Rules have been finalized that require any one of a limited set of real-estate professionals who close or settle non-financed transfers of US residential properties to legal entities or trusts to share details of those transactions with the Financial Crimes Enforcement Network (FinCEN).
Effective December 1, 2025, the rules target high-risk, all-cash property transactions and allow flexibility in compliance. And starting on January 1, 2026, the definition of “financial institution” under the Bank Secrecy Act expands to include new categories of investment advisors, requiring them to report suspicious activities and maintain specific records.
Both rules deliver on efforts outlined in the Biden-Harris administration’s US Strategy on Countering Corruption and take into account the fulsome public feedback received on the proposed versions of the rules and follow consultations with industry groups, intergovernmental partners, and other key stakeholders, FinCEN said.
R/E and RIA rules
The final residential real estate rule will require certain industry professionals to report information to FinCEN about non-financed transfers of residential real estate to a legal entity or trust, which present a high illicit finance risk. The rule will increase transparency, limit the ability of illicit actors to anonymously launder illicit proceeds through the American housing market, and bolster law enforcement investigative efforts, FinCEN says.
The rule is a part of a broader effort to combat money laundering and the movement of dirty money through the American financial system. All-cash purchases of residential real estate are considered a high risk for money laundering. The increase in money laundering flows in residential real estate can also drive up housing costs, which is one of the big economic issues featuring in the race to the White House in the US this year.
Under the final rule, certain recordkeeping mandates apply. A Real Estate Report would need to be filed within 30 days after the date of the property’s transfer, and the reporting person would be required to keep a copy of the Real Estate Report for five years, along with a form signed by the transferee or a transferee’s representative certifying that the transferee’s beneficial ownership information is correct. The reporting person would also be required to keep a copy of any designation agreement, and other parties to the designation agreement would also need to keep copies of the agreement.
The final investment adviser rule will apply anti-money-laundering/countering the financing of terrorism (AML/CFT) requirements – including AML/CFT compliance programs and suspicious activity reporting obligations – to certain investment advisers that are registered with the SEC, as well as those that report to the SEC as exempt reporting advisers. The rule will help address the uneven application of AML/CFT requirements across this industry, FinCEN says.
“The Treasury Department has been hard at work to disrupt attempts to use the United States to hide and launder ill-gotten gains,” said US Secretary of the Treasury Janet Yellen. “That includes by addressing our biggest regulatory deficiencies, including through these two new rules that close critical loopholes in the US financial system that bad actors use to facilitate serious crimes like corruption, narcotrafficking, and fraud. These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors,” she said.
Modifications to the rule
FinCEN said it modified some aspects of its proposals in response to the feedback it received from the public and industry trade groups.
In the final version of the investment adviser rule, FinCEN exempted several types of advisers from the anti-money-laundering requirements; those now exempt include certain midsize and family advisers and pension consultants.
It also dropped a requirement that the person maintaining an investment adviser’s anti-money-laundering program be located in the US and subject to oversight by the Treasury and any other appropriate federal regulator. Foreign advisers will only fall under the requirements to the extent that a US adviser is involved, or if service is provided to a US person.
The response from the National Association of Realtors (NAR) was favorable, with the trade group saying said the final version of the residential real estate rule was “a pragmatic, risk-based approach to combating money-laundering and these other crimes.” In April, NAR had expressed concern about the cost of compliance for this proposed rule, adding that the rule was too broad in scope by requiring the reporting of transfers of real estate that are not likely to be high risk in nature.
FinCEN faces other pushback
The Biden administration has made increasing corporate transparency part of its overall agenda, including through creating a requirement that millions of small businesses register with the government as part of an effort to prevent the criminal abuse of anonymous shell companies. That law, the Corporate Transparency Act (CTA) – passed in 2021 – is facing major legal challenges from small business groups across the country.
The CTA requires certain companies to report their beneficial owners to FinCEN. While aimed at cracking down on money laundering and illicit finance, small businesses argue the law places an undue burden on them.
In March, an Alabama federal district judge ruled that the Treasury Department cannot require small business owners to report details on their owners and others who benefit from the business. A second lawsuit was filed in Michigan by the Small Business Association of Michigan and others seeking to block enforcement of the CTA.