A new federal regulation aimed at combating illicit finance in the U.S. real estate market took effect on December 1, 2025, bringing significant changes for professionals in the residential property industry. The rule, finalized by the Financial Crimes Enforcement Network (FinCEN), mandates that certain real estate settlement professionals—such as title insurers and escrow agents—must now report specific details about residential real estate transactions that involve non-financed sales or transfers to legal entities or trusts.
The goal of these expanded reporting requirements is to enhance transparency and curb money-laundering activities that can sometimes be hidden behind real estate transactions. For years, the real estate market has been a target for illicit financial activities due to the potential for property purchases to be used as a vehicle for laundering money or hiding assets. By requiring additional reporting in these non-financed cases, the government aims to strengthen its ability to detect suspicious transactions, particularly those involving opaque ownership structures such as shell companies or trusts.
The rule requires industry participants involved in such transactions to provide critical information about the buyers, sellers, and the specific details of the transaction. This change marks a significant shift in the way real estate professionals must handle certain property transfers, as previously, reporting obligations were less stringent, especially in non-financed sales. With this new rule in place, title insurers, escrow agents, and other settlement professionals must now ensure that they are gathering and reporting the necessary data for qualifying transactions.
For many in the real estate industry, the compliance with these new obligations represents a shift in how they conduct business. The requirement to report on legal entities or trusts purchasing properties, for example, will require a deeper level of due diligence, as it is not uncommon for such transactions to involve complex structures that may be used to obscure the identity of the true buyer. These new reporting protocols will require more thorough verification of the identities and financial activities of those involved in these transactions.
Though these changes may add an additional layer of complexity for settlement professionals, they are seen as a necessary step in the fight against money laundering and other illicit financial activities. The new rule also aims to create a more transparent real estate market, where transactions are less likely to be used for illicit purposes, and where the financial activities tied to property transfers can be more easily scrutinized.
As of now, compliance with these new reporting requirements is mandatory for all qualifying transactions, making it essential for industry professionals to familiarize themselves with the rule and ensure they are meeting all necessary reporting obligations. While these changes may impose new operational burdens, they are ultimately designed to protect the integrity of the real estate market and prevent the use of property transactions for illicit financial activities.
The new rule from FinCEN reflects broader efforts by the U.S. government to crack down on illicit finance and improve oversight of sectors that are vulnerable to financial crime. The real estate market has long been a key area of focus in these efforts, and with the implementation of this new regulation, the industry is being asked to take a more active role in ensuring transparency and compliance.
