The U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) has long enacted programs and regulations aimed at preventing money laundering and terrorist financing in an effort to protect U.S. economic and national security. FinCEN works closely with financial institutions to collect financial reports which are then analyzed for signs of unlawful schemes or money laundering. If detected, these potential threats are shared with law enforcement agencies to aid in tracking down illicit actors.
FinCEN’s latest effort to combat financial crime focuses on certain high-risk, non-financed transfers of residential real estate to legal entities and trusts under FinCEN’s Anti-Money Laundering Regulations for Residential Real Estate Transfers Rule (“RRE Rule”). Originally scheduled to take effect in December 2025 and later postponed by FinCEN until March 1, 2026 (as discussed in our previous alert), the RRE Rule is now in effect nationwide. Designated reporting persons such as those involved in real estate closings and settlements are required to submit a Real Estate Report to FinCEN regarding these types of transfers. Specifically, the rule will apply when all four of the following criteria are met:
- Residential Real Property (1-4 family structures)
- Non-Financed Transfer (no qualifying institutional lender)
- Transferee Entity or Trust (not an individual buyer)
- No Exemption Applies
Transfers to individuals, as well as certain transfers commonly used in estate planning, are exempt and do not have to be reported.
The Real Estate Report must be filed by the last day of the month following the month in which the date of closing occurred, or within 30 calendar days after the date of closing, whichever is later, and must be submitted electronically through the BSA E-Filing System by a designated reporting person.
Negligent violations of the rule could result in civil penalties currently set at a maximum of $1,430 for each violation, with additional monetary penalties for patterns of negligent activities or willful violations of the rule. Criminal penalties for willful violations of the rule could also result.
This new reporting rule will change closing workflows nationwide. In response, Barley Snyder has implemented a team of professionals to analyze incoming real estate transactions and determine whether they meet the criteria for filing a Real Estate Report. The firm has also appointed designated reporting persons across its footprint to handle the filing of these reports.
As always, Barley Snyder will continue to follow FinCEN’s Residential Real Estate Rule closely and provide updates as new information is released. If you have any questions about these new reporting requirements, please contact attorney Jayne Katherman or any member of Barley Snyder’s Real Estate Practice Group.
