As we previously blogged, the Financial Crimes Enforcement Center (“FinCEN”) published Anti-Money Laundering Regulations for Residential Real Estate Transfers (“Final Rule”) regarding residential real estate. The Final Rule, set to go into effect on December 1, 2025, institutes a new Bank Secrecy Act reporting form – the “Real Estate Report” (“Report”) – which imposes a nation-wide reporting requirement for the details of residential real estate transactions, subject to certain exceptions, in which the buyer is a covered entity or trust.
FinCEN has now published the proposed Report, which is here, and requested comments within 60 days. The Reports are to be filed through FinCEN’s electronic online reporting system.
The proposed Report has 111 distinct fields. “FinCEN expects approximately 60 percent must be completed to report a given transfer . . . . [but also] anticipates that significantly more fields may be required for certain highly complex reportable transfers, such as those with multiple beneficial owners (“BOs”) or multiple sources of funds that would require the same fields to be populated for each owner or source of funds.”
As we previously blogged, a Report must identify the following information:
- The reporting person;
- The legal entity or trust receiving ownership of the property;
- The BOs of the transferee entity or transferee trust;
- Certain individuals signing documents on behalf of the transferee entity or transferee trust during the reportable transfer;
- The transferor;
- The residential real property being transferred; and
- Total consideration and certain information about any payments made.
FinCEN repeats that reporting persons may rely reasonably on information provided by other persons, if the reporting person does not know facts that would reasonably call into question the reliability of the information. However, as to BO information, the reasonable reliance standard applies more narrowly to information provided by the transferee or the transferee’s representative and only if the person providing the information certifies its accuracy in writing to the best of their knowledge. Moreover, the Final Rule does not allow the filing of incomplete Reports.
The Report requires in part collection of a BO’s name, date of birth, address, government-issued identifying number (such as a social security number or foreign passport number), and citizenship. As to BOs of transferee trusts, the reporting person also must indicate if the BO is one or more of the following:
- An individual who is a trustee of the transferee trust
- An individual other than a trustee with the authority to dispose of transferee trust assets
- A beneficiary who is the sole permissible recipient of income and principal from the transferee trust or who has the right to demand a distribution of, or withdraw, substantially all of the assets from the transferee trust
- A grantor or settlor who has the right to revoke the transferee trust or otherwise withdraw the assets of the transferee trust
- A beneficial owner of a legal entity or trust that is a trustee of the transferee trust
- A beneficial owner of a legal entity or trust with authority to dispose of transferee trust assets in a manner other than as a trustee of a transferee trust
- A beneficial owner of a legal entity or trust that is the sole permissible recipient of income and principal from the transferee trust or who has the right to demand a distribution of, or withdraw, substantially all of the assets from the transferee trust
- A beneficial owner of legal entity or trust that is a grantor or settlor with the right to revoke the transferee trust or otherwise withdraw the assets of the transferee trust
FinCEN estimates that about 850,000 Reports will be filed annually by up to 172,753 reporting persons. FinCEN also estimates that it will take, on average, each filer about 50 minutes to institute training and technology sufficient to be able to file Reports. FinCEN further estimates that it will take, on average, about 15 minutes to file each Report. Thus, FinCEN estimates that compliance with the reporting requirement will impose a total annual burden of 356,461 hours.
FinCEN advised of the following observations regarding data collected through the Geographic Targeting Orders (“GTOs”), which have accumulated BO information since 2016 through reports regarding the purchases of certain real estate by entities in designated U.S. jurisdictions if they exceeded certain monetary thresholds:
FinCEN estimates that approximately 64 percent of all reports filed were submitted by the five largest title companies and an additional 8 percent, approximately, were filed by the remaining 15 of the 20 largest title companies. The residual share of total reports filed were submitted by either smaller title companies or law offices, with an average filing volume of 16 GTO reports filed per remaining filer and an average of one identifiably distinct employee filer per reporting year per reporting entity.
Finally, signaling the likely role of lawyers in filing the proposed real estate Reports, “FinCEN notes that of the approximately 2,400 identifiably unique filers who submitted at least one Residential Real Estate GTO report through August 2024, approximately 38.4 percent self-identified as either primarily employed as an attorney or the employee of a law office.”
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