Money Laundering Rule in Effect as of December 1

As of December 1, 2025 a new rule issued by FinCEN (Financial Crimes Enforcement Network) takes effect.  This rule applies to real property of one to four residential units, vacant land intended for construction of residential of one to four residential units, where the buyer is a legal entity or trust,and the buyer is making an all-cash purchase or financing the purchase through a bank,  etc., that does not have an independent money laundering reporting obligation.  

Information required to be collected by a "reporting person" which typically is the escrow or title company in the transaction, will include legal names, dates of birth, dates of execution of trusts, addresses, dba's, citizenship (for trustees and beneficial owners), taxpayer identification numbers, and if needed account number and financial institution name from which payment is made.

Additionally, there will probably be an extra charge in escrow for collecting this information which according to one escrow officer could be as much as an additional $700.  California Association of Realtors is including this transactional information now, so that any properties already begun prior to December 1 will be covered. This information is in a separate required form now, but will soon be incorporated into the standard residential purchase contract.

And, should all necessary information not be delivered as requested on a timely basis, the Reporting Person will not close escrow, and any party not providing this information may be in breach of contract and the other party may be entitled to cancel.

While more regulations and forms to sign in escrow are met with a tired groan, bear in mind that "in 2025, financial crime is more sophisticated than ever, costing the global economy up to $2 trillion annually, according to the UN Office on Drugs and Crime ." https://www.moodys.com/web/en/us/kyc/resources/insights/aml-in-2025.html, involving cryptocurrency, real estate transactions, and other ways of laundering money. 

See more at :  https://www.realtor.com/news/trends/fincen-money-laundering-rule-crackdown-all-case-home-purchases/ and at FinCEN: https://www.fincen.gov/boi-faqs

 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996