https://www.costar.com/article/2055232499/real-estate-pros-must-report-residential-cash-sales-under-new-anti-money-laundering-rules
The U.S. Treasury is finalizing measures to curb money laundering that requires professionals in the real estate industry to report cash sales of some residential property to the government.
The rule taking effect in December 2025 applies to nonfinanced sales to legal entities and trusts, but to not individual cash buyers or sellers. Title agents, attorneys and other parties that handle closings for single-family houses, buildings with up to four apartments, large condominium or cooperative buildings or vacant land where these types of housing are planned will be subject to reporting requirements.
The federal agency said the rule will replace efforts over the past eight years to police illicit financial activity in residential property sales in selected U.S. markets and on a temporary basis. The Treasury’s Financial Crimes Enforcement Network also adopted a separate rule this week requiring investment advisers to submit information about possible illegal activity.
“The Treasury Department has been hard at work to disrupt attempts to use the United States to hide and launder ill-gotten gains,” U.S. Treasury Secretary Janet Yellen said in a statement Wednesday. “That includes by addressing our biggest regulatory deficiencies, including through these two new rules that close critical loopholes in the U.S. financial system that bad actors use to facilitate serious crimes like corruption, narcotrafficking and fraud.”
The agency said it reduced some reporting requirements to address concerns raised by trade groups during the rulemaking process earlier this year. The National Association of Realtors sought an exemption for real estate agents who help people sell or find homes to buy but typically don't conduct due diligence on their clients. Agents who represent buyers and sellers during their house-finding search are unlikely to be subject to the rule, the Treasury said in issuing the final rule this week.
Exemptions
The American Land Title Association, concerned about the reporting obligations’ potential annual cost to the real estate industry, wanted real estate sales for little or no money to be excluded. The final rule does not provide an exemption for these transfers, the Treasury said, because even these can present a risk despite the low amount of money being traded. But the Treasury did exempt a number of common transactions, such as those for estate planning purposes.
“While [the title association] still is carefully reviewing (the) final residential real estate rule, it appears the agency incorporated several important industry recommendations to streamline the regulation and reduce some of the burden on real estate professionals,” the group told CoStar News in an emailed statement.
The NAR, a real estate trade group with more than 1.5 million members, told CoStar News in an email it was pleased that the final rule makes the title or closing agent the primary individual responsible for reporting a transaction to the government. The rule also allows the various professionals involved in a deal to designate someone other than the agent to report it to the government, as long as they work on the closing in another capacity.
The government also addressed concerns that real estate professionals might act in good faith but still be penalized for failing to report a cash transaction. The potential civil penalty cannot exceed $1,394 for each violation. The rule includes a “reasonable reliance” standard that allows agents or attorneys to rely on the entity acquiring residential property to identify the individual who transfers or receives it.
The Treasury began using so-called residential geographic targeting orders in 2016, requiring title companies in selected markets to report cash transfers worth $300,000 or more. A substantial number of sales reported under these orders were conducted by individuals who were involved in other suspicious activities, according to the final rule.
