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Dreher Tomkies LLP
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Columbus, Ohio 43215
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FINCEN PROPOSES NEW ANTI-MONEY LAUNDERING AND SUSPICIOUS ACTIVITY REPORTING REQUIREMENTS FOR NON-BANK MORTGAGE LENDERS

The Financial Crimes Enforcement Network (FinCEN) has issued a notice of proposed rulemaking that would require non-bank residential mortgage lenders and originators to establish anti-money laundering (AML) programs and comply with suspicious activity report (SAR) regulations.

The Bank Secrecy Act (BSA) and its implementing regulations require specified "financial institutions" to establish and maintain AML programs that include (i) the development of internal policies, procedures and controls, (ii) the designation of a compliance officer, (iii) an ongoing employee training program and (iv) an independent audit function to test programs. Several categories of "financial institutions" were exempted by regulation from compliance with the AML program requirement. The exempted businesses include, inter alia, "loan or finance companies." See Alerts dated October 30 and November 1, 2002.

The BSA and its implementing regulations also require certain "financial institutions" (not including "loan or finance companies") to report activity that might signify money laundering, tax evasion or other criminal activities.

FinCEN now proposes an "incremental approach" to implementation of AML and SAR regulations for "loan or finance companies" that would focus first on entities engaged in residential mortgage lending or origination that are not currently subject to any AML or SAR program requirement under the BSA. Accordingly, FinCEN proposes to amend its regulations to add a new definition of "loan or finance company" and two new provisions setting forth AML and SAR requirements for such entities. FinCEN indicated that it may expand the definition of "loan or finance company" in the future.

Written comments on the proposal will be accepted until February 7, 2011.

Do not hesitate to contact us if you would like more information on applicability of the proposed rule to your organization or compliance with existing AML or SAR requirements.

  • Darrell Dreher