This is noteworthy because the two Federal District Courts ruled opposite of each other.
The first case, rendered February 19, 2026, was in Florida:
FIDELITY NATIONAL FINANCIAL, INC., et al., Plaintiffs, v. SECRETARY SCOTT BESSENT, etc., et al., Defendants. Additional Party Names: Andrea Gacki, Fid. Nat’l Title Ins. Co., Fin. Crimes Enf’t Network, United States Dep’t of the Treasury, No. 3:25-CV-554-WWB-SJH, 2025 WL 4477503, at *1 (M.D. Fla. Dec. 9, 2025), report and recommendation adopted sub nom. Fid. Nat’l Fin., Inc. v. Bessent, No. 3:25-CV-554-WWB-SJH, 2026 WL 472350 (M.D. Fla. Feb. 19, 2026)
This case involves an action under the Administrative Procedures Act (APA) brought by plaintiffs Fidelity National Financial, Inc. (FNF) and Fidelity National Title Insurance Company (FNTIC) challenging the FiCEN rule that generally requires reporting of non-financed transfers of ownership interests in residential real property to transferee entities or trusts, subject to several exceptions.
The plaintiffs argue that the rule exceeds statutory authority, is arbitrary and capricious, and violates the Fourth and First Amendments. The magistrate judge found that the rule is statutorily authorized under sections 5318(g)(1), 5318(g)(5), and 5318(a)(2) of the Bank Secrecy Act (BSA). The rule was found to be within the statutory language, as it targets transactions that are suspicious and relevant to potential violations of law. The magistrate judge also found that the rule is not arbitrary and capricious, as FinCEN conducted a rational cost-benefit analysis and adequately responded to public comments.
Regarding the Fourth Amendment challenge, the magistrate judge concluded that the rule is properly tailored to suspicious transactions relevant to possible violations of law and does not violate the Fourth Amendment. The rule was found to be lawful under the precedent set by California Bankers Ass’n v. Shultz, which allows for reporting requirements under the BSA.
Finally, the magistrate judge addressed the First Amendment challenge, finding that the rule does not violate the First Amendment’s prohibition against compelled speech. The rule was determined to be neither ideological nor purely factual, non-commercial speech, and thus does not require strict scrutiny.
The magistrate judge recommended granting the defendants’ motion for summary judgment and denying the plaintiffs’ motion, thereby upholding the Rule.
The recommendation of the magistrate judge was adopted by Hon. Wendy Berger, a President Trump nominee.
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The second case, rendered March 19, 2026, was in Texas:
FLOWERS TITLE COMPANIES, LLC, Plaintiff, v. SCOTT BESSENT, in his official capacity as U.S. Sec’y of Treasury, et al., Defendants. Additional Party Names: Fin. Crimes Enf’t Network, No. 6:25-CV-127-JDK, 2026 WL 782283, at *1 (E.D. Tex. Mar. 19, 2026).
In this case, on March 19, 2026, the United States District Court for the Eastern District of Texas, Tyler Division, held that the that the 2024 Final Rule promulgated by the Financial Crimes Enforcement Network (FinCEN), the “Rule” (which implements reporting requirements for non-financed residential real estate transactions where ownership is transferred to an entity or trust, with certain exceptions) conflicts with the terms of the Bank Secrecy Act and ordered that the rule be vacated.
The plaintiff argued that the Rule was unlawful under the Administrative Procedure Act (APA), claiming it exceeds FinCEN’s statutory authority under the Bank Secrecy Act. If the Act does authorize the Rule, the plaintiff contends that it violates the nondelegation doctrine, exceeds Congress’s enumerated powers, and infringes upon the Fourth Amendment.
The Bank Secrecy Act authorizes FinCEN to require financial institutions to report “any suspicion transaction relevant to a possible violation of law or regulation,” 31 U.S.C. § 5318(g)(1), and (B) Section 5318(a)(2), permits FinCEN to require financial institutions to “maintain appropriate procedures, including the collection and reporting of certain information,” 31 U.S.C. § 5318(a)(2).
The Court stated: “The fact that some bad actors have conducted non-financed real estate transactions does not make such transactions categorically ‘suspicious’.”
The court granted the plaintiff’s motion for summary judgment and denied FinCEN’s cross-motion, concluding that neither provision of the Act cited by FinCEN authorizes the Final Rule. The first provision, 31 U.S.C. § 5319(g)(1), allows FinCEN to require reports of “any suspicious transaction,” but the agency failed to demonstrate how non-financed residential real estate transactions are categorically suspicious. The second provision, 31 U.S.C. § 5318(a)(2), authorizes FinCEN to require financial institutions to maintain procedures to comply with the Act, not to require the reports covered by the Final Rule.
Consequently, the court vacated and set aside the Rule.
The court concluded that Section 5318(g)(1) does not authorize FinCEN to treat all non-financed residential real estate transactions as suspicious, and Section 5318(a)(2) does not grant FinCEN independent authority to require reporting.
The court determined that vacatur of the Rule was the appropriate remedy, as the Rule exceeded FinCEN’s authority under the Bank Secrecy Act and vacatur would not be unduly disruptive. The Rule had only been in place for a brief period of time, and vacatur would re-establish the status quo absent the unlawful agency action. The court granted the plaintiff’s motion for summary judgment, denied FinCEN’s cross-motion, and ordered that the Rule be vacated.
This opinion was rendered by Hon. Jeremy D. Kernodle, a President Trump nominee.
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Neither of those cases have been appealed at this time.
When two Federal District Courts render opposite decisions on the same issue, one court does not override the other. That rule is true with respect to the Apellate Courts in each circuit. So, if the 11th Circuit upholds the Florida case and the 5th Circuit upholds the Texas case, then the law of the case only applies to the circuit in which the case was rendered.
Of course, conflicting Circuit Court decisions make the matter ripe for the U.S. Supreme Court to finally resolve the issue. Unfortunately, the U.S. Supreme Court is not obligated to hear the issue, so we may just have different rules of law in two different circuits.
These District Court cases are not the final word on this matter, if they are appealed, the 11th Circuit and the 5th Circuit could stay the decisions or otherwise address the rulings. For now, in the 5th Circuit the Rule is vacated and in the 11th Circuit it is upheld.
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Following the Federal District Court’s decision rendered March 19, 2026, in FLOWERS TITLE COMPANIES, LLC, Plaintiff, v. SCOTT BESSENT, in his official capacity as U.S. Sec’y of Treasury, et al., Defendants. Additional Party Names: Fin. Crimes Enf’t Network, No. 6:25-CV-127-JDK, 2026 WL 782283, at *1 (E.D. Tex. Mar. 19, 2026), which held that the 2024 Final Rule promulgated by the Financial Crimes Enforcement Network (FinCEN), the “Rule” (which implements reporting requirements for non-financed residential real estate transactions where ownership is transferred to an entity or trust, with certain exceptions) conflicts with the terms of the Bank Secrecy Act and ordered that the rule be vacated, FinCEN issued the following guidance:
“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.”
More to come as this plays out through the court system.
