FinCEN Issues Updated FAQs Following Vacatur of Residential Real Estate Reporting Rule

Eastern District of Texas Vacatur

On March 19, 2026, the U.S. District Court for the Eastern District of Texas (in Flowers Title Companies, LLC v. Bessent) vacated FinCEN’s Anti-Money Laundering Regulations for Residential Real Estate Transfers (the RRE Rule). As described in a February GT Alert, the RRE Rule, which took effect March 1, 2026, required reporting of certain non-financed residential real estate transfers to entities and trusts, imposing obligations that would have applied to title companies, closing agents, title insurers, and other real estate settlement professionals involved in those transfers.

The court, however, found that FinCEN exceeded its statutory authority under the Bank Secrecy Act (BSA). The BSA permits reporting of “suspicious transactions,” but the court noted that FinCEN failed to explain how non-financed residential real estate transactions are categorically “suspicious.” Furthermore, the court rejected FinCEN’s argument that § 5318(a)(2) independently empowers required reporting to enforce the BSA, concluding that FinCEN’s interpretation “smuggles expansive reporting authority into a provision that is focused on procedures.” For these reasons, the court ordered that the RRE Rule be vacated. FinCEN filed a Notice of Appeal in the Fifth Circuit on May 11, 2026.

FinCEN’s Updated FAQs

In response to the district court’s decision, FinCEN published updated RRE FAQs, which incorporate and clarify the effect of the district court’s ruling.

No Current Reporting Obligation

• FinCEN states that reporting persons are not currently required to file Real Estate Reports. This position remains in effect while the court’s order remains in force.

No Liability for Non-Filing

• The FAQs confirm that if the court’s order is overturned and the RRE Rule again becomes legally effective, FinCEN will not require reporting persons to retroactively report covered transactions that would have been reportable while the court’s order was in force.

No Indication When Reporting Will Be Required If Order Overturned

• If the order is overturned, FinCEN will provide further guidance on when reporting will be required.

FinCEN’s FAQs may have implications for closing service providers that created and began implementing compliance systems prior to the district court’s ruling.

Conclusion

FinCEN’s updated FAQs clarify that, at present, the RRE Rule is unenforceable. However, closing service providers should monitor the Fifth Circuit for developments on FinCEN’s appeal, as the RRE Rule may be reinstated.