Reported by Herrick K. Lidstone (Jennings Haug Keleher McLeod Waterfall, LLP) and Victoria B. Bantz (Clark Hill PLC)

(Summary shared below. To read full report, go to: https://media.clarkhill.com/wp-content/uploads/2025/10/16152758/Anti-Money-Laundering-10.16.25.pdf)

A new rule from the Treasury’s Financial Crimes Enforcement Network (FinCEN) set to take effect on March 1, 2026, will compel professionals involved in residential real estate closings to file suspicious activity reports for certain non-financed property transfers.  Previously limited to geographic “targeting orders” for specific cities and counties, the rule will broadly apply across the United States to a range of entities and trusts as transferees.  The regulatory shift reflects the government’s intention to curb illicit actors’ ability to launder money through real estate deals masked by opaque ownership structures. 

Who Must Report, and Under What Conditions

Under the new rule, any non-financed purchase of U.S. residential real property made by a “transferee entity” or “transferee trust” is potentially “reportable,” provided it is paid (in whole or in part) using cash, certified checks, money orders, fund transfers, or virtual currency.  Transactions where the buyer is an individual (not an entity) remain exempt.  The rule carries no price floor, meaning even modest-value transfers may fall within its scope—a divergence from prior targeting orders that set thresholds to exclude smaller deals. 

Attorneys Swept Into Reporting Duties, Despite Ethical Tensions

Perhaps most controversially, attorneys may be “reporting persons” under the rule when they undertake closing or settlement functions—roles formerly exempted under the geographic targeting orders.  FinCEN elected to maintain attorneys’ inclusion despite concerns that mandatory reporting might conflict with principles of client confidentiality or legal privilege.  To ease that tension, the rule allows parties in a transaction to enter into designation agreements, assigning a single reporting actor.  Attorneys are also cautioned to seek client consent and assess whether invocation of a “required-by-law” exception might justify disclosure. 

Information and Reliance Rules, and Litigation Looms

Once triggered, reporting persons must disclose identifying information about themselves, the transferee entity and its beneficial owners, transferor details, property data, and any relevant payment information.  The rule includes a “reasonable reliance” safe harbor allowing reporting parties to rely on certifications provided by others unless facts emerge casting doubt on their veracity.  Meanwhile, litigation has already been filed: in May 2025, Fidelity National Financial challenged the rule in federal court, claiming it exceeds FinCEN’s statutory authority and imposes undue burdens on routine real estate activity.  Because the rule’s implementation has been delayed to March 2026, a scheduled hearing was cancelled by mutual agreement. 

Implications and Unanswered Questions

Until February 28, 2026, existing geographic targeting orders (GTOs) continue to apply in their designated jurisdictions; practitioners must ensure compliance with both regimes where relevant.  The ultimate reach of the rule—particularly whether Congress, FinCEN, or courts will constrict its burdens or reporting scope—remains uncertain.  For now, the rule serves as a signal of the government’s heightened focus on transparency in real estate ownership and attempts to thwart anonymous money flows through U.S. housing markets.