FinCEN Proposed Rule Requiring Real Estate Professionals to Report Transfers of U.S. Residential Real Property

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Jason B. Freeman

Jason B. Freeman

Managing Member


Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine, a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

FinCEN Issues Proposed Rule Requiring Real Estate Professionals to Report Transfers of U.S. Residential Real Property

The Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) has issued a proposed rule under the Bank Secrecy Act (“BSA”) requiring that real estate professionals report certain information regarding transfers of residential real property to legal entities or trusts.

Reasons for Proposed Rule

When issuing the proposed rule, FinCEN expressed concern that “[t]he United States’ stable real estate market and strong property rights protections make U.S. residential real estate attractive to illicit actors looking to launder the proceeds of crime and corruption.”[1] The use of legal entities to obfuscate ownership and non-financed transfers, which “are currently outside the purview of the due diligence requirements imposed on regulated financial institutions pursuant to the [Bank Secrecy Act]”, only furthered the perceived potential for abuse.[2]

The Proposed Rule

The proposed rule would require a “reporting person” to report certain information in connection with a “reportable transfer.”[3]

A “reportable transfer” generally would include a transfer to a “transferee entity” or “transferee trust” of an ownership interest in:

A “transferee entity” would mean any person other than a transferee trust or an individual but would not include certain entities regulated under other law.[5] A “transferee trust” would be defined as “any legal arrangement created when a person . . . places assets under the control of a trustee for the benefit of one or more persons . . . or for a specified purpose, as well as any legal arrangement similar in structure or function to the above, whether formed under the laws of the United States or a foreign jurisdiction.”[6]

The “reporting person” for a particular reportable transfer generally would be determined based on a “cascading” categorization of persons who are in the business of providing real estate closing and settlement services.[7] Specifically, the “reportable person” would be:

Alternatively, potential reporting persons involved in a transfer also would be able to designate the reporting person through a designation agreement.[9]

The type of information that a reporting person would have to provide FinCEN would include identifying information regarding:

This information would have to be reported to FinCEN within 30 days of closing.[11]

Final Thoughts

This is just a proposed rule and may be changed or scrapped altogether depending on comments that FinCEN receives. We’ll keep you posted on further developments.

[1] 89 Fed. Reg. 12425 (Feb. 16, 2024).

[2] Id. at 12425.

[3] Id. at 12466.

[4] Id.

[5] Id. at 12469.

[6] Id.

[7] Id. at 12466.

[8] Id. at 12466-67.

[9] Id. at 12467.

[10] Id. at 12467-69.

[11] Id. at 12469.