FinCEN Continues De-Regulatory Push With Key Legislative Announcements
In a week that has highlighted the Trump administration’s de-regulatory agenda on financial oversight, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced multiple developments in their attempts to ease compliance burdens on non-banking institutions while still maintaining appropriate anti-money laundering (AML) and counter-terrorism financing (CFT) protocols to protect national security. These updates – which include a voluntary survey on AML/CFT costs and a delay on the unprecedented real estate reporting rule – signal the potential for additional regulatory rollbacks that could save those operating in covered industries millions in operational expenses.
Survey To Analyze Compliance Costs for Non-Banks
On September 29th, FinCEN issued a Notice and Request for Comment in the Federal Register, proposing a one-time “Survey of the Costs of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Compliance.” The voluntary survey focuses on direct costs borne by non-bank financial institutions (NBFIs), a list that includes casinos, money services businesses (MSBs), insurance companies, dealers in precious metals and stones, credit card system operators, and loan/finance companies. Notably however, American credit unions and several other NBFI’s were left off the list of those being surveyed, this in spite of these entities being subject to staunch AML/CFT requirements in their own right. The survey seeks to examine 2024 expenses related to Bank Secrecy Act (BSA) requirements, such as Suspicious Activity Reports (SARs), customer verification, and Office of Foreign Assets Control (OFAC) compliance for these covered entities, while also exploring the efficacy of technology-driven processes for information collection and potential cost breakdowns for other vital activities such as employee training on these practices and record-keeping.1
All told, the information collected is expected to allow the federal government and its regulators to better grasp the cumulative impact of current AML/CFT regulations, and may back future efforts to adjust regulatory obligations and advance de-regulatory proposals consistent with other executive orders executed by the Trump administration to date. In their announcement, FinCEN emphasized that the data collected will help to assess regulatory impacts and will not trigger any direct enforcement action against potential participants, which should boost the potential for full participation and efficacy of the survey. FinCEN estimates that there will be nearly 280,000 respondents to their survey, over 230,000 of which being MSBs, with the agency estimating that covered entities will spend a collective total of 2.2 million hours completing their responses. As such, a wealth of significant information should ultimately be collected and sorted through, with those affected hopeful that their efforts will help to streamline future regulation (or de-regulation) and salvage valuable resources for their respective firms. The key to any potential changes however will be toeing the line of reducing regulatory burdens without weakening long-standing safeguards. The requested comments are due by December 1, 2025.
Residential Real Estate Rule Gets Breathing Room
Just one day after their above-mentioned announcement, FinCEN announced an additional move that will provide temporary exemptive relief to other non-banking institutions that are set to face their own set of new regulations. On September 30th, the agency announced its plans to delay the effective date of its August 2024 “Anti-Money Laundering Regulations for Residential Real Estate Transfers” (i.e. the Residential Real Estate Rule or RRE) from its initial date of implementation of December 1st, 2025 to March 1st, 2026.
In its original form, the landmark rule would seek to close a major loophole in American AML defenses by tightening regulatory oversight of residential real estate transfers suspected of being used to launder money. The measure would require certain professionals involved in real estate closings and settlements to file formal reports to FinCEN regarding certain non-financed transfers of residential real estate to legal entities or trusts for the first time. Under the rule, only non-financed transfers (i.e. transfers not backed by a mortgage or credit from a qualifying financial institution and thus not subject to traditional oversight from lenders themselves) would be subject to the new reporting requirements, and only when the buyer is a legal entity or trust (not an individual).2 Today, transactions of this variety remain prone to exploitation by illicit actors such as those operating within international drug cartels, drug and human traffickers, and corrupt foreign officials or politically-exposed persons. They have also remained difficult to hinder historically given that these dealings generally bypass bank scrutiny over origin of funds, subsequently allowing potentially ill-gotten funds to infiltrate the U.S. financial system. Aside from the destabilizing effects had by laundering efforts themselves, these transactions have also directly contributed to the current U.S. residential housing crisis. The major influx of illicit cash into this sector has severely disadvantaged those seeking to compete fairly in the U.S. real estate market, driving up housing costs while also reducing availability of homes for purchase on the market.
As is the case with the announcement of any new regulations, the covered parties – particularly smaller firms – initially raised concerns about compliance burdens, cost, complexity, and privacy implications. This input has in part contributed to the announcement of the delay, which will formally exempt real estate closing and settlement providers (reporting persons) from filing reports on qualifying transactions closing before March 1st. The order will officially grant a temporary exemption on all aspects of the rule, including recordkeeping, reporting of suspicious activity, and related compliance obligations in the short term, allowing covered firms additional time to establish their associated compliance processes. While illicit finance risks persist, the extension aims to ensure feasible and appropriate implementation of the rule for the ultimate benefit of the U.S. financial system.
Altogether these announcements reflect a post-election pivot towards creating more efficient AML/CFT frameworks, while easing burdens on American businesses. As additional comments on both new measures and the current state of affairs for the aforementioned institutions continue to roll in, stakeholders are anticipating the balancing of these rules and the potential for reduced red tape.
Citations
- “Agency Information Collection Activities: Proposed New Information Collection; Survey of the Costs of AML/CFT Compliance; Comment Request.” Department of the Treasury Financial Crimes Enforcement Network, Federal Register, 30 Sept. 2025.
- “Anti-Money Laundering Regulations for Residential Real Estate Transfers.” Department of the Treasury Financial Crimes Enforcement Network, Federal Register, 29 Aug. 2024.