Below are the top 10 pitfalls real estate agents should avoid under the FinCEN Residential Real Estate AML Rule.

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1. Assuming that any purchase by an LLC or trust automatically requires reporting, without first confirming the type of financing being used.

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2. Failing to identify potentially reportable transactions early in the process, which often leads to rushed information requests and closing delays.

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3. Treating private loans, hard-money loans, seller financing, or land contracts as traditional bank financing, when these financing methods frequently make a transaction reportable.

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4. Allowing buyer structure changes late in the transaction, such as switching from an individual buyer to an entity or trust after the contract is signed or closing is scheduled, without alerting the closing team.


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5. Confusing authorized signers with beneficial owners and incorrectly advising clients that only the signer’s information will be required.

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6. Assuming that a buyer’s foreign status alone triggers reporting, rather than focusing on whether the buyer structure and financing meet the rule’s criteria.

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7. Over-collecting seller information or implying that sellers are subject to beneficial ownership or AML review, which can create unnecessary concern.

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8. Waiting until closing to explain FinCEN requirements instead of setting expectations early with buyers and sellers.

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9. Describing the reporting-related charge as a government or FinCEN filing fee, rather than a settlement provider’s administrative or compliance fee.

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10. Attempting to interpret the rule or provide legal compliance advice instead of identifying potential issues and deferring to the title company or closing professional.