Beginning March 1, 2026, residential real estate lawyers and title agents will need to begin reporting under the Financial Crimes Enforcement Network (FinCEN) residential real estate reporting rule (the “RRE Rule”). 

 

The RRE Rule requires the proper “reporting person” to file a beneficial ownership report for every reportable non-financed transfer of residential real property to a “transferee entity” or “transferee trust.”

 

The RRE Rule defines “non-financed transfer” as a transfer that “does not involve an extension of credit to all transferees that is (i) secured by the transferred residential real property; and (ii) extended by a financial institution that has both an obligation to maintain an anti-money laundering program and an obligation to report suspicious transactions [under 31 CFR 1010].” 

 

As a result, residential real estate lawyers and title agents will need to understand which financial institutions have obligations to maintain anti-money laundering (AML) programs and an obligation to report suspicious transactions (SAR).  

 

Institutions Subject to AML/SAR Obligations

To the uninitiated, the phrase “AML/SAR” obligations can be daunting.

The Bank Secrecy Act, as amended, empowers FinCEN to require financial institutions to maintain anti-money laundering (AML) programs and to report suspicious transactions through FinCEN’s suspicious activity report (SAR) system. FinCEN’s AML/SAR regulations can be found beginning at 31 CFR 1020.100.  

If a financial institution is subject to AML/SAR obligations, it must:

  • Maintain an AML program that involves a system of internal controls, independent testing, designation of a compliance officer, employee training, and other risk-based procedures for conducting ongoing customer due diligence. (31 CFR 1020.210)
  • Maintain a program to identify its customers and the beneficial owners of its corporate customers. (31 CFR 1020.220)
  • File suspicious activity reports (known as “SARs”) with FinCEN when there are suspicious transactions. (31 CFR 1020.300)
  • Maintain records available for inspection by regulators relating to its AML/SAR activities.  (31 CFR 1020.400). 

 

FinCEN’s AML/SAR obligations apply to all “banks” which is term is defined in the Bank Secrecy Act and in FinCEN’s regulations as: “any commercial bank, private bank, savings and loan association, savings bank, industrial bank, thrift institution, federally-chartered credit union, any organization (other than a money services business) chartered under the banking laws of any state and subject to the supervision of the bank supervisors authorities of a state, and any bank organized under foreign law.”  (31 CFR 1010.100(d)). 

 

FinCEN’s AML/SAR obligations also apply to “loan or finance companies” through 31 CFR 1029.210. 

 

Practical Steps for Compliance

On a practical level, how are residential real estate lawyers and title agents supposed to know which financial institutions are subject to AML/SAR obligations? 

This question is one of the most challenging of the RRE Rule.  While AML/SAR obligations apply to all state and federally chartered banks, and other bank-like organizations that are “subject to the supervision of” either state or federal bank supervisors, it is not realistic to expect that all the residential real estate lawyers and title agents in the U.S. are going to take a crash course in bank regulatory law.

The short answer to the question is that reporting persons under the RRE Rule are going to have to develop procedures to identify lenders making loans in their transactions.  

FinCEN anticipated this conclusion in the RRE Rule when it provided that “the reporting person may rely upon information provided by other persons, absent knowledge of facts that would reasonably call into question the reliability of the information provided to the reporting person.”  (31 CFR 1031.320(j). 

This concept – which FinCEN called its “reasonable reliance standard,” means that a reporting person may require parties to a transaction to sign a written certification with respect to facts required in the report.  If the reporting person obtains a reliance certificate (and has no “knowledge of facts that would reasonably call into question the reliability of the information provided”), then the reporting person may rely on that certification and be relieved of the obligation to ensure that the information is true when the reporting person files the required report. 

Applying the reasonable reliance standard to the question of which financial institutions are subject to AML/SAR obligations suggests that reporting persons should require every lender in a residential real estate transaction to certify in writing whether the lender is (or is not) subject to AML/SAR obligations. 

In order to rely on such a certificate, the reporting person must maintain its copy of the certificate for at least five years from the date of the transaction.  31 CFR 1031.320(l). 

 

Conclusion

Every professional involved in residential real estate transactions must understand how the RRE Rule works and which lenders are subject to AML/SAR obligations. The most effective way to stay compliant is to establish a consistent process requiring every lender in a transaction to sign a written certification confirming the institution’s AML/SAR status.

RRE Report, a FinCEN Report Company service, makes this step simple. With built-in Reliance Certificate tools, users can easily generate, sign, and securely archive compliance certificates—saving valuable time and reducing the risk of error.

Practitioners who do not utilize RRE Report will need to manually create and track certificates, collect signatures, and store records for the full retention period.

To learn more or explore how RRE Report can help your firm streamline compliance under the Residential Real Estate Rule, visit RREreport.com.