Come March 2026, the federal government will expect nothing less than full compliance, and the penalties for non-reporting could be severe.
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Come March 2026, the federal government will expect nothing less than full compliance, and the penalties for non-reporting could be severe.
Real estate professionals, such as attorneys, real estate brokers, and title companies alike, should prepare for and be aware of one of the most sweeping anti-money laundering (“AML”) compliance changes in decades. In August 2024, the Financial Crimes Enforcement Network (“FinCEN”) finalized the Anti-Money Laundering Regulations for Residential Real Estate Transfers, known informally as the Residential Real Estate Rule (“RRE Rule” or “Rule”) [see https://bit.ly/42GQVCy].
Originally, the RRE Rule was set to take effect on Dec. 1, 2025. The Rule would have required closing professionals to file detailed reports with FinCEN for certain non-financed (i.e., all-cash or privately financed) property transfers [see https://bit.ly/4nSqq5E]. However, on September 30, 2025, FinCEN announced that it is postponing the effective date to March 1, 2026, through an Exemptive Relief Order [see https://bit.ly/4h8PZMY]. While this short postponement gives the industry some additional time to prepare for its implementation, the RRE Rule will be going into effect.
The RRE Rule expands FinCEN’s effort to increase transparency in the U.S. real estate market [see https://bit.ly/3KNFqTJ]. Since 2016, FinCEN has relied on Geographic Targeting Orders (“GTOs”) requiring title insurance companies to report all-cash purchases in certain metropolitan areas. The new rule replaces those GTOs with a nationwide, permanent reporting regime under the Bank Secrecy Act (“BSA”) [see http://bit.ly/3IKfHel]. Below are some of the key elements of the RRE Rule:
Covered Transactions
The RRE Rule applies to non-financed transfers of residential real property when the transferee is a legal entity or trust, not an individual. The types of real property covered by the Rule include:
Reporting Persons
FinCEN establishes a “cascade” of potential reporting parties, such as settlement agents, title or escrow companies, attorneys, and other closing professionals, and allows parties to assign reporting responsibility by written agreement. If no one is designated, the first qualifying party in the chain must report. The reporting “cascade” is as follows:
Required Information
The reporting window is expected to be thirty (30) days after closing. Electronic filing through FinCEN’s BSA E-Filing portal will be mandatory. Each report (i.e., Form FinCEN RER) must disclose:
Exemptions
The RRE Rule exempts transfers: (1) involving regulated financial institutions already subject to AML programs; (2) ordered by courts (probate, divorce, bankruptcy); (3) to governmental bodies; or (4) resulting from foreclosures or eminent domain. FinCEN provides a helpful FAQ for industry professionals which provides critical guidance regarding the RRE Rule [see https://bit.ly/48tM77g]. The required filing form can be found at https://bit.ly/4nPgfyN.
FinCEN indicates that the reporting requirements of the RRE Rule “are expected to assist the U.S. Department of the Treasury, law enforcement, and national security agencies in addressing illicit finance vulnerabilities in the U.S. residential real estate sector, and to curtail the ability of illicit actors to anonymously launder illicit proceeds through transfers of residential real property….” FinCEN further points out that “[i]nvestigations revealed that shell companies, LLCs, and trusts are frequently used to mask beneficial ownership in high-value all-cash transactions.”
According to FinCEN, the reporting process will mirror the Corporate Transparency Act (“CTA”) beneficial ownership registry but will focus specifically on property transfers. By creating a permanent database of who truly owns U.S. residential property, FinCEN hopes to deter illicit investment, and bring U.S. standards in line with those in the European Union and United Kingdom.
According to FinCEN, the delay to March 1st allows additional time for reporting persons to develop and implement systems and procedures necessary for compliance. Industry groups, such as the American Land Title Association (“ALTA”), applauded the delay, citing heavy compliance burdens [see https://bit.ly/46St9Gg]. FinCEN is providing this temporary relief to allow reporting persons additional time to implement the systems, training, and processes necessary to comply with the RRE Rule [see https://bit.ly/48nm0Pg]. Industry feedback suggested that compliance costs were greatly underestimated, particularly for smaller title agencies, closing attorneys, and escrow firms.
While the RRE Rule is delayed, the current GTOs remain in force. FinCEN renewed the GTOs on Oct. 10, 2025, extending them through February 28, 2026, to ensure continuous reporting coverage before the new RRE Rule takes effect [see renewal notice at https://bit.ly/3L6T1FA]. Under the GTOs, title insurance companies in specified metropolitan areas (such as New York City, Miami, Los Angeles, and San Francisco) must continue to report all-cash purchases of residential property by legal entities when the purchase price exceeds $300,000.
The delay is not simply procedural. It gives firms and industry participants a reasonable opportunity to prepare intelligently rather than reactively for its implementation. FinCEN’s 100-plus field reporting form is complex and will require new data collection systems and internal policies to be established.
Building Compliance Infrastructure
During this extended implementation period, professionals should put in place procedures for determining which party will serve as the reporting person in each transaction. They should also develop beneficial ownership questionnaires consistent with the Corporate Transparency Act standards and review closing software capabilities to capture trust and entity data. Industry participants should update engagement letters and closing instructions to allocate responsibility for RRE filings and train staff to identify covered transactions early in the process.
RRE Filing Requirements
There is no fee for submitting a Real Estate Report (RER) directly to FinCEN through FinCEN’s BSA E-Filing System at https://bsaefiling.fincen.gov. According to FinCEN, “[r]eporting persons may use third-party service providers to submit RERs to FinCEN. Those providers might charge fees for their services. Before authorizing a third-party service provider to file a RER with FinCEN, you should: (1) understand the fees for the offered services; and (2) carefully review any terms of service or agreements.” If multiple parties participate in a closing, they should specify, in writing, who will file the RRE Report. Absent such an agreement, responsibility may default unexpectedly, exposing an unprepared party to significant liability.
Data-Security and Privacy
Because the RRE Rule will collect sensitive personal information (e.g., passport numbers, SSNs, trust agreements, and other critical personally identifiable information), closing agents must plan robust data-security protocols. FinCEN promises confidentiality, but cyber-risk and recordkeeping standards remain the filer’s responsibility.
Liability and Penalties
Failure to file or inaccurate filings can trigger civil and criminal penalties under the BSA. Given the complexity of entity ownership chains, it is essential to verify beneficial ownership data carefully. The RRE Rule operates under the Bank Secrecy Act (BSA) authorities, which allow both civil and criminal sanctions for violations of reporting, recordkeeping, and filing obligations. Under the final rule as published, penalties are tiered depending on whether conduct is negligent or willful.
Civil Penalties for Negligent Violations
A negligent violation of the RRE Rule may lead to a civil penalty of up to approximately $1,394 per violation (as of the latest Rule’s publication). For a pattern of negligent violations, an additional civil penalty of up to $108,489 may be assessed. Thus, repeating the same mistake across multiple closings could significantly multiply exposure under the “pattern” threshold.
Civil & Criminal Penalties for Willful Violations
If a violator acts willfully, that is, knowingly or with reckless disregard of the requirements, the penalties increase. The criminal penalties can also include up to five (5) years imprisonment. A criminal fine of up to $250,000 (or possibly more under aggravating circumstances) may accompany imprisonment. There are also enhanced civil penalties that may apply. In the willful case, a civil penalty of up to the greater of the amount involved in the transaction (subject to a cap), or $69,733. There is a transaction-cap (i.e. a ceiling) of $278,937 on the punitive civil penalty tied to the transaction amount, where that amount is greater.
Action Steps Before March 1, 2026
The postponement provides time for firms to plan and test compliance systems. During this window, professionals should identify their reporting responsibilities, train staff, and coordinate with title companies and vendors. Below are some of the critical steps industry professionals should take prior to the March 1, 2026 effective date:
The postponement to March 1, 2026, provides the real estate industry five additional months to prepare. For attorneys, brokers, and title professionals, the key takeaway is clear: use this window wisely and educate themselves. Build your compliance framework now, test your reporting systems, and align your processes with both the Corporate Transparency Act and FinCEN’s RRE Rule requirements. Come March 2026, the federal government will expect nothing less than full compliance, and the penalties for non-reporting could be severe.
About the author: Legal Column author John Dolgetta, Esq. is the principal of the law firm of Dolgetta Law, PLLC. For information about Dolgetta Law, PLLC and John Dolgetta, Esq., please visit http://www.dolgettalaw.com. The foregoing article is for informational purposes only and does not confer an attorney-client relationship and shall not be considered legal advice. The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views or positions of HGAR, its affiliates, or any other entity.
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