The Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of the Treasury, recently finalized regulations (Final Rule) requiring non-bank Residential Mortgage Lenders and Originators (RMLOs) to establish an Anti-Money Laundering Program (AML Program) and file Suspicious Activity Reports (SARs), as FinCEN requires of other types of financial institutions.*
FinCEN issued these regulations defining non-bank residential mortgage lenders and originators as loan or finance companies for the purpose of requiring them to establish AML Programs and report suspicious activities under the Bank Secrecy Act (BSA).
The effective compliance date for the Final Rule is August 13, 2012.
FinCEN may impose civil monetary penalties for non-compliance with its regulations, including a penalty for each suspicious activity reporting violation, so compliance with the SAR regulations should be considered mandatory on the part of responsible management.
BSA authorizes the Treasury to issue regulations requiring financial institutions, including any “loan or finance company” to keep records and file reports that are deemed to have “a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.”
In the supplementary information to the Final Rule, the term loan or finance company “can reasonably be construed to extend to any business entity that makes loans to or finances purchases on behalf of consumers and businesses. Some loan and finance companies extend personal loans and loans secured by real estate, mortgages and deeds of trust, including home equity loans.”
IN THIS ARTICLE
-What is Money Laundering?
-Minimum Program Requirements
-Risk Assessment
-Risk Profile Review
-Monitoring for Suspicious Activity
-Suspicious Activity Reporting
-SAR Disclosure Prohibition
-Safe Harbor From Liability
-Examination and Enforcement
-Training
-Testing
-Required Reporting
-Timing for filing SAR Reports
-Red Flags
-Training Outline
-SAR Narrative – “The 5 W’s”
-To File Or Not To File
LENDERS COMPLIANCE GROUP is the first full-service, mortgage risk management firm in the United States specializing exclusively in outsourced mortgage compliance and offering a full suite of services in residential mortgage banking for banks and nonbanks.
*Jonathan Foxx is the President & Managing Director of Lenders Compliance Group
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