The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, has adopted a rule requiring certain residential real estate transfers to be reported to the federal government. The rule is designed to help prevent money laundering and other financial crimes involving real estate transactions.
The reporting requirement generally applies to certain non-financed (cash) residential property transfers, particularly those involving legal entities such as LLCs, corporations, or trusts. Traditional mortgage-financed transactions are typically excluded because banks and lenders are already subject to federal anti-money laundering regulations.
When applicable, the designated reporting party (as defined under the rule) must submit required information about the transaction and the beneficial owners of the purchasing entity to FinCEN within the specified timeframe.
Who has to report the information to FinCEN?
The report must be filed by the “reporting person,” which is one professional involved in the transaction who meets specific criteria under the FinCEN rule. Only one person per transaction is required to file the report.
How is the reporting person determined?
The reporting person is determined either by written agreement among the professionals involved or, if no agreement is made, by applying the reporting cascade below.
Under the reporting cascade, responsibility follows this order:
The closing or settlement agent listed on the closing statement
If none, the person who prepares the closing or settlement statement
If none, the person who records the deed
If none, the person who issues the owner’s title insurance policy
If none, the person who disburses the largest amount of funds in the transaction
If none, the person who evaluates the status of title
If none, the person who prepares the deed or other ownership transfer document
The first person in this list who is involved in the transaction is responsible for filing the report.
Does the seller have to file anything?
No. Sellers are not responsible for filing the FinCEN Real Estate Report. However, sellers may be asked to provide information if needed for compliance purposes.
What Information Is Included In the Report?
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Information About the Property:
Property Address
Date of closing
Total purchase price
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Information About the Buyer or Business (If Applicable)
Full legal name
Date of birth
Current residential address
Identification number (such as from a driver’s license or passport), including issuing jurisdiction
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Information About the Reporting Person
Name and business address
Role in the transaction
Contact Information
Is This Information Public?
No. The information filed with FinCEN is not public record. It is submitted through a secure federal system and is available only to authorized government agencies for law enforcement and national security purposes.
Does FinCEN require reporting for all real estate transactions?
No. The rules mainly focus on certain non-financed residential transactions, especially those involving legal entities. Traditional mortgage transactions are generally covered by banking regulations instead.
Why is real estate part of FinCEN’s focus?
Real estate can sometimes be used to hide illegal money, especially in all-cash purchases made through LLCs or trusts. FinCEN created reporting rules to help prevent this.
Where Can I Learn More?
You can learn more about this by going to the Financial Crimes Enforcement Network Website HERE.
Return to Federal Real Estate Disclosure Requirements
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