On March 20, a federal judge in Texas vacated a sweeping anti-money laundering rule that had taken effect just 19 days earlier. The rule, issued by the Treasury Department's Financial Crimes Enforcement Network, would have required title companies to report the beneficial owners behind any LLC or trust purchasing residential real estate in an all-cash transaction, anywhere in the country, at any price point. No exceptions for dollar amount. No geographic carve-outs.

U.S. District Judge Jeremy Kernodle ruled that FinCEN exceeded its statutory authority under the Bank Secrecy Act. The core of his reasoning: the law authorizes FinCEN to regulate "suspicious" transactions. Kernodle found that FinCEN had failed to demonstrate that all-cash entity purchases are categorically suspicious. "The fact that some bad actors have conducted non-financed real estate transactions does not make such transactions categorically 'suspicious,'" he wrote. "If it did, then nearly every type of transaction imaginable would be 'suspicious.'"

With that, the rule was gone. FinCEN's own website now carries an alert stating that reporting persons are not currently required to file real estate reports and are not subject to liability if they fail to do so.

The ruling is being appealed, and the FACT Coalition, which supported the regulation, has said it expects the government to prevail. This is not settled law. But for now, the compliance machinery that title companies had spent months building sits idle.

What the Rule Would Have Done

To understand the ruling's significance, it helps to know what the rule covered. The regulation applied to any non-financed residential real estate transfer where the buyer was a legal entity or trust, with no geographic or price threshold. It covered single-family homes, Manhattan condos and co-ops, apartment buildings, and certain vacant land intended for residential use. Financed transactions were excluded, because banks are already subject to AML obligations.

By FinCEN's own estimates, the rule would have covered between 800,000 and 850,000 transfers annually at a compliance cost of up to $690 million. Title companies would have been responsible for collecting and submitting Real Estate Reports to FinCEN within 30 to 60 days of closing, identifying the individual beneficial owners behind the purchasing entity.

The agency argued the rule was necessary to close loopholes that cash buyers using shell companies had exploited for years. Critics argued the compliance burden was disproportionate and the legal authority wasn't there.

Why This Is a Particularly NYC Story

New York City, and Manhattan specifically, sits at the center of this conversation in ways that don't apply elsewhere.

In the first five months of 2025, 60 percent of all Manhattan deals closed without financing, the highest share citywide. LLCs accounted for 11.35 percent of all NYC home purchases in 2025, and Manhattan accounts for nearly half of all LLC-based sales citywide. At the highest price points, the concentration is even more pronounced. In Q1 2025, 58 percent of ultra-luxury transactions in Manhattan were completed without financing.

According to Reinvent Albany, which analyzed city property assessment data, 37 percent of Manhattan properties are owned by LLCs, a figure that is five times the New York State average and three times the rate of the next-largest cities in the state. At specific buildings, the numbers are even more striking. 220 Central Park South, where Ken Griffin purchased the most expensive residential unit in U.S. history, reportedly had 85 percent of buyers close through LLCs.

This is why New York City has been subject to FinCEN's Geographic Targeting Orders since 2016. The GTOs are exactly what they sound like: temporary, repeatedly renewed reporting requirements targeted at specific metro areas identified as high-risk. Under the current GTO framework, all real estate purchases made through a limited liability company at or above $300,000 in covered metropolitan areas, including New York City, are subject to disclosure rules requiring title companies to identify the beneficial owners of purchasing entities.

Here's what the ruling does not change for the New York market: the GTOs remain in effect. The vacated rule was a nationwide expansion of that framework, designed to extend the same logic everywhere simultaneously. The ruling pushes the policy back to the prior regime. For NYC buyers and sellers transacting through entities, the disclosure requirements that applied before March 1 still apply today.

When FinCEN began scrutinizing all-cash real estate purchases that used anonymous LLCs in the cities covered by the original GTOs, it found that up to 30 percent involved suspicious activity. That figure has driven the agency's push to expand the program ever since.

The Legitimate Uses That Got Caught in the Net

The political framing of this ruling, at least in some quarters, has been binary: either you support disclosure or you're sympathetic to money laundering. Reality is always more nuanced.

LLCs and trusts serve entirely legitimate purposes in real estate. They provide liability protection, allow for cleaner estate planning, enable partnership structures, and give high-net-worth individuals privacy from public records. The overwhelming majority of transactions conducted through entities have nothing to do with illicit funds.

International buyers frequently structure their purchases through local LLCs, legal representatives, or U.S.-based family members. The limited available data shows consistent interest from buyers in the United Kingdom, Israel, Japan, Canada, and Italy, and the true figure of cross-border purchases is likely far higher than official records reflect. Those buyers aren't typically using LLCs to hide criminal proceeds. They're using them for the same reasons domestic buyers do.

The rule's critics argued that it imposed a one-size-fits-all compliance regime on a practice that is almost always lawful, in order to catch the fraction of transactions that aren't. Judge Kernodle sided with that view, at least for now.

What Happens Next

The appeal will take time. The FACT Coalition has indicated it's confident the government prevails, and there's genuine legal disagreement: a separate challenge in the Middle District of Florida previously resulted in the rule being upheld. First American, one of the country's largest title insurance companies, has noted on its website that the court's decision is not final and may be set aside, and the company is continuing to monitor developments.

Congress could also move independently. The GTOs in New York and other major cities rest on a different legal foundation than the vacated rule, so their status is not affected by this ruling. And New York State passed the LLC Transparency Act, which established its own beneficial ownership registry at the state level.

For buyers and sellers in New York's luxury market, the practical impact of the ruling is limited in the near term. The GTO framework continues. The state-level disclosure requirements continue. But the broader trajectory of federal policy in this area has clearly shifted under the current administration, and the legal fight over how far FinCEN's authority actually extends is far from resolved.

What's worth watching: if the rule is ultimately reinstated on appeal, or if Congress acts to codify something similar with a cleaner statutory basis, the compliance requirements could return in a form that's harder to challenge.

For anyone transacting through entities in New York City right now, the guidance is straightforward: nothing about the GTO requirements has changed. The beneficial ownership disclosure obligations that have applied to LLC purchases at or above $300,000 in this market since 2016 remain in place. Work with your attorney and title company before closing, as you would have before March 1.

The federal story is still developing. In New York, the rules look much the same as they did before.