FinCEN Reminds Loan Officers of New Reporting Obligations

by devteam August 17th, 2012 | Share

The Financial Crimes Enforcement Network (FinCen)rnissued an advisory aimed at helping residential mortgage loan originatorsrn(RMLO) and non-bank mortgage lenders identify suspicious activity related tornpotential mortgage fraud and submit suspicious activity reports (SAR.)  The advisory outlines the most common typesrnof mortgage fraud schemes and the potential “red flags” for which lendersrnshould look. </p

The advisory was announcedrnby FinCENrnDirector James H. Freis, Jr. today at the American Association of ResidentialrnMortgage Regulators’ (AARMR’s) annual conference.  He also discussed FinCEN’s new anti-money launderingrn(AML) requirements for RMLOs which, along with a rule requiring the filing ofrnSARs went into effect last Monday. </p

The advisory defines nine types ofrnmortgage fraud including income, occupancy, appraisal, liability, andrnemployment fraud.  It also warns lendersrnabout debt elimination schemes, foreclosure rescue scams, identity theft andrnschemes involving Home Equity Conversion or reverse mortgages.  The advisory also lists several dozen tipsrnregarding behavior, documents, or other indications of possible suspiciousrnactivity such a young buyer purchasing in a senior development, identicalrndocuments submitted from the same source for multiple loan applications, or addressesrnthat indicate the borrower does not reside in the mortgage property. </p

If an institution suspects that someonernis attempted to conduct a transaction that may be fraudulent in nature or, underrnthe new money laundering regulations, if a financial institution knows or hasrnreason to believe that a transaction made or attempted through its officesrninvolves funds or are an attempt to disguise funds derived from illegalrnactivity or lacks a business or apparent lawful purpose then the institutionrnmay be required to file a SAR.  Thernadvisory provides detailed information on filing these documents and therninformation which is required to be included.</p

FinCEN has been working to providerninformation to both regulators and RMLOs about the new regulations.  Among its initiatives is a web page withrnlinks to a variety of publications to assist them with compliance and a Webinarrnfor RMLOs.  The agency is also workingrnwith its regulatory partners to develop an examination manual, which willrnensure consistent compliance examination procedures and is conducting publicrnoutreach at numerous industry events to assist RMLOs with understanding theirrncompliance obligations.</p

Freis said FinCEN is “looking forward tornworking with the mortgage company and mortgage broker community, as well as ourrnregulatory and law enforcement partners, to protect this sector of thernfinancial system from illicit actors, and these financial institutions andrntheir customers from fraud and financial loss. rnThis step closes a regulatory gap and will augment the informationrnavailable to law enforcement about suspicious activity in this sector.”

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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