ALTA Files Amicus Brief Supporting Fidelity Appeal in FinCEN Reporting Rule Case

ALTA filed an amicus brief supporting Fidelity National Financial Inc. and Fidelity National Title Insurance Co. in their appeal of a federal court decision that upheld FinCEN's authority to issue the Residential Real Estate Reporting Rule under the Bank Secrecy Act.

The appeal, now before the U.S. Court of Appeals for the Eleventh Circuit, comes amid conflicting court decisions regarding the rule's legality and raises important questions about the scope of FinCEN's authority and the role of title and settlement professionals in federal anti-money laundering efforts. In a separate ruling in March, a federal court in Texas vacated the regulation nationwide, finding that FinCEN exceeded its statutory authority. Meanwhile, another lawsuit filed in the U.S. District Court for the District of Puerto Rico challenges FinCEN's rule on similar procedural and constitutional grounds (Puerto Rico v. FinCEN, No. PRD-191360).

In its filing, ALTA argued the rule imposes significant operational, financial and compliance burdens on title and settlement companies—particularly small businesses—while offering benefits that are largely speculative.

The filing included data ALTA gathered from a survey of more than 1,300 title professionals, attorneys and settlement providers who worked to comply with the rule before it was vacated by a federal court in Texas. The brief cited the survey as evidence that the actual implementation burden was substantially greater than FinCEN projected. ALTA argued the agency's compliance cost estimates failed to account for the operational realities title professionals encountered after the rule took effect. The brief further argued that determining whether a transaction is reportable is often far more complicated than FinCEN assumed. In many cases, title professionals must interpret complex regulatory definitions that are not readily answered by reviewing transaction documents alone.

One of ALTA's most significant concerns involves the practical challenge of obtaining information from buyers and sellers. The association notes that during the rulemaking process it asked FinCEN to allow reporting entities to indicate when required information could not be obtained from transaction participants. FinCEN declined to provide such flexibility, instead maintaining that incomplete reports would not satisfy reporting obligations and could expose reporting persons to penalties.
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According to ALTA, this creates an untenable situation because title and settlement professionals have no legal authority to compel parties to provide beneficial ownership information. Yet they remain responsible for reporting information they may be unable to obtain. The survey found that consumer privacy concerns and refusals to provide information were among the most persistent implementation challenges. ALTA's filing also disputed FinCEN's conclusion that compliance would require little or no additional technology investment and similarly contends FinCEN underestimated the amount of training necessary to implement the rule.