The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury focused on combating money laundering and financial fraud. A new FinCEN reporting requirement is being rolled out nationwide and may impact certain real estate transactions closing on or after March 1, 2026.
To my understanding, the following is an overview of the new FinCen Rule. More info at the Financial Crimes Enforcement Network
FincCEN reporting may be required when all three of the following are true:
- The property is residential, and
- The buyer is purchasing in the name of an entity (LLC, corporation, partnership or trust) – NOT an individual, and
- The transaction is cash or non-traditional financing, meaning there is no lender involved that has an Anti-Money Laundering (AML) program
If all three apply, additional reporting steps and documentation will be required prior to closing.
For this purpose residential is generally considered to include:
- 1–4 family homes (or designed for 1–4 families)
- Condominium unit purchases
- Vacant land when the buyer intends to build a 1–4 family residence
- Certain mixed-use buildings, if the property includes 1–4 residential units (even if the first level is commercial)
Transactions typically not covered include:
- Pure commercial properties
- Purchases of entire buildings with more than five residential units (as a whole-building acquisition)
Certain situations may be exempt from the reporting requirement. Examples mentioned included:
- Transfers resulting from death (estate-related transfers)
- Transfers resulting from divorce/dissolution
- Certain court-supervised or government-supervised transfers
- Some 1031 exchange scenarios
(Exemptions may depend on the specific transaction details.)
If an exemption may apply, buyers may need guidance from their attorney, CPA, or tax advisor to confirm eligibility.
Information clients must provide prior to settlement if FinCEN reporting is required:
Entity Buyer:
- Entity legal name, address, jurisdiction, EIN
- Individuals with 25%+ ownership
- Individuals with substantial control (major decision authority)
- If another company owns any part, identify the real people behind it
Trust Buyer:
- Trust name, date executed, revocable or not
- All trustees
- Grantors who can revoke or withdraw assets
- Beneficiaries who can demand money or withdraw substantially all assets
- If a trustee is a company, identify the real people behind it
For each listed individual:
- Legal name, date of birth, home address
- Taxpayer ID (SSN or ITIN)
- Government ID image
- (Buyers Only) How funds are paid (wire, check, etc.) and source account information for funds used (number and bank name)
Seller side:
- Sellers may be asked for basic identifying info, including taxpayer ID
Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
