In Flowers Title Companies, LLC v. Bessent, a federal district court held that FinCEN exceeded its statutory authority under the Bank Secrecy Act in promulgating its 2024 Final Rule governing reporting of certain non-financed residential real estate transactions as discussed in our recent blog by Real Estate Default Shareholder Ben Hoen.
The court concluded that the Rule improperly treated broad categories of transactions as “suspicious” without sufficient statutory basis. Also, the Bank Secrecy Act does not authorize FinCEN to impose the nationwide reporting regime set forth in the Rule.
As a result, the court vacated and set aside the Rule in its entirety under the Administrative Procedure Act (APA).
The decision strongly supports the position that the Rule is currently unenforceable on a nationwide basis, given the court’s express vacatur and other precedent recognizing broad relief under the APA. However, there is conflicting authority in other jurisdictions (including two recent decisions upholding the Rule: The Fidelity Decision and The Corley Decision), creating a developing split in the Districts.
The government is expected to appeal the decision, potentially including action by the Supreme Court of the United States to settle the law, is likely. In the meantime, since the Flower Title decision, FinCEN has self-imposed a stay by posting the following message on its website: “In light of a federal court decision, reporting persons are not currently required to file real estate reports with FinCEN and are not subject to liability if they fail to do so while the order remains in force.”
Next Steps to Consider:
- Pause implementation efforts tied solely to the Final Rule (unless otherwise contractually required).
- Do not begin new reporting under the vacated Rule at this time.
- Continue monitoring developments, as the Rule could be reinstated pending appeal or replaced by revised rulemaking.
- Maintain flexibility in compliance planning, particularly for institutions that had begun building reporting infrastructure.
We will continue to monitor developments closely and will update you as new guidance, court decisions, or regulatory changes become available. If you have questions on this topic or would like to learn more about Weltman’s Real Estate Default solutions, feel free to connect with Ben at any time.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
