As the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) appeals the overturning of its real estate anti-money-laundering rule, closing and settlement agents won’t be responsible for reporting of legal-entity and trust purchases made without financing or through a non-regulated lender.
“Reporting persons are not currently required to file Real Estate Reports with FinCEN and are not subject to liability if they fail to do so while the court’s order remains in force,” FinCEN’s updated FAQ read on Wednesday. “If the court’s order is overturned and the RRE Rule again becomes legally effective, reporting persons will not be required to file reports for covered transactions that would have been required to be reported while the court’s order was in force. If the order is overturned, FinCEN will provide further guidance on when reporting will be required.”
A previous Inman article explained the ins and outs of the rule, which requires agents to document the legal entity or trust involved in a real estate transaction. Agents also have to document the owners of that entity, any 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 filed by the last day of the month following the month in which the transaction occurred, or by 30 days after the closing date, whichever is later.
The Treasury Department first proposed the new reporting rules in early 2024. They were initially set to go into effect in December 2025, but were postponed to give the industry “more time to comply.”
That postponement gave the Pacific Legal Foundation (PLF), a public-interest law firm based in Sacramento, California, the opportunity to file a lawsuit in April 2025 on behalf of Celia Flowers, a Texas title company owner. Flowers said FinCEN’s rule, which requires closing and settlement agents to report legal-entity and trust purchases made without financing or through a non-regulated lender, imposed undue “costly new compliance obligations” and “severe penalties” for reporting errors.
The PLF argued the rule was an overreach of FinCEN’s powers under the Currency and Foreign Transactions Reporting Act, also known as the Bank Secrecy Act. The 1970 Act requires record-keeping and reporting of large cash transactions above $10,000. The Act, PLF said, also gives “total discretion to the Secretary of Treasury to decide whether and when to require systematic collection of information and reporting on consumer transactions.”
However, PLF said the depth of record-keeping required by FinCEN’s new rule was time-consuming and violated the Fourth Amendment by requiring closing and settlement agents to “perform government surveillance on their clients by reporting private information from legitimate transactions.”
U.S. District Judge Jeremy Kernodle sided with PLF in March, saying that the U.S. Department of the Treasury failed “to explain or show how non-financed residential real estate transactions are categorically ‘suspicious’.” President Donald Trump, who appointed Kernodle in 2018, has steadily weakened FinCEN’s regulatory powers by gutting several Biden-era money-laundering rules.
FinCEN never included real estate agents in the reporting process. However, the National Association of Realtors had begun educating Realtors about the new rule, as roughly 28 percent of sales in 2025 were all-cash. Approximately another 22 percent of transactions involved a legal entity, including trusts.
