On March 19, the U.S. District Court for the Eastern District of Texas vacated a previously effective final rule issued by FinCEN requiring reporting of any non-financed residential real estate transfers to entities or trusts. The court held that the rule exceeded FinCEN’s statutory authority under the Bank Secrecy Act, finding that neither provision cited by the agency — a requirement for suspicious transaction reports and authority to mandate institutions maintain procedures for compliance — permitted such a broad reporting mandate. The court ruled FinCEN failed to justify treating all non-financed transfers as categorically suspicious, criticizing its reliance on prior geographic targeting order (GTO) statistics and law enforcement actions as “vague, conclusory, and unpersuasive.”

The rule, finalized in August 2024 and effective since December 1, 2025, applied nationwide with no minimum dollar threshold, though with some exceptions. It required individuals involved in closings or settlements, such as title insurance agents, escrow agents, or attorneys, to report detailed information about the reporting person, transferees, beneficial owners, transferors, property, and payment methods for covered transactions. The regulation outlined a “cascading approach” for determining the person who must report the transactions and allowed the reporting function to be designated by written agreements between eligible parties. In granting summary judgment under the APA, the court contrasted the rule with FinCEN’s earlier GTOs that were geographically and temporally limited. The court found vacatur appropriate due to both the “seriousness of deficiencies” and minimal disruption in returning to the pre-rule status quo. It did not address alternative constitutional claims raised in the case.