to assign and clarify reporting duties, particularly in complex transactions.
5. Prepare for Regulatory Scrutiny. Businesses need maintain thorough records of compliance activities, including training and internal audits, as well as maintaining copies of all designation agreements and beneficial ownership certifications for at least five (5) years. Noncompliance with the RRE Rule can result in significant civil and criminal penalties.

Conclusion

As the December 1, 2025, enforcement date approaches, industry professionals must act swiftly to align their practices with FinCEN’s new RRE Rule. Real estate professionals, title insurers, closing agents, and anyone who may qualify as a reporting person should prioritize understanding the rule’s reporting obligations, evaluating beneficial ownership disclosure requirements, and updating compliance programs accordingly. Proactive preparation now will not only ensure regulatory compliance but also position firms as responsible gatekeepers in the fight against money laundering and financial crime in the U.S. housing market.

Republished with permission. This article, "FinCEN’S New Real Estate Reporting Rule: Historical Context, Compliance Requirements, Legal Challenges and What ACMA Members Need to Know," was published by The Abstract.