A new voice has entered the discourse surrounding the ongoing legal battle between Fidelity National Financial (as well as its subsidiary Fidelity National Title Insurance Co.) and the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
Originally filed in May by Fidelity against FinCEN – as well as FinCEN director Andrea Gacki and Treasury Secretary Scott Bessent – the suit sought to impose an injunction against and ultimately overturn FinCEN’s “Anti-Money Laundering Regulations for Residential Real Estate Transfers” final rule.
This rule was originally intended to go into effect on Dec. 1 but the effective date has since been delayed to March 1, 2026.
More recently, competing motions for summary judgment were submitted by both parties, with oral arguments given on Nov. 18.
On Dec. 9, U.S. Magistrate Judge Samuel Horovitz, who represents the U.S. District Court, Middle District of Florida, filed a recommendation report with the court favoring summary judgment in FinCEN’s favor calling Fidelity’s arguments against the final rule “unpersuasive.”
Throughout the 50-page report, Horowitz examined and critically analyzed the arguments presented by the plaintiffs against the final rule and the government’s authority to impose it. As the plaintiffs in the case, Fidelity and its subsidiaries are challenging a rule that, exceptions aside, generally requires reporting on non-financed transfers of ownership interest in residential real estate to certain entities or trusts, with some exceptions.
According to Horowitz’s report, the challenges raised in the motions focus on whether the rule exceeds legal authority, is arbitrary and capricious, and violates the Fourth and First Amendments. FinCEN has maintained that the rule balances the need for useful reports for law enforcement with reducing the burden on businesses.
Unlike geographic targeting orders (GTOs), which the final rule will replace, Horowitz pointed out that the rule includes trusts in its reporting requirements. FinCEN received mixed feedback on this aspect but did not exclude trusts, citing a high risk of money laundering associated with these transfers, while suggesting that any challenges with assessing trust documents will be addressed through new exceptions and standards.
Although the plaintiffs have challenged the statutory authorization that makes the rule legitimate and enforceable, Horowitz argued that FinCEN has the authority under 31 U.S.C. § 5318(g)(1) to require financial institutions to report suspicious transactions related to possible legal violations.
The law also includes provisions for creating streamlined reporting processes for simpler cases, detailed in the same statutes, Horowitz added.
“The undersigned recommends the rule is statutorily authorized,” his report read in part.
Horowitz added that Fidelity argued that the established rule inaccurately encompasses transactions that are not genuinely suspicious or linked to legal violations. Since key terms are not defined in the statute, the plaintiffs referenced dictionary definitions, indicating that "suspicious" refers to transactions that provoke doubt or concern.
However, Horowitz believes the plaintiffs did not fully explore the implications of the definitions and that while they cite definitions from Black's Law Dictionary, their interpretation lacks context.
While their initial arguments relied on dictionary meanings, Horowitz pointed out that the plaintiffs then shifted their focus to case law interpretations. Fidelity argued that a ruling in Lopez v. First Union Nat’l Bank mandates a strict interpretation of § 5318(g)(1) to allow reporting only when there is a reasonable basis connecting a transaction to illegal activity.
However, Horowitz saw weakness with this arguement. He noted that the language of § 5318(g)(1) differs from that of § 5318(g)(3), which deals with safe-harbor immunity for voluntary disclosures of legal violations. The differing wording indicates Congress intended different scopes for these provisions. As a result, Horowitz believes there is no basis for treating them as synonymous.
“Is the rule directed to ‘any suspicious transaction relevant to a possible violation of law or regulation?’ That is, does the rule regulate transactions that: ‘tend to arouse’ ‘a state of mental uneasiness and uncertainty’ or sense of ‘something wrong without proof or on slight evidence’ and are relevant or ‘logically connected’ to ‘the chance that something is or might be’ illegal or ‘the quality, state, or condition of’ illegality ‘being conceivable in theory or in practice;’ of illegality ‘perhaps being,’ ‘perhaps existing,’ or ‘comporting with physical laws or the laws of reason?’ Yes,” Horowitz’s opinion reads in part. “And was FinCEN’s determination of as much arbitrary and capricious? No.”
The report ended with Horowitz “respectfully” recommending that the court grant FinCEN’s motion for summary judgement and deny Fidelity its own motion for summary judgement. .
The presiding judge will make the ultimate decision.