A quiet but massive regulatory change is moving toward the residential real estate market.
For years, specific “Geographic Targeting Orders” (GTOs) required title companies in
hotspots like Miami and New York City to report the true owners behind shell companies
buying homes with cash. Those temporary, localized rules are now evolving into a
permanent, nationwide mandate.

The Financial Crimes Enforcement Network (FinCEN) is finalizing regulations that will
require settlement agents across the United States to report beneficial ownership
information for non-financed residential transfers to legal entities and trusts. With the
effective date set for March 2026, the window for preparation is open. The industry is
moving past the initial shock and focusing on the practical reality: this is no longer just a
regional concern. It is the new standard for doing business.

The New Reality: Why Cash Is No Longer King of Privacy

The driving force behind this regulation is the government’s need to close a significant
loophole in the U.S. financial system. While banks have long been required to file
Suspicious Activity Reports (SARs), the real estate sector has historically had less stringent
reporting requirements for all-cash deals.

This gap has allowed illicit funds to flow into the American housing market. FinCEN data
reveals that in counties previously covered by GTOs, a significant percentage of reported
beneficial owners were already subjects of suspicious activity reports filed by financial
institutions. The new rule aims to bring the U.S. in line with other G7 nations by ensuring
that bad actors cannot hide illicit proceeds in residential property.

For settlement agents, this means the definition of a “standard closing” is changing.
Approximately one-third of all home sales in the U.S. are cash transactions. While many of
these are legitimate purchases by retirees or investors, the volume means that agents
everywhere, not just in major metros, will face new compliance hurdles.

The Operational Impact: What Needs to Change

The shift from voluntary or localized reporting to a federal mandate creates immediate
operational pressure for title and settlement companies.

The friction points are clear:

• Data Intensity: The new reports require collecting specific data points. This includes sensitive information like passport numbers and beneficial ownership details that are not public record. You cannot simply pull this from a database.
• Client Friction: Buyers who are used to privacy may push back. Settlement agents will need to explain that providing this information is a federal requirement, not a company policy.
• Closing Delays: If this data is not collected early in the process, it becomes a bottleneck. Discovering a buyer is an entity or trust at the closing table could stop a deal in its tracks if the beneficial ownership information is not ready.

The Strategic Response: From Panic to Process

Successful firms are reframing this challenge. Instead of viewing it as a crisis, they are
treating it as a workflow update. Industry experts suggest a three-pronged approach to
managing this transition effectively.

1. Get Educated and Audit Your Tech

The first step is understanding exactly what data is required. Vendor partners and title production software providers are already updating their systems to accommodate these new fields. Settlement agents should use this time to review their current software capabilities and ensure they are ready to capture and secure this sensitive data.

2. Update the Workflow

The most critical change must happen at order entry. Firms need to implement a “triage” process to identify reportable transactions immediately. Staff should be trained to ask three qualifying questions early:

• Is this a residential transaction?
• Is it non-financed (cash)?
• Is the buyer a legal entity or trust?

If the answer to all three is yes, the data collection clock starts immediately. Waiting until the settlement statement is prepared is too late.

3. Proactive Communication

This is a business development opportunity disguised as a compliance burden. Settlement
agents should be reaching out to their referral partners now. Real estate agents and
investors need to know this is coming. By positioning your firm as the expert who protects
their deals from regulatory delays, you build trust. Informing partners early ensures that
when March 2026 arrives, their clients are not blindsided by requests for personal data.

Building Your Circle of Trust

Navigating this change requires more than just updated software. It requires a team of
advisors who understand the specific nuances of the settlement and fiduciary industry.

• The Specialized Banker: You need a banking partner who understands fiduciary accounts and the cash flow cycles of title companies. They can help navigate the financial operational changes that come with increased compliance costs.

• The Attorney and CPA: Buyers using trusts and entities often do so for tax or estate planning reasons. These professionals are essential for helping the buyer understand their own entity structure so they can provide accurate information to the settlement agent.

• The Industry Advocates: Engaging with organizations like the American Land Title Association (ALTA) and the Title Action Network (TAN) ensures you stay informed on advocacy efforts that may refine or clarify these rules before they go live.

The FinCEN rule is a significant shift, but it is manageable with the right partners and early
preparation. The firms that adapt their workflows now will be the ones that continue to
close deals smoothly when the new regulations take effect.

—

This topic was discussed in depth with experts Angela Saiz and Elizabeth Berg on
Capital Bank’s “Pick Up! Pick Up!” podcast. Listen to the episode “The FinCEN
Freakout Call” here: Ep. 03 | The FinCEN Freakout Call | Pick Up! Pick Up!

Is your settlement or title company preparing for these regulatory changes? Contact
Capital Bank’s dedicated Fiduciary Banking team for tailored solutions: Settlement Services