FinCEN Anti-Money Laundering Rule

The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury responsible for enforcing financial regulations, including the Bank Secrecy Act (BSA) and other regulatory functions. FinCEN works to combat money laundering, fraud, and other illicit financial activities by collecting and analyzing financial data.

Learn more at FinCEN.gov →

Beginning March 1, 2026, FinCEN will require reporting for all residential transfers of real property to a legal entity or trust that are non-financed. It's important to note that 'residential real property' extends beyond traditional, single-family homes, and 'non-financed' includes more than just all-cash transactions.

FinCEN required reports must be entered, uploaded and submitted to FinCEN by the later of either the final day of the month following the month in which the date of closing occurred, or 30 calendar days after the date of closing.

Key Highlights of the Rule:

• Aims to prevent money laundering, financial crimes and other illicit activities
• Applies nationwide, across ALL counties in the United States (no county is exempt)
• Targets non-financed transfers (beyond just all-cash transactions)
• Introduces new compliance requirements, including reporting and record-keeping
• Non-compliance may result in penalties and legal action

FinCEN's Geographic Targeting Orders (GTOs) have been in place since 2016 as temporary, location-specific measures requiring title companies to report certain real estate transactions in high-risk areas. Over time, these orders have expanded, covering more locations and refining reporting criteria.

The new Anti-Money Laundering (AML) rule, effective March 1, 2026, is not an extension of GTOs, it's a permanent, nationwide regulation. Unlike GTOs, which focus on specific geographic regions, the AML rule requires reporting of all residential transfers of real property to a legal entity or trust that is non-financed, across every county in the United States and for any transferring dollar amount, including $0 gift transfers.

The new Anti-Money Laundering rule will have the greatest impact on title insurance companies and title agents, including settlement agents, as they will primarily be responsible for reporting applicable transactions. Real estate professionals will also need to understand the AML rule to help answer client questions and navigate potential reporting requirements. Additionally, legal entities and trusts involved in real estate transfers will also need to understand the AML rule as they may be subject to new reporting and compliance obligations.

With these changes, substantial training and process updates will be required to ensure compliance and avoid potential penalties.

FinCEN's definition of "residential real property" goes beyond the traditional single-family home. Under the FinCEN AML rule, it includes:

• One-to-four family residences
• Vacant land intended for future one-to-four family development
• Units in buildings designed for one-to-four family occupancy (e.g., condominiums or apartments)
• Shares in a cooperative housing corporation (co-ops)

FinCEN defines a transferee legal entity as any person other than a transferee trust or an individual. That includes the following, whether domestic or foreign:

• Corporations
• Partnerships
• Estates
• Associations
• Limited liability companies (LLCs)

Exceptions to the types of transferee legal entities that fall under the reporting requirement include:

• Public companies (securities reporting issuers)
• Governmental authorities
• Banks and credit unions
• Money services businesses
• Broker-dealers & financial market utilities
• Insurance companies
• State-licensed insurance producers
• Subsidiaries of exempted entities

According to FinCEN, a non-financed transfer is any transfer that:

• Does not involve a loan or line of credit secured by the property, or
• Involves financing not provided by a financial institution subject to Bank Secrecy Act (BSA), AML and Suspicious Activity Reporting (SAR) rules

This includes:

• All-cash purchases
• Seller carrybacks or private lender funding
• Transactions where the lender is not BSA/AML/SAR-regulated

In short: If there's no loan, or the lender isn't regulated under AML rules, it's non-financed.

Under the AML rule, certain transactions must be reported to FinCEN. For qualifying transactions, the report must include:

• The reporting person (typically the title settlement agent, insurance company or title agent)
• The transferee legal entity or trust receiving ownership of the property and all the entity's beneficial owners with 25% or more ownership interest
• The transferee trust receiving ownership of the property and information related to the beneficiaries of that trust
• Any individual signing on behalf of the transferee during the transfer
• The transferor (usually the seller)
• The residential real property being transferred
• Details about the transaction itself including the total consideration being paid and certain bank source and payment details

Reports must be uploaded and filed in the BSA filing system within a 30–60-day window after closing. A reporting person must file a Real Estate Report by the later of these two dates:

• The last day of the month following the month in which the date of the closing occurred, or
• Thirty calendar days after the closing date

FinCEN has created a "Reporting Cascade." This is a ranked list of who might be responsible for reporting a transaction. Start at the top, with the highest ranking individual or company involved in the transaction, and move down the list until an individual or company applies:

1. The person/company listed as the closing or settlement agent on the closing or settlement statement
2. The person/company that prepares the closing or settlement statement
3. The person/company that submits transfer documents for recording
4. The person/company that underwrites an owner's title insurance policy
5. The person/company that disburses the greatest amount of funds
6. The person/company that provides an evaluation of the status of the title
7. The person/company that prepares the deed or, if no deed is involved, any other legal instrument that transfers ownership (in co-ops the person who prepares the stock certificate)

Only one party is responsible: the highest-ranking applicable person or company on this list.

Aside from the exceptions to transferee entities and trusts, there are other standard exceptions to the AML rule. Transactions in the following categories are exempt from reporting:

• Transfer related to an easement
• Transfer resulting from death (by will, trust, contract, or operation of law)
• Transfer related to divorce
• Transfer to a bankruptcy estate
• Transfer supervised by a court in the U.S.
• Transfer for no consideration when made to a qualifying trust
• Transfer to a qualified intermediary in a 1031 exchange
• Transfer for which there is no reporting person

Civil penalty:

• Fines between $1,394 and $108,489 for each violation
• Each day a violation continues = a separate violation
• Failing to file or filing false/incomplete info is a violation
• In addition, the Secretary of the Treasury may bring a civil action to enjoin the violation

Criminal penalty:

• Up to $250,000 in fines and/or 5 years in prison for willful noncompliance

More information: Penalties | FinCEN.gov →

Yes, they can be. Although the FinCEN AML Rule applies to "residential real property," the definition of residential real property is more than the traditional 1-4 family residence definition. Specifically, the following commercial-type transactions would include property that is considered "residential real property" for purposes of reporting under the new FinCEN AML Rule:

1. Vacant land zoned or intended for 1-4 Family residence
2. Multi-family properties more than 4 that are used for and/or intended for residential use
3. Builders purchasing lots or subdividing lots intended to be used for build residential homes
4. Multi-use like apartments over strip mall when those "apartments" are intended for residential use