On March 1, 2026, the Financial Crimes Enforcement Network (“FinCEN”) imposed new reporting requirements for certain transfers of residential real property that are deemed to be high-risk for illicit finance. Specifically, a Real Estate Report must be filed with FinCEN for all reportable transfers outlining the particulars of said transaction. To ensure compliance with FinCEN’s regulations, it is important to understand the essential components of the Real Estate Report, specifically its applicability criteria, reporting responsibilities, and required informational disclosures.
Determining Reportable Transfers
A Real Estate Report is required for real estate closings and settlements involving non-financed transfers to a transferee entity or transferee trust of an ownership interest in residential real property.
A “non-financed transfer” refers to any transfer, irrespective of the purchase price, that does not involve an extension of credit to all transferees that is (1) secured by the transferred residential real property and (2) extended by a financial institution with anti-money laundering program obligations. As such, transfers without financing from a bank, mortgage broker, or other regulated lender with anti-money laundering obligations, such as cash transfers, will likely require reporting. However, certain transfers are expressly exempt from the reporting requirement, including, but not limited to, transfers resulting from death or divorce.
A “transferee trust” refers to any traditional legal trust arrangement, whether established under U.S. or foreign law, with certain exceptions, including statutory trusts (which are treated as transferee entities). A “transferee entity” refers to any transferee other than a transferee trust or an individual, with several exceptions set forth under the regulation.
“Residential real property” refers to the following types of property located in the United States: (1) real property containing a structure designed for one to four family occupancy, (2) land where the transferee intends to build a structure designed for one to four family occupancy, (3) a unit designed for one to four family occupancy within a structure, and (4) shares in a cooperative housing corporation.
Identifying the Reporting Person
The reporting person is determined through a cascading chain of selection set forth in the FinCEN regulation. The preferred person in said chain of selection is the closing or settlement agent. However, the default reporting person may enter into a designation agreement delegating its reporting responsibilities to other reporting persons in the chain of selection. While third-party reporting agencies are outside the chain of selection, the reporting person may use a third-party reporting agency to file the Real Estate Report; however, the reporting person remains ultimately responsible for completing and filing the Real Estate Report.
Required Informational Disclosures
The Real Estate Report requires detailed information about the reporting person, the transferor, the transferee, the residential real property to be transferred, and the payment information related thereto. In compiling the Real Estate Report, the reporting person can rely on information provided by other persons, provided the reporting person has no knowledge that would reasonably call into question the reliability of such information.
The Process for Filing the Real Estate Report
The reporting person must file the Real Estate Report electronically with FinCEN as indicated in the instructions to the report by the later of either (i) the final day of the month following the month in which the date of closing occurs or (ii) 30 calendar days after the date of closing. As a practical matter, this means the reporting person will have between 30 and 60 days to file the Real Estate Report. While FinCEN does not impose record retention requirements for the Real Estate Report itself, certain documents related thereto must be kept for five years, such as any designation agreements delineating a specific reporting person.
Failure to File Penalties
FinCEN assesses penalties differently based on whether the failure to file the Real Estate Report is negligent or willful. As of FinCEN’s published penalties issued on February 13, 2026, if negligent, the wrongdoer can be (i) civilly fined up to $1,430 per violation and (ii) subject to an additional fine of up to $111,308 for ongoing patterns of negligence. If willful, the wrongdoer can be (i) civilly fined up to the greater of $71,545 or the amount involved (capped at $286,184), (ii) criminally fined up to $250,000, and/or (iii) sentenced to up to 5 years in prison.
If you have any questions about how these new FinCEN reporting requirements will affect your residential real property transfers or need guidance in navigating the reporting process, please contact Hinckley Allen’s Real Estate attorneys for assistance.
