On March 19, 2026, a federal district judge in the Eastern District of Texas set aside FinCEN’s sweeping real‑estate reporting rule, concluding that the agency exceeded its statutory authority under the Bank Secrecy Act.
FinCEN previously used Geographic Targeting Orders (GTOs, previously discussed by our firm) to require title insurers in select metropolitan areas to report certain high‑value, non‑financed residential real estate transactions involving legal entities. Those GTOs were geographically limited and adopted under a statute that allows short‑term reporting requirements when the Department of the Treasury finds heightened money‑laundering risk. But FinCEN broadened that approach in 2024: it adopted a nationwide rule requiring the reporting of almost all cash-based transfers of residential real estate to entities or trusts, regardless of any risk indications. The rule imposed detailed reporting obligations on participants in real‑estate closings and, after delays, became effective March 1, 2026.
Flowers Title Companies challenged the rule under the Administrative Procedure Act, arguing that FinCEN was a federal administrative agency that lacked Congressional authority to impose a sweeping categorical reporting requirement for transactions that are not inherently suspicious. FinCEN relied on two provisions of the Bank Secrecy Act in defense of the rule. First, FinCEN pointed to statutory authority to require reports of “any suspicious transaction.” But, in giving effect to every word of this provision, the court held that this provision only authorized the regulation of suspicious transactions. FinCEN’s categorical designation of all non‑financed residential purchases by entities or trusts as “suspicious” simply went too far. Second, FinCEN argued that a separate provision allowing the Treasury to require institutions to maintain “procedures” permitted standalone reporting obligations. The court rejected this interpretation, explaining that the statute allows the Treasury to regulate how reporting occurs when otherwise authorized, not to create entirely new reporting obligations untethered from the “suspicious transaction” requirement.
Without statutory authority to support the reporting rule, the court agreed with Flowers and vacated the rule in its entirety. The court also went a step further and held that vacatur—not party‑specific relief—was the proper remedy. The order therefore nullified the rule nationwide, returning the regulatory landscape to the pre‑rule status quo. The decision creates a clear split with at least one other district court that upheld the same rule earlier this year, increasing the likelihood of appellate review. For now, however, the ruling significantly narrows FinCEN’s ability to impose across‑the‑board reporting obligations in the real‑estate sector without clear congressional authorization.
As of April 16, 2026, FinCEN’s residential real estate page advises that, in light of this decision, “reporting persons are not currently required to file real estate reports with FinCEN and are not subject to liability if they fail to do so while the order remains in force.” FinCEN’s commitment to this position is unknown, and its position leaves room for stays, emergency appellate relief, or ordinary appellate relief to reinstate the reporting requirement with immediate effect. Reporting persons who may be subject to this rule should remain vigilant in confirming FinCEN’s position at all times relevant to their transactions.
