Introduction

In an earlier piece, we commented on the issuance and effectiveness of a final rule (the “Final Rule”) issued by the U.S. Financial Crimes Enforcement Network (“FinCEN”) under the Bank Secrecy Act (“BSA”). The Final Rule, which took effect on 1 March 2026, imposes nationwide reporting requirements on certain residential real estate transactions that are deemed to carry a high risk of involving illicit finance: it targets non-financed purchases by, or gifts or contributions to, legal entities or most types of trusts.

Scope and Covered Transactions

The Final Rule introduced transaction-based reporting requirements for in-scope transfers to legal entities or trusts (not natural persons) of residential real property (one-to-four-family homes, condominiums, cooperatives and vacant land intended for residential use) located within the United States. To be covered by the Final Rule, the transfer must be made without secured financing from a financial institution subject to the BSA’s anti-money laundering regime.

Exemptions are provided for a number of transactions deemed to have a low probability of abuse. In addition, non-exempt transfers may nevertheless be outside the scope of the rule if the transferee is an enumerated exempt regulated entity.

Subsequent Developments

On 19 March of this year, a U.S. federal trial judge in Texas vacated the Final Rule (ostensibly with nationwide effect) on the ground that FinCEN, in issuing the Final Rule, exceeded its authority under the BSA because (i) non-financed residential real estate transactions are not per se suspicious and (ii) the statute does not authorize the breadth of reporting mandated by the Final Rule.

In light of the decision, FinCEN announced that reporting persons facially subject to the Final Rule are not currently required to file reports with FinCEN and are not subject to liability if they fail to do so while the court order remains in force.

The government may appeal the court’s ruling and may seek a stay of his order (it has until mid-May to do so). If the order is stayed, enforcement of the Final Rule may continue pending resolution of the appeal.

Conclusion

Attorneys and other covered real estate professionals should retain any records with respect to closed transactions, as well as any forms and protocols established to comply with the Final Rule, in anticipation of the possibility that its requirements will re-enter into force at a subsequent point. Continued monitoring of the situation is also recommended.