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new federal rule requires real estate professionals to report all-cash residential transactions involving entities or trusts to FinCEN, but not direct individual buyers. The rule targets non-financed transfers of residential property to entities or trusts with specific exemptions for regulated entities and routine transfers.
Real estate professionals involved in closings must identify the reporting party, collect beneficial ownership information, and file reports within 30-60 days. They should update processes and train staff to ensure compliance by December 1, 2025.
The rule applies to residential real property transactions involving legal entities or trusts, but not direct individual buyers. All-cash and non-bank financed transactions are the primary focus of the new rule as they present higher risks for money laundering.
A transfer is considered reportable if it meets four specific criteria: the transaction involves residential real property in the U.S., is non-financed, involves a transferee entity or trust, and does not fall under one of the specified exemptions. The reporting person must file a Real Estate Report with FinCEN containing information about the transferor, transferee, and beneficial ownership.
The report must be filed no later than 30 calendar days after the date of closing, or the last day of the month following the month in which the closing occurred, whichever is later. Reporting persons are required to retain copies of designation agreements and written beneficial ownership certifications for five years.
Several exemptions apply, including transfers resulting from death, divorce, bankruptcy, or court supervision, as well as certain regulated entities and trusts. Real estate professionals should review their transaction processes, update closing documentation, and train staff to ensure compliance by the effective date of December 1, 2025.
The new rule continues a trend in combating money laundering and financial crimes, and most routine transfers to individuals are not covered. However, transfers to entities or trusts should be carefully reviewed for applicability and exemptions. Real estate professionals must familiarize themselves with the rules, assess their exposure, and prepare for reporting and recordkeeping obligations.
