FinCEN Issues Final Rule on Residential Real Estate Reporting

FinCEN recently issued a final rule regarding reporting requirements for persons involved in residential real estate closings and settlements.  The rule takes effect on December 1, 2025.

Under the residential real estate rule, certain reporting persons involved in real estate closings and settlements would have to file reports to FinCEN regarding certain kinds of non-financed transfers of ownership of residential real property to an entity or trust.  In discussing the focus of the rule on non-financed transfers, FinCEN states in the rule’s preamble, “Most transfers of residential real estate are associated with a mortgage loan or other financing provided by financial institutions subject to AML/CFT program requirements.  As non-financed transfers do not involve such financial institutions, such transfers can be and have been exploited by illicit actors of all varieties, including those that pose domestic threats, such as persons engaged in fraud or organized crime, and foreign threats, such as international drug cartels, human traffickers, and corrupt political or business figures.”

The “residential real property” to which the rule applies includes but is not limited to real property in the U.S. containing a structure designed principally for occupancy by one to four families, as well as land located in the U.S. on which the transferee intends to build such a structure.  There are a number of exceptions to what constitutes a reportable transfer, including transfers for which there is no reporting person.  The term “reporting person” is a waterfall that includes (among other people):

• The person listed as the closing or settlement agent on the closing or settlement statement for the transfer;
• If no such person is involved in the transfer, then the person that prepares the closing or settlement statement for the transfer; and
• If no such person is involved in the transfer, then the person that files with the recordation office the deed or other instrument that transfers ownership of the residential real property.

The information that must be reported includes, among other items, the full legal name and category of the reporting person (as described above), the full legal name and address (if applicable) of the transferee, the transferee’s unique identifying number (such as its IRS taxpayer identification number), information regarding the beneficial owner of the transferee (such as their full legal name and address), information regarding the transferor (such as its full legal name and unique identifying number), information regarding the residential real estate in question (such as the street address (if any) and the legal description), and information regarding any payments made by or on behalf of the transferee regarding the transfer.