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March 24, 2026
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This follows our latest client alert on Fincen here.
On March 19, 2026, the U.S. District Court for the Eastern District of Texas vacated FinCEN’s Anti‑Money Laundering Regulations for Residential Real Estate Transfers in its Memorandum Opinion and Order, Flowers Title Companies, LLC v. Bessent, No. 6:25-cv-127-JDK (E.D. Tex. Mar. 19, 2026), ruling that FinCEN exceeded its statutory authority under the Bank Secrecy Act. The decision sets aside, on a nationwide basis, the rule that would have required reporting of non‑financed residential real estate transfers involving entities or trusts, regardless of transaction value or location.
FinCEN relied primarily on 31 U.S.C. § 5318(g), which allows the agency to require reporting of “suspicious transactions.” The court held that FinCEN made a fundamental legal leap it was not allowed to make because the rule treated every non‑financed residential transfer to an entity or trust as inherently suspicious. Further, the court noted that nothing in the cited statutory provisions authorizes FinCEN to impose nationwide, transaction‑by‑transaction reporting on the real estate industry, and dramatically overstepped Congressional authority.
As a result, reporting persons—including title companies, settlement agents, and others involved in covered transactions—are not currently required to file reports under the vacated rule while the court’s order remains in effect. Accordingly, certain details regarding the transferee entity or trust information and their beneficial owners, such as the name, date of birth, driver’s license, residential address, among other information, need not now be provided as part of closing. FinCEN has acknowledged that no filings are required during this period, although an appeal is widely anticipated.
Clients involved in residential real estate transactions should be aware that the compliance landscape remains fluid. While the ruling provides immediate relief from the new reporting obligations, future court action or regulatory response could reinstate similar requirements. We will continue to monitor developments and provide updates as they occur.
