LENDERS COMPLIANCE GROUP



ANTI-MONEY LAUNDERING COMPLIANCE FOR NON-BANKS
   

Each Residential Mortgage Lender and Originator (“RMLO”) must adopt a policy and procedure for Anti-Money Laundering, in recognition of the its obligations under the Bank Secrecy Act (“BSA”), other related money laundering regulations, the requirements of the Financial Crimes Enforcement Network, and federal and state licensing agencies.

The Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Department of the Treasury, finalized regulations (“Final Rule”) requiring non-bank residential mortgage lenders and originators to establish anti-money laundering (“AML”) programs and to file Suspicious Activity Reports (“SARs”), in the same manner as FinCEN required of other types of financial institutions. FinCEN issued these regulations defining non-bank residential mortgage lenders and originators as loan or finance companies for the purpose of requiring them to establish anti-money laundering programs and to report suspicious activities under the BSA.

FinCEN may impose civil monetary penalties for noncompliance with its regulations for each negligent suspicious activity reporting violation.

The BSA authorizes the Treasury to issue regulations requiring financial institutions, including any “loan or finance company” to maintain records and to file reports that the Treasury determines to “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.”

In the supplementary information to the Final Rule, the term ‘loan or finance company’ “can reasonably be construed to extend to any business entity that makes loans to or finances purchases on behalf of consumers and businesses. Some loan and finance companies extend personal loans and loans secured by real estate, mortgages and deeds of trust, including home equity loans.”

INDEPENDENT TESTING

Testing annually is recommended, but not later than every eighteen months. An audit of the procedures detailed in an RMLO’s policy and procedures must be conducted either internally, in accordance with FinCEN guidelines, or, in accordance with FinCEN guidelines, by an independent, external auditor entirely independent of the BSA Officer.

The results of the audit must be reported to the audit committee of the RMLO’s Management and the BSA Officer. It is the responsibility of the BSA Officer to take appropriate action to correct any problems found as a result of the audit and promptly respond to the RMLO’s audit committee.