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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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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