/>iThe U.S. real estate market has long been a cornerstone of the American dream—a path to stability, investment, and generational wealth. But at the margins, that same market has also provided an opportunity for illicit actors who exploit all-cash deals to quietly launder dirty money into legitimate assets. Recognizing this vulnerability, in August 2024, the Financial Crimes Enforcement Network (FinCEN) introduced a new rule aimed at shedding light on all-cash real estate transactions and closing a loophole in the fight against money laundering.
FinCEN’s Residential Real Estate Rule (the 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. Title companies and settlement agents are now on the frontlines of the federal government’s fight against real estate money laundering. The industry has argued that the rule will impose an undue burden on businesses and that its costs outweigh its benefits. 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 rule. Fidelity National Finance, Inc. et al. v. Treasury, et al., 3:25-cv-00554 (M.D.Fla. May 20, 2025). United States District Judge Wendy Berger, a Trump appointee, will now consider whether FinCEN has exceeded its statutory authority.
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 scheduled to take effect in December to ensure they are not caught off guard should legal challenges fail.
How Did We Get Here? (The Abridged Version)
The RRE Rule is the latest development in a 55-year evolution of anti-money laundering (AML) laws and regulations in the United States. In 1970, Congress passed the Bank Secrecy Act (BSA), which provided the Treasury Department with broad authority to require financial institutions to keep records and file reports to help detect and prevent money laundering. The BSA sat dormant for 15 years until 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 in 1985.
In 1986, Congress passed the Money Laundering Control Act, which established money laundering as a financial crime and established the notion of a BSA/AML “program” by directing banks to maintain policies and procedures to monitor BSA compliance. FinCEN was created in 1990, shortly after which Congress passed the Annunzio-Wylie Anti-Money Laundering Act of 1992, which required banks to file Suspicious Activity Reports (SARs).
The terrorist attacks of September 11, 2001, prompted Congress to enact the USA PATRIOT Act, which dramatically expanded the scope and rigor of U.S. AML laws. Specifically, Title III of the Act, the International Money Laundering Abatement and Financial Anti-Terrorism Act, criminalized terrorism financing, strengthened customer identification procedures (CIP), prohibited financial institutions from dealing with foreign shell banks, and required enhanced due diligence for certain accounts. The most significant overhaul of the U.S. AML regime since the PATRIOT Act came with the Anti-Money Laundering Act of 2020 (AMLA 2020). 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 statutory history is important context, but the RRE Rule’s true origin rests in the history of FinCEN’s geographic 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. This was a significant expansion of BSA enforcement to the non-bank financial sector and set a precedent for real estate GTOs.
In January 2016, FinCEN began using GTOs to target all-cash luxury real estate purchases in New York and Miami. The GTO followed a multi-series expose 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.
The RRE Rule at a Glance
The RRE Rule seeks to increase transparency in all-cash real estate transactions by requiring certain professionals to report certain information, including the identities of beneficial owners behind purchases, in the hopes of preventing money laundering through anonymous property deals.
The RRE Rule applies to all non-financed (i.e., all-cash) transfers of residential real property to legal entities (e.g., LLCs, corporations) or trusts, subject to certain exceptions. 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 information.
The rule carves out several categories of low-risk or routine transactions, including: (1) grants, transfers, or revocations of easements, (2) transfers resulting from death or divorce, and (3) transfers to bankruptcy estates. The default reporting person in the cascading hierarchy may shift the responsibility to another (e.g., the deed filer), subject to a designation agreement. In effect, parties can contract to shift the filing requirements. Notably, FinCEN has not yet published the Real Estate Report to be filed.
Reporting persons may reasonably rely on information provided by others, absent knowledge of facts that would call its reliability into question. For beneficial ownership, a written certification from the transferee or its representative is required. Reporting persons must retain copies of beneficial ownership certifications and designation agreements for five years. Reports must be filed electronically with FinCEN by the later of the last day of the month following the closing date or 30 days after the closing date. Penalties for noncompliance include civil and criminal sanctions under the BSA.
FNF’s Legal Challenge to the RRE Rule
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 plaintiff’s anchor argument focuses on FinCEN’s lack of statutory authority, they also raise constitutional concerns, including that: (1) the rule violates the Fourth Amendment’s prohibition of unreasonable searches by mandating the collection 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 arguments connected to the industry’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.
What Industry Professionals Must Do to Prepare
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?
- 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.
- Establish Internal Policies and Procedures. Organizations should assign responsibility for compliance and document processes for identifying reportable transactions, collecting required information, and filing reports.
- 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 required transaction, payment, and personal information.
- Leverage Designation Agreements. Where appropriate, organizations should use written designation agreements to assign and clarify reporting duties, particularly in complex transactions.
- 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 years. Noncompliance with the RRE Rule can result in significant civil and criminal penalties.
