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Just weeks after taking effect, FinCEN’s Anti-Money Laundering Regulations for Residential Real Estate Transfers Rule (“Rule”) has been struck down by a federal court in Texas. As we reported in our September 2025 alert, the Rule went into effect on March 1, 2026, requiring persons such as title companies, settlement agents, attorneys, and other real estate professionals (“Reporting Persons”) to collect and report detailed beneficial ownership information in connection with non-financed residential real estate transfers to legal entities and trusts. On March 19, 2026, a U.S. District Judge for the Eastern District of Texas issued an order granting summary judgment in favor of a plaintiff Texas title company, vacating the Rule nationwide.
Following the court’s ruling, FinCEN updated its website with the following alert: “In light of a federal court decision, reporting persons are not currently required to file real estate reports with FinCEN and are not subject to liability if they fail to do so while the order remains in force.” However, the situation remains highly fluid. Notably, this ruling is in tension with a decision from the U.S. District Court for the Middle District of Florida, which previously upheld the Rule, so an appeal to the Fifth Circuit is widely expected.
Reporting Persons are assessing the implications of the ruling; however, we expect many will likely take a cautious approach in the interim and continue collecting information pertaining to the Reporting Requirements in transactions which would otherwise be reportable, in the event retroactive compliance or filings are later required. As the litigation makes its way through the courts, real estate professionals should continue to familiarize themselves with the Rule, review their transaction processes, update residential real estate contracts, and assess their exposure. For further information on the Rule, read our August 2025 alert that details various requirements within the Rule, such as what constitutes a reportable transfer, who is the Reporting Person, what must be disclosed, and what transactions are exempt and not reportable.
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