Maxim M.L. Nowak, Partner

On July 14, 2025, we issued the below publication related to the implementation of the Anti-Money Laundering Regulations for Residential Real Estate Transfers ("Rule") which were to take effect December 1, 2025. On September 30, 2025, the Secretary of the Treasury issued an order, postponing the effectiveness of the Rule until March 1, 2026.

We continue to monitor this situation and will keep you updated on any changes to the effectiveness of this Rule. Click here for more.

---

---

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has finalized new anti-money laundering (AML) regulations imposing nationwide reporting requirements on certain residential real estate transactions. Published in the Federal Register on August 29, 2024, the Anti-Money Laundering Regulations for Residential Real Estate Transfers (“Rule”) [1] will take effect December 1, 2025. This new 120-page Rule introduces onerous new compliance obligations for real estate professionals handling all-cash purchases of residential properties.

This Rule was promulgated under the Bank Secrecy Act (BSA). As part of the U.S. government’s evolving approach to combat financial crimes, the BSA provides broad authority to the Department of the Treasury to implement measures designed to protect the U.S. financial system. The key pillars of this framework include the following:[2]

Reporting and Recordkeeping | The BSA authorizes Treasury to require reports and records that are highly useful in:

• Criminal, tax, or regulatory investigations, risk assessments or proceedings; and
• Intelligence or counterintelligence activities, including efforts to protect against terrorism.

Risk-Based AML/CFT Programs | Financial institutions must establish reasonably designed, risk-based programs to prevent money laundering and the financing of terrorism. These programs must be tailored to the institution’s risk profile, products and services.

Tracking Illicit Funds | The framework facilitates the tracking of funds that are either:

• Derived from criminal activity, or
• Intended to promote criminal or terrorist conduct.

Risk Assessment and System Protection | Financial institutions are expected to continually assess risks related to money laundering, terrorist financing, tax evasion and fraud. The goal is to:

• Protect the U.S. financial system from criminal abuse; and
• Safeguard U.S. national security.

Information Sharing | The BSA encourages the development of appropriate information-sharing frameworks among:

• Financial institutions, their agents, and service providers;
• Regulatory authorities and associations of financial institutions;
• The Department of the Treasury; and
• Law enforcement authorities.

Key Elements of the Rule

Generally, the final rule requires certain persons involved in real estate closings and settlements to submit reports and keep records on certain non-financed transfers of residential real property to specified legal entities and trusts. This collaborative approach aims to identify, disrupt and apprehend money launderers and individuals financing terrorism, through transfers of residential real property, which threatens U.S. economic and national security.

Who is Covered | The rule targets non-financed transactions — i.e., all-cash purchases of residential real estate. Reporting obligations fall on professionals involved in the closing and settlement process, including:

Any person, whether or not acting as an agent for a title agent or company, a licensed attorney, real estate broker or real estate salesperson, who for another and with or without a commission, fee, or other valuable consideration and with or without the intention or expectation of receiving a commission, fee or other valuable consideration, directly or indirectly, provides closing or settlement services incident to the transfer of residential real property.

What Must Be Reported | Covered parties must file reports with FinCEN for qualifying transactions, disclosing identifying information about purchaser(s), beneficial owner(s) and transaction details. These reports are modeled on Suspicious Activity Reports (SARs) or Currency Transaction Reports (CTRs) but tailored to residential real estate.

Scope | The rule applies nationwide and covers transactions by both individuals and entities, as well as trusts. Purchases involving trusts or opaque ownership structures will receive heightened scrutiny. Notably, certain financial institutions who are otherwise subject to “Know Your Client” and other due diligence mandates are excluded.

Potential Implications

Compliance Burden | Title companies, attorneys, and other closing professionals must develop new processes for due diligence, recordkeeping, and reporting.

• Impact on Transactions: Buyers and sellers should anticipate additional steps and possible delays, particularly in all-cash deals or where ownership structures are complex.
• Scrutiny of Foreign Investors: Transactions involving foreign purchasers using opaque entities will likely face heightened regulatory attention.

Penalties for Non-Compliance | Violations of the Rule can trigger significant civil penalties and even potential criminal charges for both individuals and entities. While fines for single violations are relatively insignificant, violators showing “patterns of negligent activity” can face fines exceeding $100,000.[3] Willful violators are subject to fines up to $250,000 and five years in federal prison. Convicted executives can also face disgorgement and other significant, individual financial penalties. [4]

The rule becomes effective December 1, 2025 and covered professionals should begin updating compliance programs now to prepare for implementation. For a more detailed analysis of this Rule, please refer to the Federal Register.

Parties involved in residential real estate — particularly those structuring or advising on all-cash deals — should consult counsel promptly to assess risks and prepare for compliance. Herrick’s Real Estate and White Collar Defense teams are available to assist clients in navigating these developments and ensuring readiness before year-end.