Federal Court Vacates FinCEN’s Residential Real Estate AML Reporting Rule. On March 19, 2026, a federal court in Texas struck down FinCEN’s Residential Real Estate Anti-Money Laundering Reporting Rule 26. This happened when the Federal Court in the Eastern District of Texas vacated it in its entirety in Flowers Title Companies, LLC v. Bessent. The court sided with the plaintiff on summary judgment and rejected FinCEN’s cross-motion. It found that the Rule exceeded the Bank Secrecy Act (BSA) as permitted by the Act. An appeal is likely coming. However, for now, the ruling has real consequences for title companies, closing attorneys, and settlement professionals across the country.
Since taking effect on December 1, 2025, the Rule required reporting on any non-financed residential transfer involving an entity or trust. There were no geographic limits and no minimum transaction value. The numbers tell the story — it was projected to sweep up as many as 850,000 deals a year. In addition, first-year compliance costs could hit $690 million.
The court’s decision rested on two independent grounds. Either one alone would have been enough to sink the Rule. The first involved FinCEN’s main statutory hook: the BSA’s suspicious transaction provision at 31 U.S.C. § 5318(g)(1). This allows the agency to require financial institutions to flag transactions that may indicate a violation of law or regulation. FinCEN’s position was that non-financed transfers to entities or trusts are categorically suspicious due to the money laundering risks they pose. However, the court wasn’t buying it. It called FinCEN’s supporting rationale “vague, conclusory, and unpersuasive.”
The court pointed out the obvious — buying a home without a mortgage and holding property through an LLC or a trust are things people do every day for ordinary reasons. For example, they may want to sidestep interest costs, limit personal liability, or manage their tax exposure. Moreover, the fact that bad actors have occasionally used these structures does not make the entire category suspect.
The court also rejected FinCEN’s fallback argument relying on 31 U.S.C. § 5318(a)(2), which lets the Treasury Secretary require financial institutions to maintain appropriate procedures and collect certain information. FinCEN claimed this granted broad authority for reporting requirements. However, the court disagreed and stated the provision allows FinCEN to require institutions to have reporting procedures. It does not allow the agency to create new and sweeping mandates. Expanding the provision in FinCEN’s way would make the suspicious transaction authority redundant and bypass Congress’s statutory limits. With the Rule found unlawful, the court vacated it nationwide.
Now, the industry reverts to pre-December 2025. FinCEN’s GTO program—geographic restrictions and price thresholds—again serves as the main reporting method for non-financed real estate transactions. Meanwhile, a conflicting Middle District of Florida decision in favor of FinCEN, in a parallel case by Fidelity National Financial, makes further litigation inevitable. Because of this, where things go from here is genuinely uncertain.
FinCEN could appeal, seek a stay, or go back to the drawing board and try again with a more carefully constructed rule. The underlying concern that drove the regulation — the use of shell entities and trusts to launder money through real estate — isn’t going away. Furthermore, the political pressure to address it remains. For title companies, settlement agents, and closing professionals, the practical answer for now is to stay alert. The rules in this space have already changed once, and they may well change again.