Spotlight on Anti-Money Laundering (Part 3 of 3): SAR Reporting for RMLOs

AML Attorney Howard EisenhardtFor the first time, all non-bank residential mortgage lenders and originators (RMLOs) are required to file mandatory and voluntary Suspicious Activity Reports (SARs) with the government through the e-filing system established by FinCEN. Similar to the establishment of an AML program, compliance for this regulation is August 13, 2012.

A company may file a voluntary report with FinCEN to alert them of any suspicious transaction they have reason to believe is a possible violation of any law or regulation, without any de minimus amount. A company must file a SAR once they have become aware of a transaction that:

  • Is conducted or attempted by, at, or through a RMLO
  • Involves or aggregates funds or assets of at least $5,000
  • The RMLO knows, suspects, or has reason to suspect that the transaction or pattern of transactions:
    • Involves funds derived from illegal activity or conducted to hide funds or assets derived from illegal activity
    • Is designed to evade BSA requirements
    • Has no business or apparent lawful purpose, i.e., “doesn’t look right”
    • Involves the use of the company to facilitate criminal activity

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Spotlight on Anti-Money Laundering (Part 2 of 3): Establishing an AML Compliance Program at a Non-Bank Residential Mortgage Lenders and Originators

Auto Finance Attorney John Redding

As reported in Part 1 of this series, all non-bank residential mortgage lenders and originators (RMLOs) have until August 13, 2012 to establish an Anti-Money Laundering (AML) program as part of the new rule.

Howard Eisenhardt, Counsel in BuckleySandler’s Washington, DC office, cautions against simply attempting to use a bank model AML template. “Bank models are focused on cash, account monitoring, and include many things that are not part of the business model of an RMLO. In addition, there are many things peculiar to an RMLO that would not be present in the traditional depository AML program.  While some parts may be the same, the RMLO AML Program is not a ‘one size fits all.’ The bank model is like the proverbial square peg, the RMLO model is more like a round hole, and the two just don’t fit together,” explains Eisenhardt.

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Spotlight on Anti-Money Laundering (Part 1): New Regulatory Path Ahead for Non-Bank Residential Mortgage Lenders and Originators

Auto Finance Attorney John Redding

Ongoing concern among regulators, law enforcement, and Congress over abusive and fraudulent sales and financing practices in both the primary and secondary residential mortgage markets prompted the Financial Crimes Enforcement Network (FinCEN) to finalize a rulemaking process concerning regulation of non-bank residential mortgage lenders and originators (RMLOs) that started in 2003.

The Advance Notice of Proposed Rulemaking (ANPRM) issued by FinCEN in 2009 and the Notice of Proposed Rulemaking issued in 2010 were follow-ups to the 2003 APNR and resulted in the Final Rule being issued in 2012.  The Final Rule requires RMLOs – mostly non-bank mortgage lenders – to establish an Anti-Money Laundering (AML) program and to file Suspicious Activity Reports (SARs) as required by the Bank Secrecy Act (BSA).

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