Closing and settlement agents will not be fined for failing to report transactions, as the Financial Crimes Enforcement Network (FinCEN) is suing to overturn real estate anti-money laundering rules.
As the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) seeks to overturn real estate anti-money laundering rules, closing and settlement officials will no longer be responsible for reporting corporate and trust purchases made without financing or through unregulated lenders.
“Reporters are currently under no obligation to file real estate reports with FinCEN and will not be held liable for failure to do so while the court order is in effect,” FinCEN’s updated FAQ said Wednesday. “If the court order is reversed and the RRE rule becomes legally effective again, reporters will no longer be required to file reports for covered transactions that were required to be reported while the court order was in effect. If the order is reversed, FinCEN will provide further guidance on when reporting is required.”
A previous Inman article detailed this rule, which requires agents to document the legal entities or trusts involved in real estate transactions. The agent must also document the entity’s owners, the individuals signing documents on behalf of the entity, the seller, the property being transferred, social security numbers, information about payments made, and more. Reports must be submitted by the last day of the month following the month in which the transaction occurred, or 30 days after the transaction closes, whichever is later.
The Treasury Department first proposed new reporting rules in early 2024. It was originally scheduled to come into force in December 2025, but was delayed to “give industry time to comply”.
The delay gives Pacific Law Foundation (PLF), a public interest law firm based in Sacramento, California, the opportunity to file a lawsuit on behalf of Texas title company owner Celia Flowers in April 2025. Flowers said FinCEN’s rules, which require closing and settlement agents to report financings and corporate and trust purchases made through unregulated lenders, impose unwarranted “costly new compliance obligations” and “draconian penalties” for reporting errors.
PLF argued that this rule oversteps FinCEN’s authority under the Currency and Foreign Transaction Reporting Act, also known as the Bank Secrecy Act. The 1970 Act requires record-keeping and reporting of high-value cash transactions over $10,000. PLF said the law also “gives the Secretary of the Treasury complete discretion to determine whether and when to require systematic information collection and reporting on consumer transactions.”
However, PLF said the thorough record-keeping required by FinCEN’s new rules is time-consuming and violates the Fourth Amendment by requiring closing and settlement personnel to “enforce government oversight of their customers by reporting personal information from legitimate transactions.”
U.S. District Judge Jeremy Kernodle sided with PLF in March, writing that the U.S. Treasury “failed to explain how non-loan residential real estate transactions were conclusively ‘suspicious.'” President Donald Trump, who appointed Kernodle in 2018, has steadily weakened FinCEN’s regulatory authority by watering down some of the Biden administration-era money laundering regulations.
FinCEN has never included real estate agents in its reporting process. But with about 28% of sales in 2025 being all-cash, the National Association of Realtors has begun educating real estate agents about the new rules. Additionally, approximately 22% of transactions involved legal entities such as trusts.
Email Marian McPherson
