Bank Secrecy Act
Flowers Title Companies LLC v. U.S. Department of the Treasury
Date: April 14, 2025
Issue: Whether the Financial Crimes Enforcement Network’s (FinCEN) final rule requiring increased recordkeeping and reporting on non-financed real estate transactions violates the U.S. Constitution and separation of powers.
Case Summary: Flowers Title Companies LLC sued FinCEN in the Eastern district of Texas, challenging its final rule requiring increased recordkeeping and reporting on non-financed real estate transactions.
FinCEN’s reporting rule directs title companies to collect and report information about non-financed residential property transfers, including sensitive personal details. FinCEN claims it can impose these requirements because the Bank Secrecy Act (BSA) authorizes rules for reporting “any suspicious transaction relevant to a possible violation of law or regulation.” The rule allegedly treats ordinary real estate transactions as inherently “suspicious,” based on the possibility that mandatory, systemic reporting could uncover information relevant to potential legal or regulatory violations.
Flowers sued FinCEN, alleging it violated the separation of powers by promulgating the reporting rule. The separation of powers divides authority among different branches to prevent any single branch from becoming too powerful. According to Flowers, the rule is unconstitutional because FinCEN’s asserted statutory authority amounts to a roving power to require disclosures on any consumer transaction the agency deems fit.
Flowers also argued that the BSA impermissibly delegates legislative power. The Constitution requires Congress to make fundamental policy decisions and leave only minor details to the Executive Branch. Flowers claims the BSA fails to provide any intelligible principle for deciding whether or when to require reports on real estate transfers or systemic disclosures of non-financed residential transactions. As a result, Flowers contended that Congress failed to address the conditions under which businesses must gather and report information on routine transactions.
Next, Flowers argued that the BSA and reporting rule violated the U.S. Constitution by exceeding Congress’s Commerce Clause authority and infringing on states’ rights under the Tenth Amendment. Specifically, Flowers claimed the BSA improperly authorizes reporting requirements for purely intrastate transactions, which Congress lacks the constitutional power to regulate. Because Flowers conducts only intrastate real estate transactions between Texas residents and is not federally insured, it contended that applying the BSA to it is unconstitutional.
Finally, Flowers argued that the reporting rule violates the Fourth Amendment of the U.S. Constitution, which prohibits unreasonable searches and seizures of “persons, houses, papers and effects.” Flowers asserted that business records qualify as “papers” under the Fourth Amendment, so according to Flowers, the reporting rule amounts to a warrantless search by forcing reporting individuals and entities to gather and produce papers containing sensitive information for FinCEN.
Bottom Line: Flowers seeks a declaratory judgment, holding the reporting rule unconstitutional and setting it aside. Additionally, Flowers requests an injunction prohibiting FinCEN from enforcing the reporting rule.
Documents: Complaint
