FinCEN: Proposes Non-Bank Lenders File SARs

December 7th, 2010 · No Comments


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On December 6, 2010, the Financial Crimes Enforcement Network (FinCEN) proposed a requirement that non-bank residential mortgage lenders and originators, just like other types of financial institutions, establish anti-money laundering (AML) programs and comply with suspicious activity report (SAR) regulations. The requirements are provided in a Notice of Proposed Rulemaking.

The Bank Secrecy Act (BSA) authorizes the Treasury to issue regulations requiring financial institutions to keep records and file reports that the Secretary determines "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." The subject proposed rulemaking regarding residential mortgage lenders is derived from that authority.

At this time, the only mortgage originators that are required to file SARs are banks and insured depository institutions.

According to FinCEN, analyses of SARs in FinCEN’s mortgage fraud reports show that non-bank mortgage lenders and originators initiated many of the mortgages that were associated with SAR filings.

The Notice of Proposed Rulemaking intends to provide prevention of mortgage fraud, including such activities as false statement, use of straw buyers, fraudulent flipping, and even identity theft associated with mortgage borrowing. These illegal activities, and others, have been identified in information provided by SARs.

This Notice of Proposed Rulemaking was informed by comments received following an Advanced Notice of Proposed Rulemaking (ANPRM) issued last year on July 21, 2009.
Comments: Due 30 days after publication in the Federal Register.

Lenders Compliance Group provides a robust and comprehensive risk assessment for auditing SARs. If you would like to prepare for the SARs filing requirements and/or provide independent testing and monitoring for compliance, please contact us.

Minimum requirements are proposed to implement the proposed rule.

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LENDERS COMPLIANCE GROUP is the first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance and offering a full suite of hands-on and automated services in residential mortgage banking.

Tags: Mortgage Market

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