It is no surprise that criminals use real estate to launder money. The good news is that a new federal rule, which goes into effect on March 1, 2026, will improve transparency and prevent such illicit financial activity through anonymous property purchases.
The challenge for real estate professionals is that all-cash residential transactions (and certain financed transactions) will become significantly more complex because the law changes the requirements regarding how cash real estate deals are to be reported.
Settlement agents, title companies, and other transaction professionals will need to make important changes.
The FinCEN Residential Real Estate Reporting Rule
This nationwide Residential Real Estate Reporting Rule (RRE Rule) is being implemented by the Financial Crimes Enforcement Network (FinCEN).
If you are involved in closing all-cash residential transactions or other transactions that are also subject to the Residential Real Estate Rule in which the buyer is an entity or trust, this rule applies to you.
What Transactions Are Included?
The RRE Rule captures all non-financed transfers of residential real property where the transferee is an entity or trust. This includes:
1. Certain vacant land
2. Individual units within larger residential buildings
3. Single-family homes and 1-4 unit residential structures
4. Shares in cooperative housing corporations
The rule is specific to cash transactions. However, it may also apply to any transfer without traditional mortgage financing. If the buyer obtained a loan from a private lender or used alternative financing, if there is no institutional mortgage, the transaction likely falls under the reporting requirement.
Who is Required to File the Report?
The designated reporting person holds the liability, although the responsibility can be transferred using written designation agreements, which must be transaction-specific and retained for five years. Blanket agreements or general policies to shift reporting duties are not permitted.
Important Exemptions
Not every transaction requires reporting. The following are excluded:
1. Transactions where the buyer is a securities reporting issuer, government authority, bank, insurance company, or their subsidiaries
2. 1031 exchanges to qualified intermediaries
3. Certain trust-to-trust transfers involving settlors or spouses
4. Court-supervised transfers (inheritance, divorce, bankruptcy, judicial foreclosure)
Do not assume your transaction qualifies for one of these exemptions without careful analysis of the specific circumstances. I recommend you consult with an attorney to ensure that you follow the law.
What Information Must Be Reported?
The following information must be collected and verified:
1. Complete details about the property and transaction
2. Comprehensive information about buyers and sellers (including entities, trusts, or individuals)
3. Beneficial ownership information for entities
4. For trusts: trustees, trust protectors, controlling beneficiaries, and revocable grantors
5. Payment details and methods
6. Information about any individuals who sign transaction documents
The beneficial ownership requirements include written certifications from parties regarding beneficial owners. Standardized ALTA collection forms are available.
Compliance Deadlines and Filing Process
FinCEN has an e-filing system and reports are to be filed electronically no later than the last day of the month following closing, or 30 days after closing, whichever comes first.
You will need the following to e-file:
1. A login.gov account
2. BSA e-filing system credentials
3. Access to the final reporting form
Non-Compliance Carries Serious Penalties
The consequences for failing to comply are significant and increase based on the nature of the violation. Civil penalties for negligent violations are $1,394 per incident. Willful violations can be up to $278,582 per incident. Criminal penalties can be up to $250,000 in fines and five years’ imprisonment.
FinCEN’s history demonstrates their commitment to enforcement in anti-money laundering matters, and this rule provides clear standards for what constitutes compliance.
How to Prepare
1. Everyone involved in settlements, escrow, and compliance needs to understand these requirements before March 1, 2026. This includes all staff members.
2. Establish procedures to identify reportable transactions, collect required information, and obtain beneficial ownership certifications.
3. Create a login.gov account and obtain BSA e-filing credentials.
4. Develop policies to retain designation agreements and beneficial ownership certifications for the required five-year period.
5. Periodically check the FinCEN website to obtain the final reporting form at https://www.fincen.gov/rre. This site provides all the details about this law.
6. If you plan to shift reporting responsibility to other parties, make sure your agreements are properly drafted, specific to the transaction, and legally enforceable.
The Bottom Line
This rule represents the most significant expansion of real estate transaction reporting requirements in decades. It brings federal anti-money laundering oversight to hundreds of thousands of transactions that previously operated with minimal regulatory scrutiny.
Property owners, investors, and real estate professionals who handle cash transactions need to understand these requirements and prepare their operations accordingly.
If you are involved in residential real estate closings, particularly all-cash transactions involving entities or trusts, consult an attorney who understands these new requirements.
Gaylene Rogers Lonergan
Board Certified Residential and Commercial Real Estate Attorney
Lonergan Law Firm PLLC and Title Closing Office
12801 N. Central Expressway, Suite 150, Dallas, Texas 75243
(214) 503-7509 | LonerganLaw.com
© Gaylene Rogers Lonergan and Lonergan Law Firm, PLLC, 2026. All rights reserved. This article is provided for educational reasons exclusively and is not meant to be construed as legal advice. The Lonergan Law Firm, PLLC, will represent you only after being retained and that agreement is made in writing.
References
1. Financial Crimes Enforcement Network (FinCEN). “Residential Real Estate Reporting Rule: Overview and Key Requirements.” U.S. Department of the Treasury. Accessed January 2025.
2. AgentNet Knowledge. “FinCEN Resource Hub: Compliance Guide for Real Estate Professionals.” Industry compliance documentation and implementation guidelines. 2025.
3. American Land Title Association (ALTA). “Beneficial Ownership Collection Forms and Best Practices for the RRE Rule.” Title industry standards and procedures. 2025.
