The Reporting Cascade Under FinCEN’s AML Rule

Recently, we issued a General Bulletin to all Stewart Title Guaranty Company (STGC) issuing agents which outlined your responsibility to alert STGC when the “Reporting Cascade” as defined in the FinCEN AML regulation allocates the reporting responsibility to the title insurance underwriter.

Under the Financial Crimes Enforcement Network (“FinCEN”) Anti-Money Laundering regulation, a “Reporting Cascade” determines which real estate professional is responsible for filing the required Real Estate Report in a reportable residential real property transfer.

What does the “reporting cascade” mean for transactions under FinCEN’s AML rule?

As explained by FinCEN in its Frequently Asked Questions, the reporting cascade is a ranked list of seven functions that may be performed in a transaction. The person performing the highest-ranking applicable function is the “Reporting Person.” If no party performs the first function, responsibility moves sequentially down the list.

FinCEN AML Reporting Cascade Ranked in Order

Below is a list, in ranking order, of the persons or entities who are tasked with reporting under the new rule.

1. Closing or Settlement Agent – The person listed as the closing or settlement agent on the closing or settlement statement.
2. Preparer of the Closing Statement – If no person above is involved, the person that prepares the closing or settlement statement.
3. Recorder of the Deed – If no person above is involved, the person that files the deed or other ownership-transfer instrument with the recordation office.
4. Title Insurance Underwriter – If no person above is involved, the person that underwrites an owner’s title insurance policy for the transferee (e.g., a title insurance company).
5. Primary Disbursing Party – If no person above is involved, the person that disburses the greatest amount of funds in connection with the transfer.
6. Title Evaluator – If no person above is involved, the person that provides an evaluation of the status of title.
7. Document Preparer – If no person above is involved, the person that prepares the deed or other legal instrument transferring ownership (including cooperative stock certificates, if applicable)

Implications for Title Insurance Underwriters

A title insurance underwriter occupies the fourth position in the cascade. In most transactions, one of the first three roles will be performed by a real estate professional, making it rare for an underwriter to become the Reporting Person.
However, in the unlikely circumstance that:

• No party performs functions 1, 2, or 3; and
• An owner’s title insurance policy is issued

the title insurance underwriter would become the Reporting Person under the regulation.

Issuing a Stewart Owner’s Policy for Qualifying Transactions

If you intend to issue a Stewart owner’s policy, and no higher-ranking Reporting Person exists, Stewart Title Guaranty Company, as the title insurance underwriter, may be required to file the Real Estate Report.
In such circumstances, prior to issuing the policy, you must promptly notify Stewart at: fincen@stewart.com

Required Notification Information

The notification must include:

• Property address
• Names and contact information for the transferor and transferee
• Whether the transaction involves a lender
• Anticipated closing date
• Identification of any party believed to be higher in the reporting cascade (if applicable)
• A brief description of the transaction structure and the basis for concluding that no higher Reporting Person exists

Stay Prepared and Compliant

Stay Informed with Virtual Underwriter

If you haven’t already done so, please take a moment and review the complete bulletin on Virtual Underwriting: SLS2026003 - GENERAL - FinCEN Residential Real Estate Rule - The Reporting Cascade | Virtual Underwriter

Explore Stewart’s FinCEN AML Hub

Access frequently asked questions, definitions, easy-to-digest explainer videos and much more on our FinCEN Anti-Money Laundering hub. Click here to explore.

Simplify Your Reporting with FinCEN Reporting Services (FRS)

Expanded reporting requirements significantly increase responsibilities for title companies, agents and settlement service providers. Stewart created a new company to provide a dedicated solution designed to stay compliant without interrupting your daily workflow. Learn how FRS can help simplify reporting for you.