WASHINGTON — The Treasury's Financial Crimes Enforcement Network, or Fincen, finalized rules Wednesday requiring industry professionals to report risky non-financed transfers of residential real estate and applying anti-money-laundering controls to certain investment advisors.
"The Treasury Department has been hard at work to disrupt attempts to use the United States to hide and launder ill-gotten gains," said Treasury Secretary Janet Yellen. "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. These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors."
Effective December 1, 2025, Fincen says parties involved in non-financed property transfers to legal entities or trusts must report detailed information to Fincen, including data on the property, transaction, parties involved and beneficial owners. The rule targets high-risk, all-cash transactions often used to obscure illicit activities and exempts certain low-risk transactions like those related to divorce or death.
The rules also allow flexibility in compliance by letting real estate professionals designate who will file reports. The agent listed on the closing statement has the first reporting duty. If absent, the duty shifts to the professional who prepared the statement, and from there Fincen says it will continue "down the list" to determine responsible parties.
The final rule incorporates changes to reduce the compliance burden based on feedback from various stakeholders. Fincen will allow a party to rely on information provided by another party, as long as the information is plausibly accurate and includes a list of professionals who would have the primary responsibility for filing reports. The rule also includes a flexible option allowing industry professionals to designate compliance responsibilities among themselves. These adjustments aim to balance the usefulness of reports to law enforcement with minimizing the compliance burden on businesses.
As of January 1, 2026, the agency will also broaden the definition of "financial institution" under the Bank Secrecy Act to include new categories of investment advisors. That expansion would require those entities to report suspicious activities, maintain specific records and adhere to information-sharing procedures.
Entities newly subject to AML rules include investment advisors registered with, or required to register with, the Securities and Exchange Commission — typically those managing over $110 million in assets. Exempt Reporting Advisors — investment advisors that are not required to register with the SEC but must report certain information because they either advise private funds with less than $150 million in U.S. assets under management or advise only venture capital funds — will also now be required to report suspicious activities and adhere to the new recordkeeping requirements.
The final rule narrows the definition of "investment advisor" by excluding SEC-registered investment advisors who register with the SEC solely due to being midsize advisors, multistate advisors or pension consultants, as well as Registered Investment Advisors not required to report any assets under management to the SEC. It also limits the rule's application to overseas investment advisors, focusing only on their activities within the U.S. or those providing services to U.S. persons or entities.
The agency says the new rule will help address illicit finance risks in the investment advisor sector in the United States, a problem the Treasury documented in a February 2024 risk assessment.
"The risk assessment highlights numerous cases in which sanctioned persons, corrupt officials, fraudsters, and other criminals have exploited the investment adviser industry to access the U.S. financial system and launder funds," a fact sheet stated. "It finds that foreign states, most notably the People's Republic of China and the Russian Federation, leverage investment advisors and their advised funds through investment in early-stage companies to access certain technologies and services with national security implications."
