This research in brief examines the Financial Crimes Enforcement Network’s (FinCEN’s) expansion of federal anti-money-laundering reporting requirements from targeted, temporary geographic targeting orders (GTOs) to the nationwide Residential Real Estate (RRE) rule governing all-cash transfers of residential property to legal entities and trusts. It argues that the rule treats an entire category of transactions as inherently suspicious, outlines the scale of its compliance burdens, and contrasts those burdens with the limited evidence of corresponding law-enforcement value.

Key Findings:

• FinCEN estimated that the RRE rule would require reporting on 800,000 to 850,000 non-financed residential real estate transfers each year, with no purchase-price threshold and nationwide coverage.
• FinCEN estimated first-year compliance costs of about $428 million to $690 million, ongoing annual costs of $401 million to $663 million, and nearly 5 million hours of annual reporting and record-keeping burden.
• The rule would have affected nearly 173,000 reporting persons and 643,000 employees, with each report requiring completion of a form containing 111 distinct fields.
• The rule marked a sharp expansion from prior real estate geographic targeting orders, which generated just over 23,000 reports from March 2016 to August 2019; at minimum, the projected annual reporting volume under the RRE rule represented a 3,281 percent increase from this cumulative total.
• FinCEN identified 21 enforcement actions that took place over 19 years as evidence that such transactions often involve illegal activity. With at least 800,000 qualifying transfers each year under the RRE rule, 21 with a connection to illegal activity would represent 0.00014 percent of all transactions over 19 years.
• A survey of title companies indicates substantial operational and privacy burdens: More than half reported delayed closings, more than 80 percent said buyers and sellers expressed privacy concerns, and nearly two-thirds identified customer data collection as especially burdensome and expressed legal liability concerns.

Policy Implications:

• Pacific Legal Foundation represents Flowers Title Company as it challenges FinCEN’s statutory authority for the RRE rule and presses constitutional challenges under the nondelegation doctrine, the Commerce Clause, and the Fourth Amendment.

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