You may have heard there is a new FinCEN rule but it sounds like some high level mystery stuff by its name. What is it? Basically, effective March 1, 2026, the Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of the US Treasury, is implementing a new rule which will require the reporting of certain non-financed transfers of residential real estate to legal entities or trusts. This rule aims to combat money laundering by requiring specific, non-exempt, residential transactions—such as 1-4 family homes, condos, and co-ops—to be reported to the government.
From the FinCen website, "Information provided on Real Estate Reports is meant to help combat and deter money laundering by increasing transparency in the U.S. residential real estate sector. Although there are many legitimate reasons to use legal entities and trusts to own residential real property, illicit actors intent on laundering funds through residential real property often use legal entities and trusts to disguise their identities and make the proceeds of crime more difficult to identify. Illicit actors often favor non-financed transfers (including “all-cash” sales) of residential real estate to avoid scrutiny from financial institutions that have anti-money laundering and countering the financing of terrorism (AML/CFT) program and Suspicious Activity Report (SAR) filing requirements under the Bank Secrecy Act."
Basically, if it is a residential sale that doesn't use a mortgage (all cash) that's title is being put into a legal entity or trust, instead of being held by an individual, the humans behind the legal entity have to be listed so the government can trace the money.
According to an article on WRE today, a coalition of Puerto Rico-based privacy groups has filed a lawsuit to block this rule alleging "the rule will significantly harm transactions in Puerto Rico, where property buyers often use trusts or legal entities to maintain privacy and safety. The plaintiffs insist Puerto Rico regulations already allow substantial identity mapping and that the new federal rule would erase those privacy safeguards."
Lots to unpack on this issue in regard to privacy. It will be interesting to see how this plays out in the courts. In the meantime, we will be complying with the new rule.
