New reporting requirements were rolled out this week by the Financial Crimes Enforcement Network (FinCEN) in an effort to combat money laundering through real estate transfers, adding a new layer of information gathering and submission on transactions that meet ALL four of the following criteria:
1.) It is a residential property
2.) The buyer is an entity or a trust
3.) There is no traditional bank mortgage
4.) No exemptions apply
FinCEN is calling this the Residential Real Estate Rule, or RRE Rule.
Any such transfer will be subject to requirements for data that includes full information of entity ownership, banking information, and TIN or EIN. Settlement companies like Capstone Land Transfer will often be the responsible reporting party and will request documentation early in the closing process.
As part of the effort to promote understanding of these new reporting rules, Capstone is hosting a FREE virtual seminar on Thursday, March 5 to go over the reporting rules, how they impact transactions, and how real estate professionals can better assist their clients through the process.
Among the topics we will cover:
- How Capstone will handle FinCEN reporting moving forward
- The basics of reportable transactions and the criteria FinCEN uses
- When and why certain transactions are exempt from reporting
- Deadlines, fines and fees that go along with the reporting procedure
- Frequently Asked Questions
- Open discussion for all who want to participate
The new FinCEN real estate reporting requirements went into effect on March 1 for all qualifying transfers from that date forward. Capstone aims to promote understanding of these rules and continue to guide buyers and sellers on the smoothest route to the settlement table.
Here’s a look at the core basics of the FinCEN RRE Rule and when it comes into play on real estate transfers:
What is FinCEN?
The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury that combats money laundering, terrorist financing, and other financial crimes. It safeguards the financial system by analyzing transaction data, implementing Bank Secrecy Act (BSA) regulations, and providing intelligence to law enforcement.
What is a “Reportable Transfer”?
A report must be filed only if the transaction meets all of the following criteria:
- Residential Real Property: Includes 1-4 family homes, townhouses, condominiums, cooperatives, and even vacant land intended for such structures.
- Non-Financed: The transfer does not involve an extension of credit from a regulated financial institution (like a bank or credit union) secured by a mortgage. This captures “all-cash” deals and those using private or “hard money” lenders.
- Legal Entity or Trust Buyer: At least one of the transferees must be a legal entity (LLC, corporation, partnership) or a trust.
- No Exemptions: Common exemptions include transfers due to death, divorce, bankruptcy, or those involving a government transparency program.
Who reports the transfer?
FinCEN does not require the buyer to file the report. Instead, it uses a reporting cascade to determine which professional is responsible. The duty typically falls to:
- The Closing/Settlement Agent listed on the statement.
- The person who prepares the Settlement Statement.
- The person who files the Deed.
- The Title Insurance underwriter.
Key Deadlines and Penalties
Timing is critical to remain compliant and avoid significant civil or criminal penalties.
- Effective Date: March 1, 2026 (applies to closings occurring on or after this date).
- Filing Deadline: Reports must be filed by the later of:
- The final day of the month following the month in which the closing occurred.
- Thirty calendar days after the date of closing.
- Penalties: Failure to comply can result in civil penalties or criminal fines and imprisonment for willful violations.
What information is collected?
To complete the Real Estate Report, the reporting party will need to gather:
- The Reporting Person: Name and contact info.
- The Transferee (Buyer) & Transferor (Seller): Legal names, addresses, and Taxpayer Identification Numbers (TIN).
- Beneficial Owners: For the buyer entity/trust, you must identify individuals who exercise “substantial control” or own/control at least 25% of the interests.
- The Property: Legal description and physical address.
- Payments: Total consideration and the method of payment.
