The FinCEN RRE Rule: Why It Exists, What It Requires, and What It Means for Title Agents

For decades, the United States had a massive gap in its anti-money-laundering defenses. When someone takes out a mortgage to buy a house, the bank runs background checks, verifies identity, and files suspicious activity reports if something looks wrong. Banks are required to do this under the Bank Secrecy Act. But when someone buys property with cash through a shell company? Nobody checked anything. Nobody even asked who owned the shell company.

This made American real estate one of the easiest places in the world to launder money. Nearly one in four residential purchases are all-cash transactions, totaling hundreds of billions of dollars every year. A corrupt official in another country could wire stolen public funds to a Delaware LLC, buy a Manhattan condo for $5 million in cash, and nobody in the transaction was required to ask where the money came from or who actually controlled the LLC.

The physical property itself became the laundry machine. Dirty money goes in as a wire transfer from an anonymous shell company. Clean money comes out as home equity, rental income, or sale proceeds from a legitimate US real estate asset. The FinCEN Residential Real Estate Rule exists to close that gap.

This is not a theoretical problem. Paul Manafort, the former presidential campaign chairman, used shell companies to buy a Brooklyn brownstone, a Trump Tower condo, and a SoHo apartment, laundering over $30 million from offshore accounts between 2008 and 2014. He then transferred the properties to his own name and took out $19.2 million in home equity loans, effectively converting hidden foreign money into clean domestic cash.

Russian oligarch Oleg Deripaska was indicted by the DOJ in 2022 for allegedly using shell companies to secretly purchase a $15 million mansion in Washington, D.C. and over $47 million worth of Manhattan real estate while under U.S. sanctions. Ukrainian oligarch Ihor Kolomoisky was charged by federal prosecutors with laundering funds through at least 22 U.S. properties, including a Cleveland skyscraper and a Motorola facility in Illinois, leaving behind vacant buildings, unpaid taxes, and four bankrupt steel mills. Genaro Garcia Luna, Mexico's former security minister, was convicted in 2023 of taking bribes from the Sinaloa cartel and had purchased millions in U.S. property.

These are not edge cases. Between 2020 and 2024, FinCEN flagged $53.7 billion in suspicious activity connected to the real estate sector. A study by Global Financial Integrity found at least $2.6 billion laundered through U.S. commercial real estate over 20 years, with 14 of 25 investigated cases involving politically exposed persons or oligarchs with close government ties.

In 2015, The New York Times published "Towers of Secrecy," a five-part investigation that pierced the anonymity of over 200 shell companies buying luxury condos in Manhattan. The series documented links to criminals, sanctioned individuals, and corrupt officials worldwide. It created enormous pressure on FinCEN to act.

In January 2016, FinCEN responded with the first Geographic Targeting Orders (GTOs), temporary rules requiring title insurance companies in Manhattan and Miami-Dade County to identify the real humans behind shell company purchases. Think of GTOs as a pilot program. Over the next eight years, they expanded to cover major metro areas in 14 states plus Washington, D.C.

The results were damning: 30% of GTO-covered transactions involved beneficial owners who had already been flagged in suspicious activity reports. The pilot proved the problem was real, widespread, and systemic. On August 28, 2024, FinCEN published the final Residential Real Estate Rule, making the requirements permanent, nationwide, and broader in scope. It takes effect March 1, 2026.

The rule is narrower than people assume. It does not apply to every real estate transaction. It applies when three conditions are met simultaneously: the buyer is a legal entity (LLC, corporation, partnership) or a trust, the purchase is not financed by a mortgage from a bank or other regulated lender, and the property is residential (single-family homes, condos, townhouses, co-ops, or 1-4 unit buildings).

When those conditions are met and no exemption applies, someone has to file a Real Estate Report with FinCEN. The report has 111 data fields covering the property details, the buyer entity, the seller, and most importantly, the beneficial owners, meaning the real human beings who own or control the purchasing entity. You need their names, dates of birth, residential addresses, citizenship, and Social Security or tax ID numbers.

The report is filed electronically through the BSA E-Filing system at bsaefiling.fincen.gov. The deadline is the later of 30 calendar days after closing or the last day of the following month. Records must be retained for five years.

The rule establishes a seven-level hierarchy to determine who is responsible for filing. The obligation falls on the first person in this list who performed a function in the transaction: (1) the closing or settlement agent named on the settlement statement, (2) the person who prepared the settlement statement, (3) the person who filed the deed with the recording office, (4) the title insurance underwriter, (5) the person who disbursed the most funds, (6) the person who evaluated title status, (7) the person who prepared the deed.

In practice, the closing or settlement agent, typically the title company, is almost always at Tier 1. If you work at a title or escrow company, this is probably you. The cascade can be reassigned through a written designation agreement, but only to another person who is also in the cascade for that transaction.

This is not a legal memo you read once and file. It is an operations change that affects how you open files, what you ask buyers at intake, how you track deadlines, and what you retain after closing. Every transaction now needs a quick determination: is this reportable? If yes, who files, and what data do we need from the buyer?

The data collection piece is the hardest part operationally. Asking an LLC's members for their Social Security numbers, dates of birth, and residential addresses is not a conversation most title agents have had before. Starting that conversation early in the transaction, not at the closing table, is the difference between a smooth filing and a missed deadline.

The good news is that the determination itself is straightforward for most transactions. Four questions, usually answered in under two minutes. The operational challenge is building a consistent process so every closer in your office handles it the same way, every time, with a documented trail.