The settlement services industry has been granted more time to prepare for new regulations governing non-financed transfers of residential real property to legal entities and trusts.
In an exemptive relief order issued on Sept. 30, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that reporting requirements for the upcoming “Anti-Money Laundering Regulations for Residential Real Estate Transfers” will not be enforced until March 1, 2026.
On the same day, it was also announced that FinCEN and Fidelity National Financial had filed a joint motion to cancel a court hearing on Fidelity’s request for a preliminary injunction against the rule.
The ongoing suit against FinCEN by Fidelity is being heard by the U.S. District Court of the Middle District of Florida, Jacksonville Division. Although the case remains active, both parties agreed it’s unnecessary for the court to address the preliminary injunction motion in light of the exemptive relief order.
The rule in question, more commonly known as the “Residential Real Estate Rule,” was set to go into effect on Dec. 1. However, with the relief order, all those covered by the rule are now exempt from reporting requirements until the new deadline.
In its announcement, FinCEN noted the exemptive relief order is intended to grant impacted individuals and businesses more time to prepare for the new regulatory requirements.
That has been welcome news for some sectors of the industry, particularly those concerned with title companies and agencies having enough time to adjust to the regulations.
“I feel this (delay) will allow our industry to be more ready for the process changes and the solutions we are going to put into place,” Amy Gregory, chief administrative officer and president of the Florida Agency Network, told The Legal Description. “I also feel this time allows the vendors to provide demos with the final information that will be needed with this process.
“Also, if there are going to be more challenges to the rule, this will allow the time needed to work through any revisions that are agreed to with those challenges,” Gregory added. “Overall, I am very happy to see the extension.”
The announcement of the exemptive relief order coincided with FinCEN’s release of an example form that reporting individuals will be expected to file when the rule goes into effect. That form can be found here, with the label “Real Estate Report Form.”
The rule requires individuals to report non-financed transfers of residential real estate to legal entities and trusts. According to FinCEN documentation, many residential real estate transfers are linked to mortgage loans from financial institutions that follow Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) programs – non-financed transfers, however, can be misused by various illicit actors, including those involved in fraud, organized crime, drug trafficking, human trafficking and corruption. This potential for illicit financial activity necessitated the rule’s transaction reporting requirements, according to FinCEN.
To take advantage of the additional time to prepare, be sure to explore these resources from October Research about FinCEN’s real estate reporting rule: Keys to Real Estate Podcast episode: Trust Transfers Trigger FinCEN Scrutiny: What Every Attorney Needs to Know - Ruth Dillingham, Esq.
Tuesdays with Mary blog guest post: What to know about FinCEN reporting requirements for real estate transactions
Webinar: Countdown to Compliance: FinCEN's Residential Rule Explained
Subscriber-exclusive Q&A: Questions on FinCEN’s residential rule answered
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