In August 2024, the Financial Crimes Enforcement Network (FinCEN) introduced two pivotal rules aimed at enhancing transparency and combating illicit finance in the U.S. real estate and investment sectors. Consequently, these regulations – effective December 1, 2025, and January 1, 2026 – have significant implications for real estate investors and professionals.
FinCEN Residential Real Estate Reporting Requirements
Effective December 1, 2025, FinCEN’s residential real estate rule mandates that certain professionals involved in residential real estate closings and settlements report specific non-financed transactions. In particular, this move targets the anonymity often associated with all-cash purchases by legal entities or trusts, which can be exploited for money laundering.
Key Points:
- Scope: Applies to non-financed transfers of residential real estate to legal entities or trusts.
- Reporting Obligations: Professionals such as title insurers, escrow agents, and attorneys must report these transactions to FinCEN.
- Objective: Enhance transparency and deter the use of real estate for illicit financial activities.
Implications for Investors:
- Increased Scrutiny: All-cash transactions involving entities will undergo more rigorous examination.
- Compliance Burden: Investors using legal entities for property acquisitions must ensure adherence to new reporting standards.
- Strategic Planning: Consideration of financing options and entity structures will be crucial to navigate these requirements effectively.
AML/CFT Program Requirements for Investment Advisers
Effective January 1, 2026, FinCEN’s investment advisor rule extends anti-money laundering (AML) and countering the financing of terrorism (CFT) obligations to certain investment advisers, including those involved in real estate investments.
Key Points:
- Coverage: Applies to SEC-registered investment advisers and exempt reporting advisers.
- Requirements: Implementation of AML/CFT programs, filing of Suspicious Activity Reports (SARs), and adherence to recordkeeping and information-sharing protocols.
- Enforcement: The SEC will oversee compliance among covered advisers.
Implications for Real Estate Investors:
- Enhanced Due Diligence: Investment advisers must conduct thorough vetting of clients and transactions.
- Transparency: Investors may need to provide detailed information about their identities and funding sources.
- Operational Adjustments: Advisers and investors must adapt to new compliance frameworks, potentially affecting investment timelines and strategies.
Partnering with Dominion Financial Services
In today’s shifting regulatory environment, real estate investors need more than just capital, they need a lending partner who understands the stakes, the structure, and the speed required to compete. Dominion Financial Services delivers on all fronts. Whether you’re breaking ground on a new project or locking in long-term cash flow, our Ground-Up Construction Loans provide up to 90% LTC with fast-tracked funding to keep your timeline intact.
When it’s time to refinance, our DSCR Rental Loans are designed to move just as quickly, with in-house underwriting, 24-hour quotes, and a Price-Beat Guarantee that ensures you’re getting more than a loan – you’re getting an edge.
At Dominion, we don’t just keep pace with the market, we help you stay ahead of it.
This content is intended for informational purposes only and isn’t a substitute for legal guidance. Every real estate transaction is unique, and with new regulations rolling out, it’s wise to speak with a legal or compliance professional who understands your specific deal structure and investment strategy.
