The title insurance industry received an early Holiday Gift on Sept. 30 when the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an exemptive relief order, announcing that reporting requirements for the upcoming “Anti-Money Laundering Regulations for Residential Real Estate Transfers” – aka, the Residential Real Estate Rule RER) – will not be enforced until March 1, 2026.
In the interim, according to FinCEN, the current Real Estate Geographic Targeting Orders will remain in effect.
The rule, which was scheduled to take effect on Dec. 1, has been under siege by the industry which has asked FinCEN to abandon the rule entirely or to delay its implementation.
In May, Fidelity National Financial (FNF) filed a lawsuit in Florida federal court making various claims against the rule, including allegations that it violates the Fourth Amendment as it advocates a search of private information without “articulable suspicion,”; that it violates the First Amendment by forcing the disclosure of extensive personal and financial information; that it imposes requirements on local real estate transactions that do not relate to interstate commerce; and that it is arbitrary and capricious.
In August, FNF filed for a preliminary injunction to postpone the Dec, 1 implementation date and asked the court to rule on its summary judgment claim before the rule’s effective date.
The American Land Title Association had also called for a delay in the implementation of the rule to give the industry more time to prepare.
While FinCEN has refuted the claims FNF put forth in the lawsuit, it did respond to the industry’s request for more time to prepare in its exemptive relief order.
“While the illicit finance risks associated with non-financed transfer of residential real property to legal entities and trusts remain, this delay will allow industry sufficient time to comply with the Residential Real Estate Rule, serving the ultimate objective of appropriately protecting the U.S. financial system and guarding against money laundering, terrorist financing, and other illicit finance risks,” FinCEN stated in its announcement about the delay.
Compliance overload
While the industry will be keeping a close watch on the outcome of the FNF lawsuit, there is no doubt that even without this new rule, the industry’s regulatory burden remains costly in terms of both time and money. It is the core reason why title agencies must seek out tech providers who are immersed in the industry and have a keen understanding not just what must be done in the course of a real estate transaction, but how it must be carried out to meet the many regulatory demands that permeate the process.
At VizionX, we understand the pace of technological change in the real estate, lending and title insurance triad, and we are dedicated to developing technology that will help title agents not only future proof their companies, but ensure industry compliance through built-in compliance checks, reducing legal risks and guaranteeing that all processes align with regulatory requirements. Contact us today to learn more.
