Federal Court Vacates FinCEN Anti-Money Laundering Regulations for Residential Real Estate Transfers Rule (RRE Rule)

Earlier today, March 19, 2026, a federal court in the Eastern District of Texas, Tyler Division, granted summary judgment in favor of a title company plaintiff, Flowers Title Companies, LLC, which challenged that the FinCEN Residential Real Estate Transfers Rule (RRE Rule) exceeded FinCEN's statutory authority under the Bank Secrecy Act. The case was decided on cross-motions for summary judgment, meaning both parties agreed there were no disputed facts and the case turned entirely on questions of law. As part of his ruling, U.S. District Judge Jeremy Kernodle denied FinCEN's cross-motion for summary judgment, and ordered that the RRE Rule be vacated in its entirety and remanded to FinCEN. 
 
The government may seek a stay of the vacatur pending appeal, or appeal directly to the Fifth Circuit Court of Appeals.
 
Specifically, the court found that FinCEN failed to demonstrate how non-financed residential real estate transactions involving entities or trusts are categorically "suspicious," noting that individuals routinely conduct such transactions for entirely legitimate reasons, including saving on financing costs and structuring holdings through LLCs for liability and tax purposes. The court also found FinCEN's reliance on a statistic showing that approximately 42% of transactions captured by its Geographic Targeting Orders involved parties flagged in Suspicious Activity Reports to be unpersuasive, noting that the GTOs covered only a narrow, geographically targeted subset of transactions and did not support a nationwide categorical finding of suspicion.
 
The Court also found that a provision in federal law that authorizes FinCEN to require domestic financial institutions or nonfinancial trades or businesses to "maintain appropriate procedures, including the collection and reporting of certain information" – 31 U.S.C. § 5318(a)(2) – merely allows FinCEN to prescribe procedural requirements, not independently impose substantive reporting obligations such as those required by the RRE Rule. Adopting FinCEN's broader reading, the Court noted, would render the more limited reporting authority in § 5318(g)(1) superfluous.
 
Having concluded that the Rule exceeded FinCEN's statutory authority, the Court vacated the Rule under 5 U.S.C. § 706(2) of the APA. The Court found vacatur to be the appropriate remedy, noting that the Rule's deficiencies make it unlikely FinCEN could justify the Rule on remand, and that vacatur would simply restore the pre-Rule status quo.
 
CLTA will monitor for further developments and provide updated information to members as quickly as possible.

Bulletin 25/26 - 66
March 19, 2026