Answers for title and escrow teams

A transfer of residential real property (houses, condos, townhouses, co-ops, or 1-4 unit buildings) to a legal entity (LLC, corporation, partnership) or trust, where the purchase is not financed by a mortgage from a BSA-regulated bank or credit union, and no exemption applies. In plain terms: if a shell company buys a house with cash and no bank is involved, someone has to report it to FinCEN.

For decades, all-cash real estate purchases through shell companies were one of the easiest ways to launder money in the United States. When a bank issues a mortgage, they run anti-money-laundering checks. But when an anonymous LLC buys a $5 million condo with a wire transfer, nobody was required to ask who controls the LLC or where the money came from. FinCEN found $53.7 billion in suspicious real estate activity between 2020-2024. This rule closes that gap by requiring disclosure of the real humans behind entity purchases.

The first person in a seven-tier cascade who performed a specific function in the closing. The tiers are, in order: (1) closing/settlement agent, (2) settlement statement preparer, (3) deed filer, (4) title insurance underwriter, (5) largest fund disburser, (6) title evaluator, (7) deed preparer. In most residential closings, the title company is the settlement agent at Tier 1. Filing responsibility can be reassigned to another cascade participant through a written designation agreement, but only for that specific transaction.

The Real Estate Report filed with FinCEN contains 111 data fields across six categories: (1) reporting person information (your firm's details), (2) property information (address, legal description, purchase price, payment method), (3) transferor/seller information, (4) transferee entity or trust details (name, TIN, formation jurisdiction, entity type), (5) individuals representing the transferee, and (6) beneficial owner information (name, date of birth, residential address, citizenship, SSN/ITIN for each person who owns 25%+ or exercises substantial control). FinCEN estimates about 60% of the fields need to be completed for a typical transaction.

A designation agreement is a written document that transfers filing responsibility from one cascade participant to another for a specific transaction. For example, if the settlement agent (Tier 1) wants the title underwriter (Tier 4) to file instead, they sign a designation agreement. Requirements: it must be in writing, specific to one transaction (no blanket agreements), and both parties must be in the cascade for that deal. You cannot designate a third-party vendor who did not perform any cascade function. Both parties must retain the agreement for five years.

No. The rule only covers residential real property: single-family homes, townhouses, condos, co-ops, buildings designed for 1-4 family occupancy, and vacant land where the buyer intends to build residential housing. A purely commercial property like an office building, retail center, or warehouse is not covered even if the buyer is an LLC paying cash. However, mixed-use properties that include any residential component (like apartments above a retail ground floor) may be covered. Document your property classification with supporting evidence like zoning records and legal descriptions.

Generally yes, if the other conditions are met. The financing exclusion requires the loan to come from a BSA-regulated lender (a bank, credit union, or other institution subject to anti-money-laundering program requirements) and be secured by the property being transferred. Seller financing does not meet this standard because the seller is typically not a BSA-regulated institution. The same applies to private loans from individuals, family members, or unregulated entities. If an entity buys residential property with seller financing and no regulated lender is involved, treat it as non-financed for reportability analysis.

Four things: (1) Identify the reporting person by walking the 7-tier cascade and, if needed, execute a designation agreement. (2) Collect beneficial ownership data from the buyer: name, date of birth, residential address, citizenship, and SSN/ITIN for every person who owns 25%+ of the entity or exercises substantial control. (3) File the Real Estate Report through the BSA E-Filing system (bsaefiling.fincen.gov) by the deadline, which is the later of 30 days after closing or the last day of the following month. (4) Retain all certifications, designation agreements, and determination records for five years.

Document the refusal in writing: what information you requested, when you requested it, and the buyer's response. Escalate according to your firm's compliance policy and seek legal guidance. There is no blanket waiver that excuses you from filing because the buyer refused to cooperate. You may still need to file with the information you have available. The key is having a documented trail showing you made reasonable efforts to collect the required data. Never just skip the filing because collection was difficult.

Yes. Each determination generates a separate record with its own session ID. You can run the checker as many times as needed for different transactions. Each result can be saved as a PDF for your closing file, giving you a documented determination record for every transaction.

Civil penalties for negligent violations are $1,394 per violation. A pattern of negligent activity can reach $108,489. Willful violations carry penalties up to $69,733 per violation or $278,937 (or the total transaction amount, whichever is greater). Criminal penalties include fines up to $250,000 and imprisonment up to 5 years. Civil and criminal penalties can be imposed simultaneously for the same violation. The greatest enforcement risk comes from patterns of non-compliance across multiple transactions, not from individual honest mistakes with documented good-faith procedures.

Mixed-use properties that contain any residential component may be covered by the rule. A building with retail space on the ground floor and apartments above has a residential component and should be treated as potentially covered. When classification is unclear, the safer approach is to run the full four-question determination and document your reasoning. Do not assume a property is excluded just because it has some commercial use. Document the property characteristics, zoning, and your classification rationale.

Five years from the date of the reportable transfer. You must retain: beneficial ownership certifications received from the buyer, designation agreements (all parties to the agreement must keep copies), and your determination records. You do not need to retain a copy of the filed Real Estate Report itself because FinCEN has it. Store records in an organized, retrievable format. If you are ever audited or examined, you need to be able to produce these records promptly.

Filing Kit ($49) includes 9 templates and tools for the core filing workflow: transaction screening worksheet, exemption quick-reference card, buyer / transferee data collection form, seller / transferor data collection form, beneficial ownership certification form, reporting person cascade worksheet, reporting person designation agreement, 111-field organization checklist, deadline & retention tracker. It covers everything one closer needs to handle reportable files from determination through filing and retention. Agency Pack ($149) includes all 9 Filing Kit items plus 6 additional items for multi-person offices: staff training guide, compliance policy & role matrix, closer’s quick-reference desk card, manager review & qa checklist, monthly compliance review template, client communication templates. If you work alone or in a small team, Filing Kit is sufficient. If you need to train multiple staff members and standardize compliance across an office, get Agency Pack.

You only need one. Filing Kit covers the full workflow for an individual closer or small team handling reportable files. Agency Pack is for offices that need to train multiple staff members, establish a compliance policy, run QA reviews, and communicate with clients about FinCEN requirements. Agency Pack includes everything in Filing Kit, so it replaces rather than supplements it. If you are a solo closer, Filing Kit. If you manage a team, Agency Pack.

Outsourced filing services typically charge $120 to $200/report per reportable transaction. If your office handles 10 reportable closings a month, that adds up to over $14,000 a year in filing fees alone. Our toolkits are a one-time purchase you reuse on every reportable file, with any title production system. The Filing Kit pays for itself on the first reportable closing. You do the filing yourself using our templates, checklists, and guides instead of paying someone else per transaction.