ANTI-MONEY LAUNDERING POLICY
On February 7, 2012, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Department of the Treasury, finalized regulations that require non-bank residential mortgage lenders, brokers and originators to establish an anti-money laundering (“AML”) program within the company that supports the goals of the FinCEN efforts to detect money laundering by filing Suspicious Activity Reports (“SARs”) to FinCEN.
SARs are considered a critical source of information for law enforcement and regulators in their investigation of mortgage fraud. Based on coordination with the Financial Fraud Enforcement Task Force and the Residential Mortgage-Backed Securities Working group, FinCEN believes these new regulations will help mitigate some of the risks and minimize some the vulnerabilities that criminals have exploited in the non-bank residential mortgage lending arena. Analysis of SARs by FinCEN shows that independent mortgage lenders and brokers originated many of the mortgages that are the subject of bank SAR filings.
Among the many mortgage-related scams that have been identified are false statements, straw buyers, fraudulent flipping, flopping and identity theft. As these types of fraudulent schemes can be harmful to US Mortgage Lenders in reputation and in potential future required loan buybacks, it is incumbent on our Management and Staff to be aware of them, watch for red flags/warning signs in the transaction, and to report them via the SARs.
It is the policy of US Mortgage Lenders (hereinafter “the Company”) to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorists or criminal activity. US Mortgage Lenders AML Policies and Procedures.
1.3. Definition of Money Laundering
Money laundering is generally defined as engaging in acts designed to conceal or disguise the true origin of criminally derived proceeds so that the unlawful proceeds appear to have been derived from legitimate origins or constitute legitimate assets. Generally, money laundering occurs in three stages:
Placement: Cash generated from criminal activities is converted into real estate transactions for example the purchasing of a house using cash.
Layering: Funds are requested from independent mortgage lenders and brokers in a cash-out transaction. The money is then transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin.
Integration: Funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses. Terrorist financing may not involve the proceeds of criminal conduct, but rather an attempt to conceal the origin or intended use of the funds, which will later be used for criminal purposes.
2. AMLCO DESIGNATION AND DUTIES
2.1. AMLCO Designation
As required under the USA Patriot Act of 2001 (PATRIOT Act), the Company designates Thomas Martin as the Anti-Money Laundering Program Compliance Officer (AMLCO), with full responsibility for the Company’s anti-money laundering (AML) program. Thomas Martin is qualified by experience, knowledge and compliance training including online AML-specific training. The duties of the AMLCO will include monitoring the Company’s compliance with AML obligations, overseeing communication and training for employees and filing or helping MLO’s in their filing of Suspicious Activity Reports. The AMLCO will also ensure that proper AML records are kept. When warranted, the AMLCO will ensure Suspicious Activity Reports are filed with the Financial Crimes Enforcement Network (FinCEN). US Mortgage Lenders AML Policies and Procedures 6 2.2. Initial Training 2.2.1. AMLCO The AMLCO will obtain training to obtain an understanding of the AML/SAR requirements, an overview of the processes involved and the severity of the fines for non-compliance. At a minimum the training will include:
- the history of the Bank Secrecy Act and its application to non-depository residential mortgage lenders and brokers;
- what constitutes an Anti-Money Laundering Program; ● general guidance on the red flags and warning signs of fraudulent activity;
- why SARs are required and how the reports are filed and used; and
- potential repercussions, such as fines and prison time, for failing to initiate an adequate program and comply with the requirements of the regulations.
2.2.2. Loan Originators, Loan Processors, Underwriters and Operations Staff
The AMLCO will work with US Mortgage Lenders management or training department to develop a company-specific training program for all affected employees. This training focuses on specific issues such as red flag warnings, various types of fraudulent activity, how internal reporting will be handled, completion of the SARs reports and records retention. The AMLCO is responsible to coordinate the initial training for necessary staff members utilizing the company-specific program, including written material for handy reference. Attendance and materials covered during the training sessions are tracked and retained for audit purposes.
As part of this training, employees will be provided with a written statement on the critical importance of complying with the requirements of the Bank Secrecy Act and the Patriot Act, and that the AMLCO has the full support of the Management to execute US Mortgage Lenders AntiMoney Laundering Program. This statement is included on the AML Program Acknowledgement Form at the end of this document. US Mortgage Lenders AML Policies and Procedures 7
2.2.3. New Hires
All new hires are required to fulfill AML-specific training, as outlined above before they are allowed to begin with US Mortgage Lenders LLC.
2.3. Ongoing Training
2.3.1. Requirement Changes
Any changes in the requirements of the BSA or Patriot Act which relate to US Mortgage Lenders as a non-depository residential mortgage lender will be disseminated to staff members immediately along with appropriate changes in procedures if necessary.
2.3.2. Maintenance of Training Information
A complete record of the ongoing training, whether by email updates, written changes to the AML Program and attachments, policy or procedural changes or meetings should be maintained for review by regulators.
2.3.3. Annual Training
Annual training of all appropriate staff will be coordinated and conducted by the AMLCO, who may choose to use a third-party vendor, or utilize resources within the company, to develop and conduct the training. This training will cover the items included in the initial training in an overview and then concentrate on areas that have been noted to be deficient in the execution of the AML Program. This will allow for staff feedback on potential enhancement of procedures including a discussion of common issues which can lead to better coordination and communication between MLOs and Management and more effective reporting of suspicious activity. US Mortgage Lenders AML Policies and Procedures 8
3. SHARING AML INFORMATION WITH FEDERAL LAW ENFORCEMENT AGENCIES AND OTHER FINANCIAL INSTITUTIONS
3.1. FinCEN Requests Under PATRIOT Act Section 314
Under the U.S. Treasury’s final regulations (published in the Federal Register on September 26, 2002), the Company will respond to any FinCEN request about accounts or transactions by immediately searching our records to determine whether we maintain or have maintained any account for, or have engaged in any transaction with, each individual, entity, or organization named in FinCEN’s request. Upon receiving an information request, the AMLCO is to be responsible regarding the request and similar requests in the future. Unless otherwise stated in FinCEN’s request, the Company shall search current accounts and transactions, accounts maintained by a named suspect during the preceding twelve (12) months, and transactions conducted by or on behalf of or with a named subject during the preceding six (6) months. If we find a match, we will report it to FinCEN by completing FinCEN’s subject information form in a timely manner. If the search parameters differ from those mentioned above (for example FinCEN requests longer periods of time or limits the search to a geographic location), we will limit our search accordingly.
If we search our records and do not uncover a matching account or transaction, then we will not reply as allowed under Section 314(a) of the PATRIOT Act.
We will not disclose the fact that FinCEN has requested or obtained information from us, except to the extent necessary to comply with the information request. We will maintain procedures to protect the security and confidentiality of requests from FinCEN, as required by Section 501 of the Gramm-Leach-Bliley Act.
We will direct any questions we have about the request to the requesting Federal law enforcement agency as designated in the 314(a) request.
Unless otherwise stated in the information request, we will not treat the information request as continuing in nature, and we will not treat the request as a list for purposes of the customer US Mortgage Lenders AML Policies and Procedures 9 identification and verification requirements. We will not use the information provided to FinCEN for any purpose other than (1) to report to FinCEN as required under Section 314 of the PATRIOT Act; (2) to determine whether to establish or maintain an account or to engage in a transaction; or (3) to assist the Company in complying with any requirement of Section 314 of the PATRIOT Act.
3.2. Sharing Information with Other Financial Institutions
We will share information about those suspected of terrorist financing and money laundering with other financial institutions, lenders or investors for the purposes of identifying and reporting activities that may involve terrorist acts or money laundering activities and to determine whether to engage in a mortgage transaction. We will file an initial notice with FinCEN before any sharing occurs and annual notices afterwards. We will use the BSA filing system found at http://www.fincen.gov/forms/e-filing/ to file our form. Before we share information with another company, we will take reasonable steps to verify that the other company has submitted the requisite notice to FinCEN, either by obtaining confirmation from the other company or by consulting a list that FinCEN will make available. We understand that this requirement applies even with respect to financial institutions, lenders and investors with whom we are affiliated, and so we will obtain the requisite notices and follow all required procedures.
We will employ strict procedures both to ensure that only relevant information is shared and to protect the security and confidentiality of this information, including segregating it from the company’s other books and records.
4. CUSTOMER IDENTIFICATION AND VERIFICATION
We will collect certain minimum customer identification information from each customer who engages in any activity with the Company; utilize risk-based measures to verify the identity of each customer who engages in any activity; record customer identification information and the verification methods and results; provide notice to customers that we will seek identification information. US Mortgage Lenders AML Policies and Procedures 10
4.1. Required Customer Information
As part of our Customer Identification Program, (CIP) prior to engaging in any activity which potentially may involve money laundering, we will collect the following information for all customers:
- the name;
- an address, (which will be a residential street address for an individual), an Army Post Office (“APO”) or Fleet Post Office (“FPO”) number (if applicable); an identification number, which will be a taxpayer identification number (for U.S. persons) or one or more of the following:
- a taxpayer identification number, passport number and country of issuance, alien identification card number or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph such as a driver’s license.
We will refuse to complete any transaction in the event that a customer has applied for but has not received a taxpayer identification number and cannot prove his/her identity to the satisfaction of the AMLCO.
4.2. Customers Who Refuse To Provide Information
If a potential or existing customer either refuses to provide the information described above when requested, or appears to have intentionally provided misleading information, the Company will not conduct any further transactions with that person or entity. In either case, our AMLCO will be notified so that we can determine whether we should report the situation to FinCEN.
4.3. Verification of Information
Based on the risk, and to the extent reasonable and practicable, we will ensure that we have a reasonable belief that we know the true identity of our customers by using risk-based procedures to verify and document the accuracy of the information we get about our customers. In verifying customer identity, we will analyze any logical inconsistencies in the information we obtain. US Mortgage Lenders AML Policies and Procedures 11 We will verify customer identity through documentary evidence, non-documentary evidence, or both such as a credit report, 4506 (or 4506-T), tax returns, bank statements and paycheck documentation. We will use documents to verify customer identity when appropriate documents are available. In light of the increased instances of identity fraud, we will supplement the use of documentary evidence by using the non-documentary means described above and below whenever possible. We may also use such non-documentary means, after using documentary evidence, if we are still uncertain about whether we know the true identity of the customer. In analyzing the verification information, we will consider whether there is a logical consistency among the identifying information provided, such as the customer’s name, street address, zip code, telephone number (if provided), date of birth, and social security number.
Appropriate documents for verifying the identity of customers include, but are not limited to, the following:
- For an individual, an unexpired government-issued identification evidencing nationality, residence, and bearing a photograph or similar safeguards, such as a driver’s license or passport;
- For an entity, other than an individual, documents showing the existence of the entity, such as certified articles of incorporation, a government-issued business license, a partnership agreement, or a trust instrument.
We understand that we are not required to take steps to determine whether the document that the customer has provided to us for identity verification has been validly issued and that we may rely on a government-issued identification as verification of a customer’s identity. However, if we note that the document shows some obvious form of fraud, we must consider that factor in determining whether we can form a reasonable belief that we know the customer’s true identity.
We may use any or all of the following non-documentary methods of verifying identity:
- Contacting a customer;
- Independently verifying the customer’s identity through the comparison of information provided by the customer with information obtained from a consumer reporting agency, public database, employer, or other sources;
- Checking references with financial institutions, or US Mortgage Lenders AML Policies and Procedures 12
- Obtain a financial statement from financial institutions.
We will use non-documentary methods of verification in the following situations: (1) when the customer is unable to present an unexpired government-issued identification document with a photograph or other similar safeguard; (2) when the Company is unfamiliar with the documents the customer presents for identification verification; (3) when there are other circumstances that increase the risk that the Company will be unable to verify the true identity of the customer through documentary means.
We will verify the information within a reasonable time before a transaction is completed. Depending on the nature of the requested transaction, we may refuse to complete a transaction before we have verified the information. If we find suspicious information that indicates possible money laundering or terrorist financing activity, we will, after internal consultation with the company’s AMLCO, file a SAR in accordance with applicable law and regulation.
4.4. Lack of Verification
When we cannot form a reasonable belief that we know the true identity of a customer, we will do the following: (A) not complete any mortgage transaction; (B) impose terms under which the company may proceed while we attempt to verify the customer’s identity; (C) file a SAR in accordance with applicable law and regulation.
4.5. Online Applications
US Mortgage Lenders presently accept partial online mortgage applications. In order to complete the application, the applicant must select a loan officer, who is then responsible for completing the verification and risk analysis for that customer. Customers cannot submit all of their information online, requiring some interaction with US Mortgage Lenders before the application can be completed. We also notify customers online that we comply with federal law in obtaining information to help combat the funding of terrorist activities and prevent money laundering, as discussed in Section 4.8. US Mortgage Lenders AML Policies and Procedures 13
We will document our verification, including all identifying information provided by a customer, the methods used and results of verification, and the resolution of any discrepancy in the identifying information. We will keep records containing a description of any document that we relied on to verify a customer’s identity, noting the type of document, any identification number contained in the document, the place of issuance, and if any, the date of issuance and expiration date. With respect to non-documentary verification, we will retain documents that describe the methods and the results of any measures we took to verify the identity of a customer. We will maintain records of all identification information for five years after the account has been closed and readily accessible for the first two years. We will retain records made about verification of the customer’s identity for five years after the record is made.
4.7. Comparison with Government Provided Lists of Terrorists and Other Criminals
The Company may receive notice that a federal government agency has issued a list of known or suspected terrorists. Within a reasonable period of time after an account is opened or a transaction is completed (or earlier, if required by another federal law or regulation or Federal directive issued in connection with an applicable list), we will determine whether a customer appears on any such list of known or suspected terrorists or terrorist organizations issued by any federal government agency and designated as such by Treasury in consultation with the federal functional regulators. We will follow all federal directives issued in connection with such lists. We will continue to comply with the Treasury’s Office of Foreign Assets Control (“OFAC”) rules prohibiting transactions with certain foreign countries or their nationals.
4.8. Notice to Customers
We will provide notice to customers that the Company is requesting information from them to verify their identities, as required by Federal law. We will give notice to customers regarding the policy either verbally or as a plainly posted notice such as:
To help the government fight the funding of terrorism and money laundering activities, Federal law requires us to obtain, verify, and record information that identifies each person US Mortgage Lenders AML Policies and Procedures 14 who engages in financial services with this establishment. We will ask for your name, address, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.
4.9. Reliance on another Financial Institution for Identity Verification
Under the following circumstances we may rely on the performance by another financial institution of some or all of the elements of Our Customer Identification Program with respect to any customer that is engaging in a money service transaction with the other financial institution to provide or engage in services, dealings, or other financial transactions:
- When such reliance is reasonable under the circumstances for example requiring the borrower to deposit funds in an account with a bank or credit union;
- When the other financial institution is subject to a rule implementing the anti-money laundering compliance program requirements of 31 U.S.C. 5318(h) and is regulated by a Federal functional regulator.
5. FOREIGN CORRESPONDENT ACCOUNTS AND FOREIGN SHELL BANKS
It is our policy that the Company will not complete any transactions when we have a reasonable cause to believe a foreign bank or foreign financial institution is involved until the Company has determined, to the satisfaction of the AMLCO that the foreign bank is not in itself suspicious.
6. MONITORING ACCOUNTS FOR SUSPICIOUS ACTIVITY
With the assistance of underwriters, we will monitor our client’s bank accounts to permit the identification of patterns of unusual size, volume, pattern or type of transactions, geographic factors such as whether jurisdictions designated as “non-cooperative” are involved, or any of the “red flags” identified in Section 6.2 below. The AMLCO will be responsible for this monitoring, will document when and how it is carried out and will report suspicious activities to the appropriate authorities. We will create employee guidelines with examples of suspicious money US Mortgage Lenders AML Policies and Procedures 15 laundering activity and lists of high-risk clients whose accounts may warrant further scrutiny. Our AMLCO will conduct an appropriate investigation before a SAR is filed.
6.1. Emergency Notification to the Government
When conducting due diligence we will immediately call Federal law enforcement when necessary, we have reason to believe the customer is trying to move illicit cash out of the government’s reach, or we have reason to believe the customer is about to use the funds to further an act of terrorism. We may contact the OFAC via its hotline at 1-800-540-6322 or electronically through its website at www.treas.gov/offices/enforcement/ofac.
6.2. High-Intensity Financial Crimes and Drug Trafficking Designation.
6.2.1. High-Intensity Financial Crime Areas
US Mortgage Lenders is based in Hollywood, Florida, and has state licenses in Georgia, Alabama, and Texas. As of 2021, there are 8 designated High-Intensity Financial Crime Areas in Florida.
- Broward, Miami-Dade, Indian River, Martin, Monroe, Okeechobee, Palm Beach and St. Lucie.
6.2.2. High-Intensity Drug Trafficking Areas
There are many designated High-Intensity Drug Trafficking Areas in the states US Mortgage Lenders is licensed in. MLOs in these areas should be aware of the designation and watch for suspicious activity related to the use of US Mortgage Lenders to cover or facilitate illegal drug activity.
To see all of the HIDTA designations in these states, LOs are encouraged to check the following website for additional county information: https://www.nhac.org/news/HIDTA_Counties.htm
6.3. Detecting Red Flags
- Red flags that signal possible money laundering or terrorist financing include, but are not limited to:
- The customer is reluctant or refuses to reveal any information concerning business activities, or furnishes unusual or suspicious identification or documents.
- The customer wishes to engage in a transaction that lacks business sense or is inconsistent with the customer’s stated business. US Mortgage Lenders AML Policies and Procedures 16
- Upon request, the customer refuses to identify or fails to indicate any legitimate source for his or her funds and other assets, or, if provided, the source for funds is false, misleading, or substantially incorrect.
- The customer engages in transactions involving cash or cash equivalents or other monetary instruments that appear to be structured to avoid the government reporting requirements, especially if the cash or monetary instruments are in an amount just below reporting thresholds.
- The customer requests that a transaction be processed to avoid the Company’s normal documentation requirements.
- The customer uses multiple accounts, or maintains accounts in the names of family members or corporate entities, with no apparent purpose.
6.3.1. Application Information Red Flag examples.
- A power of attorney is used. Investigate why the applicant cannot execute documents and if formal supporting documentation exists.
- The applicant has high income with little or no personal property.
- The applicant has an unreasonable accumulation of assets compared to income or has a large number of unsubstantiated assets.
- The applicant claims to have no debt.
- The applicant owns an excessive amount of real estate.
- Patterns or similarities are apparent in applications received from a specific mortgage loan originator or broker, or a concentration of loans in a specific area from a single mortgage loan originator or broker.
- The employer is an unrealistic commuting distance from the property. With the increase on telecommuting in the digital age, the job type and careful employment verification are necessary to substantiate the telecommuting explanation.
6.3.2. Identity Theft and Credit Report Red Flag examples.
- A fraud or active duty alert is included with a consumer report.
- A consumer reporting agency provides a notice of credit freeze in response to a request for a consumer report.
- Credit bureau alerts for social security number discrepancies or address mismatches.
- An applicant that recently paid all accounts in full can indicate an undisclosed/unrecorded debt consolidation loan. US Mortgage Lenders AML Policies and Procedures 17
- The applicant claims substantial income but only has credit experience with finance companies.
- Recent inquiries from other mortgage lenders were noted.
- AKA or DBA noted on the credit report.
6.3.3. Appraisal Red Flag examples.
- The most recent tax value does not correlate with the appraisal’s market value.
- Certain information is left blank on the appraisal form such as the borrower, client or occupant.
- Comparables are not verified as recorded.
- Comparables all contain similar value adjustments or are all adjusted in the same directions.
- Appreciation is noted in a stable or declining area.
- Photos reveal items not disclosed in the appraisal such as a commercial property next door, railroad tracks, etc., or items with the potential for negative valuation adjustments are avoided in appraisal photos.
- One or more sales of the same property have occurred within a specified period and exceed certain value increases (10% or more).
6.3.4. Escrow/Closing Red Flag examples.
- Related parties are involved in the transaction.
- No amendments are made to escrow.
- Cash is paid to the seller outside of an escrow arrangement.
- Cash proceeds are paid to the borrower in a purchase transaction.
- Zero funds are due from the buyer.
- The terms of the closed mortgage differ from the terms approved by the underwriter.
- Unusual credits or disbursements are shown on the settlement statement.
6.3.5. Title/Escrow/Closing Agents and Documents Red Flag examples.
- The seller owned the property for a short time with cash out on a sale.
- The buyer has a pre-existing financial interest in the property.
- The chain of title included the buyer, realtor or broker.
- The title insurance or opinion was prepared for and/or mailed to a party other that the lender.
- Income tax or similar liens are noted against the borrower on credit reports but do not show up on the title search.
- A Notice of Default (NOD) is recorded. US Mortgage Lenders AML Policies and Procedures 18
- A judgment exists against the borrower and is not shown on the credit report.
- Lienholders are not shown on the HUD-1. US Mortgage Lenders AML Policies and Procedures 19
6.3.6. Verification of Employment Red Flag examples.
- Similarities in names, like the seller, applicant or broker are noted.
- The employer uses only a mail drop or post office box address.
- The employer is out of town which may signal a nonexistent firm.
- The borrower changed professions in moving to their current employer.
- Round dollar amounts are used in year-to-date or past earnings.
- Income is not commensurate with stated employment, years of experience or type of employment.
- Faxes of some documents are submitted in lieu of originals.
6.3.7. Verification of Deposit Red Flag examples.
- No date stamp was affixed to the VOD by the depository institution to indicate the date it was received.
- The deposit account is not in the borrower’s name or is a joint account with a third party.
- The deposit account is new or has a round dollar balance.
- Significant balance changes were noted in the depository accounts during the two months prior to the date of verification.
- The checking account’s average two-month balance exactly equals the present balance.
- Funds for the down payment are only on deposit for a short period.
- Young borrowers have a substantial amount of cash on deposit.
- A low-income borrower has a substantial amount of cash on deposit.
6.3.8. Miscellaneous Red Flag examples.
- Tax returns show real estate taxes paid but no property is identified as being owned.
- Tax returns do not show real estate taxes paid, but owned property is shown on the application.
- Documents provided for identification appear to have been altered or forged.
- The photograph or physical description on the identification is not consistent with the appearance of the borrower presenting the identification.
- Other information on the identification is not consistent with information provided by the borrower presenting the identification. US Mortgage Lenders AML Policies and Procedures 20
- Personal identifying information provided is inconsistent when compared to external information sources used by the company – for example: The address does not match any address in the consumer report, tax return, bank statement, driver’s license, or paycheck stubs. o The Social Security Number has not been issued, does not correlate to the date of birth range, or is listed on the SSA’s Death Master File.
- The borrower who completed the loan application fails to provide all required personal identifying information on the application or in response to notification that the application is incomplete.
- Evidence of whiteout or other document alterations are noted on photocopies.
6.4. Responding to Red Flags and Suspicious Activity
When a member of the Company detects any red flag he or she will investigate further under the direction of the AMLCO. This may include gathering additional information internally or from third-party sources, contacting the government, stopping the transaction, or filing a SAR.
6.5. Internal Reporting of Possible Suspicious Activity
All US Mortgage Lenders employees involved in the loan origination process are aware that mortgage fraud could occur at any time. Therefore any suspicious or unusual activity should be taken seriously and reported by filling out an internal Possible Suspicious Activity (PSA) form (Appendix A) and submitting to the AMLCO. The AMLCO is responsible for evaluating the unusual activity through an established escalation process from the point of initial detection to the disposition of the investigation.
6.6. SARs Determination Process
Upon receipt of the internal PSA form, the AMLCO coordinates the investigation of the suspected suspicious activity. The findings of this research are compiled and presented to management, who has the authority to make the final SAR filing decision. All decisions should be documented, including the specific reason for filing or not filing a SAR. Due to the variety of systems used to identify, track, and report suspicious activity, as well as the fact that each US Mortgage Lenders AML Policies and Procedures 21 suspicious activity reporting decision will be based on unique facts and circumstances, it is important to keep thorough records of the decision-making process.
7. SUSPICIOUS TRANSACTIONS AND BSA REPORTING
7.1. Filing a SAR
We will file a SAR for any activity conducted or attempted through our Company involving (or in the aggregate) $5,000 or more of cash or assets where we know, suspect, or have reason to suspect: 1) the transaction involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity as part of a plan to violate or evade federal law or regulation or to avoid any transaction reporting requirement under federal law or regulation, 2) the transaction is designed, whether through structuring or otherwise, to evade any requirements of the BSA regulations, 3) the transaction has no business or apparent lawful purpose or is not the sort in which the customer would normally be expected to engage, and we know, after examining the background, possible purpose of the transaction and other facts, of no reasonable explanation for the transaction, or 4) the transaction involves the use of the Company to facilitate criminal activity.
We will not base our decision on whether to file a SAR solely on whether the transaction falls above a set threshold. We will file a SAR and notify law enforcement of all transactions that raise an identifiable suspicion of criminal, terrorist, or corrupt activities. In high-risk situations, we will notify the appropriate government agency immediately and will file a SAR with FinCEN.
We will report suspicious transactions by completing a SAR and we will collect and maintain supporting documentation as required by the BSA regulations. We will file a SAR no later than 30 calendar days after the date of the initial detection of the facts that constitute a basis for filing a SAR. US Mortgage Lenders AML Policies and Procedures 22 If no suspect is identified on the date of initial detection, we may delay filing the SAR for an additional 30 calendar days pending identification of a suspect, but in no case, will the reporting be delayed more than 60 calendar days after the date of initial detection.
We will retain copies of any SAR filed and the original or business record equivalent of any supporting documentation for five years from the date of filing the SAR. We will identify and maintain supporting documentation and make such information available to FinCEN, any other appropriate law enforcement agencies, or federal or state regulators, upon request.
We will not notify any person involved in the transaction that the transaction has been reported, except as permitted by the BSA regulations. We understand that anyone who is subpoenaed or required to disclose a SAR or the information contained in the SAR, except where disclosure is requested by FinCEN, or other appropriate law enforcement or regulatory agency, will decline to produce to the SAR or to provide any information that would disclose that a SAR was prepared or filed. We will notify FinCEN of any such request and our response.
8. AML RECORD KEEPING
8.1. SAR Maintenance and Confidentiality
We will hold SARs and any supporting documentation confidential. We will not inform anyone outside of a law enforcement or regulatory agency about a SAR. We will refuse any subpoena requests for SARs or SAR information and immediately tell FinCEN of any such subpoena we receive. We will segregate SAR filings and copies of supporting documentation from other Company books and ‘records to avoid disclosing SAR filings. Our AMLCO will handle all subpoenas or other requests for SARs.
8.2. Responsibility for AML Records and SAR Filing
Our AMLCO and his or her designee will be responsible to ensure that AML records are maintained properly and that any SARs are filed as required. US Mortgage Lenders AML Policies and Procedures 23
8.3. Records Required
As part of our AML program, the Company will create and maintain SARs, and other relevant documentation on customer identity and verification (see Section IV above). We will maintain SARs and their accompanying documentation for at least five years.
9. MORTGAGE FRAUD
Mortgage fraud can be defined as material misrepresentation – intentionally providing false information to deceive or mislead a lender into extending credit beyond the limits that would normally be granted if the true facts were known. Mortgage fraud can generally be divided into two broad categories: “fraud for property” and “fraud for profit.”
Fraud for property typically occurs so that a homebuyer can purchase a house for personal use. Examples include overstating assets, overstating or falsifying income, and falsifying employment. Fraud for profit usually involves more than one person and generally “industry insiders” who know the mortgage industry and how to exploit weaknesses to earn financial gain. Insiders such as loan originators, brokers, real estate agents, processors, underwriters, appraisers, title and escrow company employees, and notaries are involved in various ways.
10. TRAINING PROGRAMS
We developed ongoing employee training under the leadership of the AMLCO. Our training will occur on at least an annual basis. Based on our Company’s size, its customer base, and its resources we have determined that Mortgage Educators & Compliance will provide the training course to our staff.
The training course must include, at a minimum: how to identify red flags and signs of money laundering that arise during the course of the employees’ duties; what to do once the risk is identified; what employees’ roles are in the Company’s compliance efforts and how to perform them; the Company’s record retention policy; and the disciplinary consequences (including civil and criminal penalties) for non-compliance with the PATRIOT Act. The training program US Mortgage Lenders AML Policies and Procedures 24 includes the maintenance of the records to show the persons trained, the dates of training, and the subject matter of their training. We will review our operations to see if certain employees, such as those in compliance, require specialized additional training. Our written procedures will be updated to reflect any such changes.
11. PROGRAM TO TEST AML PROGRAM
Annual testing of our AML program will be performed either by Mortgage Educators & Compliance, an independent third party, or another qualified independent third party. The annual testing will include an audit of our compliance with our AML program. The auditor will issue a report of the auditor’s findings upon completion of their audit to management. We will address each of the resulting recommendations.
12. MONITORING EMPLOYEE CONDUCT AND ACCOUNTS
We will subject employee transactions to the same AML procedures as customers, under the supervision of the AMLCO. We will also review the AML performance of supervisors, as part of their annual performance review. The AMLCO’s accounts will be reviewed by a qualified member of the Company staff. 13. CONFIDENTIAL REPORTING OF AML NON-COMPLIANCE Employees will report any violations of the Company’s AML compliance program to the AMLCO unless the violations implicate the Compliance Officer, in which case the employee shall report to an appropriate member of senior management. Such reports will be confidential, and the employee will suffer no retaliation for making them. US Mortgage Lenders AML Policies and Procedures 25
14. ADDITIONAL AREAS OF RISK
The Company has reviewed all areas of its business to identify potential money laundering risks that may not be covered in the procedures described above and is continually working to improve its AML program.
15. SENIOR MANAGER APPROVAL
I have Thomas W. Martin approved this AML program as reasonably designed to achieve and monitor the Company’s ongoing compliance with the requirements of the USA PATRIOT Act of 2001 and the implementing regulations under it.
US Mortgage Lenders AML Policies and Procedures 26 Possible Suspicious Activity (PSA) Form This form is used to provide necessary information to the AMLCO for review and evaluation to determine if a Suspicious Activity Report should be filed with FinCEN to report activity that may indicate money laundering or fraudulent activity. This form must be submitted within 7 days of recognizing the activity/event/occurrence. Branch/Office
What is the possible suspicious activity you are reporting?
What prompted you to consider this a possible suspicious activity that should be reported? (Use additional pages as necessary)
The date you observed/discovered the situation causing you to make this report: Send this report to the AMLCO via a secure mode, i.e., fax, secure email system, hand-delivery.
DO NOT USE REGULAR UNSECURED INTERNET EMAIL.
US Mortgage Lenders AML Policies and Procedures 27 US Mortgage Lenders Anti-Money Laundering Program Employee Acknowledgement Every employee of US Mortgage Lenders must be committed to the critical importance of complying with the requirements of the Bank Secrecy Act, as it is applies to non-bank lenders and as is outlined in this Anti-Money Laundering Program. US Mortgage Lenders Anti-Money Laundering Compliance Officer (AMLCO) has the full support of the Owner and Management to execute this Anti-Money Laundering Program. By signing this acknowledgment form, you, as an employee of US Mortgage Lenders, have read this Anti-Money Laundering Program and agree to follow the policies and procedures outlined in it as they pertain to your job functions at the Company. If, at any time, you have questions or concerns regarding any aspect of the Anti-Money Laundering Program, you will address them with the AMLCO in a timely manner.