FinCEN Finalizes Rule to Compel Reporting of Individuals and Beneficial Ownership of Entities Involved in Specified Transfers of Residential Real Estate

In August 2024, the Financial Crimes Enforcement Network (FinCEN) announced a final rule that is designed to combat and deter money laundering by increasing transparency in the U.S. residential real estate sector.

The rule requires, on a nationwide basis, certain persons involved in real estate closings and settlements to report information to FinCEN about specified transfers of residential real estate that are a high risk for illicit finance.

FinCEN’s final rule (RRE Rule) will take effect on December 1, 2025. It will require disclosure of the transferor and transferee(s) and the individuals and the beneficial owners of entities involved as transferee in the transfer of residential real estate or land which is intended to be developed or used for residential real estate, excluding transfers solely to individuals.

The RRE Rule is limited to transactions of property designed for one-to-four family occupancy, or land acquired with that intent, and in which no mortgage financing is provided by a financial institution(s) subject to Anti-Money Laundering and Suspicious Activity Report reporting obligations.

Reporting is to be made by a U.S.-based designated real estate professional involved in the closing. This professional may be the settlement agent, title insurance agent, escrow agent, or attorney. There is only one reporting person for any given reportable transfer.

Some transactions are deemed non-reportable: easements, certain transfers upon death or in connection with a divorced or other marriage dissolution, transfers to a bankruptcy estate or supervised by a court, certain transfers made by an individual solely or together with a spouse to a trust as to which they are settlor(s) or grantor(s), or where there is no reporting person.