Regulations Would Impact Non-Bank Originators, Lenders

The Financial Crimes Enforcement Network is soliciting public comment on the possible requirement that non-bank mortgage lenders and originators be required to file Suspicious Activity Reports when mortgage fraud or other financial crimes are observed, according to today’s Federal Register volume 74, No. 38.

Non-bank lenders and originators “are in a unique position to assess and identify money laundering risks and fraud,” the Federal Register said.

Studies from FinCEN reportedly have shown that mortgage fraud criminals are often involved in other financial crimes such as money laundering.

“FinCEN seeks comment on the experience of the residential real estate lending sector with money laundering and fraud schemes; the existence of any safeguards in the industry to guard against these crimes; the impact that compliance with anti-money laundering program and SAR reporting requirements may have on business operations; and what additional steps may be necessary to protect the industry from abuse by money launderers, including those who finance terrorist activity,” the register said.

FinCEN, a division of the U.S. Department of the Treasury, said non-bank entities need to be defined, as do the financial crime and money laundering risks.

The Treasury is authorized under the Bank Secrecy Act to require financial institutions to retain documents that might significantly help in a criminal investigation.

“FinCEN believes that new regulations requiring non-bank residential mortgage lenders and originators to adopt anti-money laundering programs and report suspicious transactions would augment FinCEN’s initiatives in this area,” the agency stated.

The proposed regulation would complement registration in the nationwide licensing system as required by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 because lenders and originators could improve education and training materials as they implement S.A.F.E. systems and procedures, the register said.