Federal Judge Strikes Down Treasury’s All-Cash Real Estate Disclosure Mandate

U.S. District Judge Jeremy Kernodle strikes down Treasury's anti-money laundering rule for all-cash residential sales, siding with Texas title companies in a landmark decision.

By: AXL Media

Published: Mar 24, 2026, 11:37 AM EDT

Source: Bisnow

The Legal Ruling and Vacatur

Judge Kernodle, an appointee of President Donald Trump, ruled that the 2024 Residential Real Estate (RRE) Rule ran afoul of the Bank Secrecy Act (BSA). The core of the ruling rests on the interpretation of FinCEN’s authority; while the BSA allows for the reporting of "suspicious" transactions, the court found that the agency failed to demonstrate how all non-financed transfers to entities or trusts are categorically suspicious. Kernodle noted that allowing such a broad classification would grant the government "far-reaching powers no one has contemplated," potentially allowing the regulation of nearly every type of private transaction.

FinCEN’s Enforcement and Industry Impact

The RRE Rule, which officially went into effect on March 1, 2026, after multiple delays, was designed to close a long-standing loophole where criminals use anonymous LLCs or trusts to hide illicit funds in U.S. property. Unlike the previous Geographic Targeting Orders (GTOs) which focused on high-risk cities like Miami and Manhattan for purchases over $300,000, the new rule applied nationwide with no minimum dollar threshold. Following the court's decision, FinCEN confirmed on March 23 that reporting entities are not currently required to file reports or face liability while the order remains in force, providing immediate—though perhaps temporary—relief to title agents and attorneys.

Strategic Rationale and Plaintiff Arguments

The lawsuit was spearheaded by Flowers Title Companies, a family-owned business in Tyler, Texas. The plaintiffs argued that the rule transformed private businesses into "government surveillance arms," forcing them to collect sensitive data such as Social Security numbers and photo IDs from clients who were not involved in any illegal activity. The Pacific Legal Foundation asserted that the Treasury Department’s estimate of $2.3 billion in laundered funds over five years did not justify the immense compliance burden placed on the industry, particularly as cash sales account for roughly 28% of the residential market.