“Treasury is eliminating a burdensome reporting requirement for millions of law-abiding business owners without compromising our national security.” – Scott Bessent, U.S. Secretary of the Treasury
On August 11, 2026, FinCEN reversed course and permanently ruled that U.S. companies and persons are no longer required to file the extensive beneficial ownership information (BOI) previously required to be reported under the authority of the Corporate Transparency Act (CTA). Additionally, FinCEN said it was going to dump the previously submitted personal information from the government’s online database.
Interestingly, the Secretary also commented that this was part of the administration’s promise to cut red tape. All good. However, for anyone who may be involved in real estate transactions, the natural next question is, what about FinCEN’s Residential Real Estate (RRE) reporting rule? Similarly, this rule requires that any cash or private financed transaction (i.e. non-institutional lender) at any price that includes a business entity (or even a trust) is again required to report an extensive amount of information about the buyer, the seller, and the transaction itself to the same governmental database. The theory is that institutional lenders use Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) programs and risk-based borrower screening, so those types of deals have been exempted.
In Flowers Title Companies v. Bessent (E.D. Tex., March 19, 2026), the court vacated the RRE rule nationwide, holding that FinCEN exceeded its Bank Secrecy Act statutory authority because the agency failed to show how non-financed residential real estate transactions are categorically “suspicious” under the law. Therefore, since March 19th, real estate professionals have not had to concern themselves with the reporting requirements.
However, on May 11, 2026, the government appealed the Flowers court’s vacatur of the RRE rule. Interestingly, while the Secretary recently discussed red tape motivations for doing away with reporting requirements under the Corporate Transparency Act, he made no such comments regarding the RRE rule, and the government’s appeal is still moving forward.
So why the contradiction and apparent tension between the two? No conclusive answer yet from the Secretary, but the likely culprits are the following:
(1) Different statutory authority. BOI reporting was required under the Corporate Transparency Act, which became law in 2021. The RRE rule derives from the Bank Secrecy Act, signed into law by Richard Nixon in 1970.
(2) Different national security rationale. The RRE rule was specifically designed to close a gap that allows foreign actors from adversarial nations to purchase residential property near military installations, intelligence facilities, and critical infrastructure through anonymous LLCs and trusts. The government could argue this is a more targeted, concrete national security concern than the broad anti-money-laundering rationale behind the CTA’s universal beneficial ownership registry.
(3) Different scope and scale. The CTA’s BOI reporting applied to an estimated 32+ million small businesses across virtually every industry, whereas the RRE rule targets a narrower category of transactions, i.e. private-financed/cash residential real estate transfers to entities and trusts and imposes its obligations on real estate closing professionals rather than on business owners generally.
Is there a formal legal contradiction here that would estop the government from defending the RRE rule? Likely not. But is it a meaningful rhetorical and substantive inconsistency that the Flowers plaintiffs and their counsel will exploit in the appeal? Almost certainly yes. The government will need to articulate a principled distinction for why entity-based reporting is an unacceptable burden for small businesses under the CTA but a justified burden for title companies and closing agents under the BSA; and Secretary Bessent’s own recent words certainly will make that task harder.
Have questions about FinCEN reporting requirements or how these developments may impact your business or real estate transactions? Contact the Sandberg Phoenix team to discuss how we can help.
