FinCEN Delays Residential Real Estate Transfer Reporting Rule

Highlights

• The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) on Sept. 30, 2025, postponed the start date of the new requirement to report certain transactions under the Residential Real Estate Reporting Rule from Dec. 1, 2025, to March 1, 2026.
• The announced purpose for the delay was to provide industry more time to comply, consistent with the Trump Administration's agenda to reduce compliance burdens, while at the same time adequately protecting the U.S. financial system from money laundering, terrorist financing and other serious illicit finance threats.
• FinCEN in the same release published the Real Estate Report information collection form, which earlier had been released in draft form.

The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) announced in August 2024 a final rule (the Final Rule) designed to combat and deter money laundering by increasing transparency in the U.S. residential real estate sector, labeled the Anti-Money Laundering Regulations for Residential Real Estate Transfer Rule.

The Final Rule requires, on a nationwide basis, certain persons involved in real estate closings and settlements to report information to FinCEN about specified transfers of residential real estate that are viewed as at a high risk for illicit finance. Information required to be reported includes details about the parties to the transfer and the property itself. The Final Rule was scheduled to take effect on Dec. 1, 2025.

The Treasury Department has long raised concerns about the illicit finance risk posed by abuse of the U.S. real estate market. FinCEN has been concerned about the following two broad problems in this sector.

First, the use of the U.S. residential real estate market to facilitate money laundering and other illicit activity has long been a focus of law enforcement. FinCEN has argued that illicit actors often favor transfers or "all cash" sales of residential real estate that avoid scrutiny from financial institutions that have an Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) program and Suspicious Activity Report (SAR) filing requirements under the Bank Secrecy Act. FinCEN has identified these types of transfers as vulnerable to money laundering. Second, FinCEN has argued that it is difficult to determine the individuals who beneficially own entities or trusts engaged that acquire residential real estate in "all cash" or non-financial institution-financed transactions.

Pursuant to an Exemptive Relief Order issued by the administration, all reporting persons are now exempt from the requirements of the Final Rule until March 1, 2026. Thus, reporting persons are not required to file reports with respect to "reportable transfers" that close before March 1, 2026.¹

According to FinCEN's announcement, the postponement was issued "to provide industry with more time to comply – consistent with the administration's agenda to reduce compliance burden – while still adequately protecting the U.S. financial system from money laundering, terrorist financing, and other serious illicit finance threat."

FinCEN, in the same release, published the Real Estate Report information collection form, which earlier had been released in draft form. This is the form that the reporting person is required to file electronically with FinCEN. The form is lengthy and complex, containing 111 distinct fields, and FinCEN expects approximately 60 percent must be completed to report a given transfer pursuant to the requirements of the Final Rule.²

Comments

FinCEN should be commended for postponing the effective date of the Final Rule and, at the same time, issuing the Real Estate Report information collection form so as to give stakeholders additional time to evaluate how to comply with this new reporting requirement.

The Final Rule raises many issues to consider in determining whether a transaction is covered by the Final Rule, including:

• whether the transaction constitutes a reportable transfer
• whether an applicable exemption applies to the transaction
• if a transfer is reportable, will the reporting person be identified using the reporting cascade or a designation agreement
• how a reporting person should proceed to gather all of the required information
• how to identify the individuals who are Beneficial Owners of transferee entities or transferee trusts, which requires familiarity with the definition of the term "Beneficial Owners" used in the FinCEN Beneficial Ownership Information Reporting Rule

Please note that Holland & Knight will host a webinar on this topic on Oct. 23, 2025. During "Residential Real Estate Reporting: What Real Estate Professionals Need to Know," the hosts will delve into the details of how to comply with the Final Rule. There will be ample time for questions.

Footnotes

1. To have a "reportable transfer," 1) the property must be U.S. residential real property, 2) the transfer is non-financed, 3) the property is transferred to a legal entity or trust, and 4) an exemption does not apply. A transfer is non-financed if it does not involve an extension of credit that is both secured by the transferred property and extended by a financial institution subject to an AML and SAR obligations. Further, a transfer financed only by a lender without an obligation to maintain an AML program and file a SAR, such as a nonbank private lender, is treated as a non-financed transfer that potentially must be reported.

2. See Agency Information Collection Activities; Proposed Collection; Comment Request; Real Estate Reports (Nov. 13, 2024).

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