A major shift in U.S. financial compliance is underway, directly impacting every professional and client involved in residential real estate closings. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has finalized its new Anti-Money Laundering (AML) Regulations for Residential Real Estate Transfers (RRE Rule).

While the original effective date was set for December 1, 2025, FinCEN recently issued a temporary order postponing the mandatory reporting requirements until March 1, 2026, to give the industry more time to prepare. Regardless of the slight delay, the legal community, title agents, and buyers must be ready to comply with this sweeping, nationwide expansion of transparency.

The Goal: Stripping Away Anonymity

Historically, the purchase of residential real estate using “all-cash” or non-financed funds has been exploited by illicit actors to launder money, as ownership can be easily masked behind anonymous shell companies, such as LLCs and trusts.

The new RRE Rule expands the successful Geographic Targeting Orders (GTOs)—previously limited to specific high-risk metros—to a nationwide mandate. The goal is to collect information on the true, beneficial owners of the property, protecting U.S. national security and the financial system from criminal abuse.

What Makes a Residential Closing Reportable?

A transaction is considered a “reportable transfer” and triggers the new filing requirement if it meets all of the following criteria:

  • Property Type: The transfer involves U.S. residential real property (single-family homes, condos, co-ops, 1-4 unit buildings, and even vacant land intended for such construction).

  • Financing: The transfer is non-financed (all-cash, or financed only by a non-bank private lender not subject to AML programs).

  • Transferee (Buyer): The property is transferred to a legal entity or trust (e.g., an LLC, Corporation, Partnership, or certain Trusts), rather than directly to an individual.

Crucially, there is no minimum purchase price threshold for the new reporting requirement. Even gift transfers to a trust may be covered.

The Closing Attorney’s New Compliance Mandate

The burden of compliance falls on the “reporting person”, which is determined by a cascading hierarchy. In most closings, the primary reporting responsibility falls to the person conducting the settlement or the one who prepares the settlement statement—often the title agent or the closing attorney.

The report, dubbed the “Real Estate Report”, is complex and requires reporting numerous data points, including:

  • Beneficial Ownership Information (BOI): The identities (and supporting documentation) of the natural persons who ultimately own or control the legal entity or trust receiving the property (generally those with substantial control or at least a 25% ownership interest).

  • Transferor Information: Details about the seller.

  • Payment Information: Source of funds and details regarding the payments made.

This mandate transforms the role of closing professionals, placing them on the frontlines of federal AML efforts and requiring meticulous new due diligence protocols.

Penalties and Preparation for Clients

Failure to comply with the RRE Rule can result in significant civil penalties and potential criminal charges for both the reporting person and the principals of the transferee entity.

For clients—especially those who prefer to buy residential property using their LLCs or trusts for liability or estate planning—the key takeaway is that their privacy is changing. They must be prepared to disclose their beneficial ownership information to the closing agent to facilitate the required filing.

Conclusion

The new FinCEN RRE Rule is a watershed moment for the real estate industry, cementing the federal government’s commitment to fighting illicit finance through property transactions. For buyers utilizing trusts or legal entities, and for the agents and title companies closing those deals, proactive compliance is not optional—it is a mandatory legal check. The complexity of identifying beneficial ownership and correctly filing the extensive Real Estate Report necessitates expert guidance to avoid severe penalties. To ensure your non-financed residential closing is fully compliant with the new FinCEN regulations and to receive guidance on all aspects of the AML Regulations for Residential Real Estate Transfers, contact Lforlaw today to connect with expert closing attorneys specializing in compliance and title matters.

Sources

  1. FinCEN (Financial Crimes Enforcement Network): Fact Sheet: FinCEN Issues Final Rule to Increase Transparency in Residential Real Estate Transfers (August 2024).

  2. FinCEN (Financial Crimes Enforcement Network): FinCEN Announces Postponement of Residential Real Estate Reporting Until March 1, 2026 (September 30, 2025).

  3. National Association of Realtors (NAR): Guidance on the scope and impact of the RRE Rule on real estate professionals.

  4. American Land Title Association (ALTA): Analysis of the RRE Rule’s cascade system for identifying the “reporting person.”

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