This story appeared in Bank Digest.
The Financial Crimes Enforcement network has adopted a regulation that will require nonbank residential mortgage lenders and loan originators to establish anti-money laundering programs and report suspicious transactions. According to FinCEN, an analysis of Suspicious Activity Reports filed by banks has shown that independent mortgage lenders and brokers originated many of the mortgages that later were the subject of bank-filed SARs. FinCEN expects the regulations, which will take effect 180 days after they are published in the Federal Register, to significantly increase the number of mortgage-related SARs.
The rule does not require that Currency Transaction Reports be filed for large currency transactions and does not impose other Bank Secrecy Act-related obligations, FinCEN said. It also does not cover companies that engage strictly in servicing mortgages originated by others.
A SAR must be filed if the company has reason to believe that a transaction, or a pattern of which the transaction it is a part:
1. involves funds derived from illegal activity or is intended or conducted to hide or disguise funds or assets derived from illegal activity;
2. is designed, whether through structuring or other means, to evade the requirements of the BSA;
3. has no business or apparent lawful purpose, and the loan or finance company knows of no reasonable explanation for the transaction after examining the available facts; or
4. involves the use of the loan or finance company to facilitate criminal activity.
To be reportable, the transaction must involve assets—not necessarily currency—that total at least $5,000.