New FinCEN Residential Real Estate Reporting Rule in Effect March 1, 2026

Posted on October 30, 2025, by Jordan Baer

Most business owners and professionals will recall the flurry of activity and concern over the Financial Crimes Enforcement Network (FinCEN) imposition of the Corporate Transparency Act (CTA).  Enforcement of the CTA abruptly came to an end, effective March 2, 2025, for companies formed in the United States.  However, as part of its ongoing efforts to investigate and prevent money laundering, FinCEN has a new rule with reporting requirements looming on the horizon: The Residential Real Estate Rule.₁

FinCEN is a bureau of the U.S. Department of the Treasury, and its main purpose is to safeguard the financial system from illicit activity, including money laundering. Since 2016, FinCEN has used Geographical Targeting Orders (GTOs) to combat money laundering in real estate transactions. GTOs required certain real estate transactions in high-risk areas to be reported. However, as of March 1, 2026, FinCEN will no longer use GTOs and will be expanding reporting requirements through the Anti-Money Laundering Rule (AML). AML expands the reach of reporting requirements by requiring all residential real property transfers to a legal entity or trust without financing to be reported. AML is designed to increase transparency in the U.S. residential real estate sector and to combat and deter money laundering. Failure to comply with AML requirements could lead to penalties and legal consequences.

What transactions fall under AML?

Broadly, all residential real property transfers to a legal entity or trust without financing must be reported, pursuant to AML. However, those requirements encompass a large range of transactions.₂

Residential real property includes more than a typical single-family home. It encompasses one-to-four family residences, vacant land intended for future one-to-four family construction, units within a structure designed for one-to-four family occupancy, and shares in a co-op.

A legal entity or trust includes any person other than a transferee trust or individual, such as corporations, partnerships, estates, associations, and limited liability companies, as well as any legal arrangement where a grantor places assets under a trustee’s control for the benefit of others, or for a specific purpose.

A non-financed transfer includes more than just cash transactions. AML covers any transfer that involves a loan or line of credit from a financial institution that is not subject to the Bank Secrecy Act, AML requirements, or Suspicious Activity Reporting requirements, or any transfer that does not involve a loan or line of credit secured by the property. In simpler terms, if there is no financing involved in the transaction, or if the financing is from a non-traditional financial institution that does not follow the Bank Secrecy Act (BSA), SML, or Suspicious Activity Report (SAR) rules, it is considered a non-financed transfer for the purposes of the AML reporting requirements.

The exceptions to the reporting requirements include transfers of easements, transfers resulting from death, transfers related to divorce, transfers into bankruptcy estates, transfers supervised by a Court in the U.S., transfers with no consideration to a qualifying trust, transfers to a qualified intermediary as part of a 1031 exchange, and transfers for which there is no reporting person.

What are the requirements?

If a real estate transaction must be reported to FinCEN, the report must include the following:

1. Information on the reporting person;
2. Information on the transferee;
3. Information on the beneficial owner(s);
4. Any individual signing on behalf of the transferee;
5. Information on the transferor;
6. Information on the property being transferred; and
7. Total consideration and certain payment details.

FinCEN has provided a sample Real Estate Report Form to empower real estate professionals and reporting persons to enact policies and procedures to prepare for compliance with the RRE.  Although the new FinCEN rule does not impose a requirement to establish an anti-money laundering / countering the financing of terrorism (AML/CFT) compliance program on persons involved in residential real estate closings₃, best practices will likely dictate the implementation of such a program.

What is the deadline for filing the report?

The report must be filed on the latter of the final day of the month following the closing or 30 days after closing. Reporting persons will therefore generally have about 30 to 60 days to file the report.

Who must file the report?

The Residential Real Estate Rule defines a “reporting person” in one of two ways:

A. The person or entity designated in writing in the agreement between the real estate businesses described in the cascading reporting order; or

B. By way of the cascading reporting order of priority, as follows:

1. The person listed as the closing or settlement agent on the closing or settlement statement;
2. If no person described above is involved, the person who prepares the closing or settlement statement;
3. If no person described above is involved, the person who files with the recordation office the deed or other instrument that transfers ownership of the residential real property;
4. If no person described above is involved, the person that underwrites an owner’s title insurance policy for the transferee with respect to the transferred residential real property, such as a title insurance company;
5. If no person described above is involved, the  person who disburses in any form, including from an escrow account, trust account, or lawyers’ trust account, the greatest amount of funds in connection with the residential real property transfer;
6. If no person described above is involved, the person who provides an evaluation of the status of the title; or
7. If no person described above is involved, the person who prepares the deed or, if no deed is involved, any other legal instrument that transfers ownership of the residential real property, including, with respect to shares in a cooperative housing corporation, the person who prepares the stock certificate.

If none of the above functions are performed for any given reportable transfer of residential real property, then a report is not required to be filed.

Important note for attorneys: Although the comments to the proposed rule suggested that attorneys should be exempted from the definition of reporting persons, attorneys are explicitly not exempt and should be aware of these impending reporting requirements.

What are the penalties for failing to timely file a report with FinCEN?

If a person fails to file a required report with FinCEN, it can result in fines of not more than $1,394 per each violation, with an additional civil money penalty of up to $108,489 for a pattern of negligent activity.  However, willful violations of the rule could result in a term of imprisonment of no more than 5 years and/or a criminal fine of up to $250,000. Such a willful violation could also result in a civil penalty of not more than the greater of the amount involved in the transaction (not to exceed $278,937) or $69,733.

Conclusion

FinCEN’s recent history of hitting pause on enforcing burdensome reporting requirements pertaining to the beneficial ownership of companies in the U.S. may encourage property owners and real estate practitioners to disregard this new rule.  However, the civil and criminal penalties and obvious liability to the parties involved in the residential real estate transaction indicate that residential real estate practitioners should take the necessary steps to push forward with implementing reasonable compliance programs.

1 https://www.fincen.gov/rre

2 https://www.federalregister.gov/documents/2024/08/29/2024-19198/anti-money-laundering-regulations-for-residential-real-estate-transfers

3  31 CFR 1010.205(b)(1)(v)