FinCEN Residential Real Estate Reporting Rule Struck Down

On March 19, 2026, the US District Court for the Eastern District of Texas in Flowers Title Companies LLC v. Bessent¹ ruled that the U.S. Financial Crimes Enforcement Network (“FinCEN”) exceeded its statutory authority under the Bank Secrecy Act by adopting the “Anti-Money Laundering Regulations for Residential Real Estate Transfers” (the “Rule”), and vacated the Rule effective immediately². The Rule would have required certain individuals, such as title insurance agents, escrow agents, and attorneys, to report information about certain residential real estate conveyances when the buyer is a business entity or trust. FinCEN argued that the rule was needed to combat money laundering in real estate, but the court found that the agency did not have the legal authority to impose it.

The court held that the Rule exceeded FinCEN’s statutory authority under the Bank Secrecy Act on two independent grounds. First, the court found that the Bank Secrecy Act allows FinCEN to require reports of “any suspicious transaction”, but the Rule treated all non-financed residential real estate as suspicious, and FinCEN failed to adequately explain how that blanket assumption was justified. Second, the court concluded that the Bank Secrecy Act only authorizes FinCEN to require financial institutions to maintain reporting procedures, not to impose independent substantive reporting obligations.  Because the Rule conflicted with the unambiguous terms of the statute, the court vacated it under the Administrative Procedure Act as the default remedy, finding vacatur appropriate given both the seriousness of the Rule’s deficiencies and the minimal disruption of restoring the pre-Rule status quo.

Footnotes

^{1 FLOWERS TITLE COMPANIES, LLC, v. SCOTT BESSENT, in his official capacity as U.S. Secretary of Treasury, et al., Memorandum Opinion and Order}

^{2 FLOWERS TITLE COMPANIES, LLC, v. SCOTT BESSENT, in his official capacity as U.S. Secretary of Treasury, et al., Final Judgement}

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