Before Trump’s second term, we were all worried about what FinCEN was going to require. The Financial Crimes Enforcement Network of the federal government had imposed a program where, if you owned a little company of any type (corporation, LLC, or limited partnership), you had to register all of the “beneficial owners” of the company in 2024.
Court orders kept pushing the time back, until the registration requirement didn’t go into effect until after Trump was inaugurated in 2025. The penalties for not registering were huge. They were draconian. The ongoing requirements after you originally registered were nearly impossible to comply with, and the penalties for not complying were big enough that the federal government could basically destroy any small business it targeted.
In my opinion, FinCEN was nothing more than a way that the government could destroy any small business that it decided it wanted to go after. It was a weaponization of the government against small businesses that didn’t act politically correctly. Call that a conspiracy theory, but it is clear to me that was what was happening. It was a huge overreach by the government.
FinCEN – Alive and Well
People keep asking me if FinCEN is dead or not. The company registration requirements were killed once Trump came into office, but FinCEN is alive and well. If you registered with FinCEN under their beneficial owner’s requirements, you can’t “unregister.” They have your information.
They actually don’t have any information they didn’t already have, but you just delivered it in a nice package for them. I personally got my FinCEN number, but never registered any of my companies.
FinCEN is still very active doing what they were created to do. They monitor the BSA. No, not the Boy Scouts of America – the Bank Secrecy Act. They track financial transactions and catch money laundering. They weren’t created to harass mom and pop shops. I wouldn’t be surprised if we haven’t seen the last of the Corporate Transparency Act, which required the beneficial ownership registration, but for now it is dead – Happy Day!
New Registration Requirement
FinCEN is implementing a new registration requirement dealing with real estate that went into effect March 1, 2026. It’s called the Residential Real Estate Reporting Rule. It’s supposed to catch money laundering in the US residential real estate world. It won’t be a big part of your world, but you should know about it.
This is the criterion for registration:
- Only residential real estate is involved. That is family homes up to four units and vacant land to be used for residential development.
- The transaction has to be a cash deal. If it is financed, then there is no need to report it.
- The buyer has to be an entity such as an LLC.
You only have to report if all three of these criteria are met.
Since 2016, FinCEN has had real estate disclosure rules known as “geographic targeting orders.” They only applied in a few cities, such as New York and Miami. The registration requirements that went into effect March first basically just expanded the existing requirements to nationwide compliance.
The Treasury Secretary under Joe Biden, Janet Yellen, has said as much as $2.3 billion was laundered through U.S. real estate between 2015 and 2020, and stopping this is high priority.
FinCEN Smackdown
The Pacific Legal Foundation brought a case against FinCEN and the real estate reporting requirements, claiming that the reporting requirements exceeded FinCEN’s statutory authority.
On March nineteenth, U.S. District Judge Jeremy Kernodle in Texas ruled that the real estate reporting did in fact exceed FinCEN’s authority.
He ruled that FinCEN failed to prove that all non-financed transfers to entities are “categorically suspicious.” He noted that many people use LLCs or trusts for legitimate reasons like privacy, liability protection, or tax planning.
The current reporting requirement doesn’t affect many real estate investors. The judge warned that if the government could label an entire category of normal commerce as “suspicious” without specific proof, it would give FinCEN unlimited, far-reaching power over almost any transaction imaginable. I agree with the judge.
Basically, the reporting requirement has halted. The government says they will appeal, but the FinCEN website says compliance has been suspended.
Lee is an unique attorney. He has a BS in geophysics, an MS in analytical nuclear chemistry, and a JD in Law from Brigham Young University. He has distinguished himself as a United States Supreme Court Counselor, Estate Planning and Business Formation Specialist, and Tax Lawyer, who has practiced law for over 40 years. He is the author of 15 books, has authored over 500 published articles, has given over 5000 live lectures, and is a popular continuing education teacher for attorneys, accountants, insurance, and finance professionals. Learn more at: LegaLees.com, or contact Lee at: [email protected].