05/13/2026
May 12, 2026
The legal battle over FinCEN's Anti-Money Laundering Regulations for Residential Real Estate Transfers rule has heated up again.
On May 11, the U.S. Department of the Treasury's Financial Crimes Enforcement Network filed a notice of appeal challenging a March federal court ruling that struck down the RRE rule.
The appeal will ask the U.S. Court of Appeals for the Fifth Circuit to overturn the March decision and reinstate enforcement of the rule.
The RRE rule had been in effect for less than three weeks when Texas-based Federal District Judge Jeremy D. Kernodle vacated it in full on March 19. The rule had placed significant new reporting obligations on title & escrow providers nationwide for most non-financed residential real estate transactions.
As of this writing, FinCEN has not requested a stay of Kernodle's decision. A granted stay would pause the vacatur until the appeal is resolved. Still, that has not happened, and FinCEN continues to state that compliance with the RRE rule is not currently required.
When the ruling striking down the RRE rule occurred, industry organizations including the American Land Title Association and Qualia suggested that title & escrow companies consider maintaining their FinCEN data collection infrastructure, citing the strong likelihood of an appeal. That suggestion may remain worth considering now that the appeal has been filed and the rule could ultimately become enforceable again.
Individual agencies will, of course, have to make their own decisions of how to respond as the legal drama unfolds. Agencies should also consider monitoring for updates, looking for information from their underwriters, and working with their legal counsel to determine how the situation impacts them.
When in effect, the RRE rule required title & escrow professionals—and others involved in real estate closings—to report most non-financed residential transactions involving legal entities or trusts. In practice, that meant filing reports on an estimated 800,000 to 850,000 transactions annually, at a compliance cost of hundreds of millions of dollars to the industry, according to court filings.
Kernodle found that FinCEN exceeded its legal authority under the Bank Secrecy Act of 1970 by treating an entire category of routine transactions as inherently suspicious. He called FinCEN's justifications "vague, conclusory, and unpersuasive."
FinCEN's appeal is not the only active legal front on the RRE rule. In April, Fidelity National Financial appealed a separate federal ruling out of Florida—one that had actually upheld the rule. That case, now before the Eleventh Circuit Court of Appeals, stems from FNF's argument that the rule is "arbitrary and capricious" and would cause irreparable harm to the industry.
The Florida ruling directly conflicts with Kernodle's Texas decision, setting up a potential circuit split that could ultimately push the issue toward the Supreme Court. Taken together, the two appeals underscore just how unsettled the legal landscape around the RRE rule remains—and reinforce why title & escrow companies should consider keeping their compliance infrastructure in place.
