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Anti-Money Laundering

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Matt Webb

on 27 September 2012

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Transcript of Anti-Money Laundering

Questions? In order to guard against money laundering and terrorist financing, Regulation 1029.210 requires RMLOs to establish an Anti-Money Laundering Program. Anti-Money Laundering What is an RMLO? a person or entity that accepts a mortgage loan application or offers or negotiates terms of a residential mortgage loan regardless of whether they receive compensation or gain. Money Laundering the act of moving illegally obtained assets through the financial system to disguise their origin and make them appear legitimate. integration layering placement can involve RMLOs through the presentation of forged documents, laundered money or straw buyers (undisclosed) buy-fors. the movement of funds in an effort to further disguise the audit trail and ownership of the funds. in this stage, assets that have been "placed" are liquidated and transferred to other assets such as real estate. assets are again converted to give the appearance of legitimacy AML Policies, Procedures and Controls Designation of AML Compliance Officer On-going Training Independent Auditing Required Components of AML Compliance Program Filing Suspicious Activity Reports (SARs) a form filled out and submitted by the RMLO when it suspects that a customer or other individual has or has attempted to break a law or regulation transactions require reporting if they are conducted by or through an RMLO, involve funds or assets over $5000 and the RMLO knows or has reasons to know that: it involves funds or assets derived from an illegal activity it is designed to evade the reporting requirements of the AML Regulation has no apparent business or lawful purpose, or involves the use of the RMLO to facilitate criminal activity SARs Filings will be made by AML Compliance Officer must be filed within 30 days
(60 days if a suspect is not identified) some violations may require immediate reporting to appropriate law enforcement (ex. terrorist financing) SARS ARE CONFIDENTIAL No RMLO or director, officer, employee, agent or broker of any loan or RMLO may disclose a SAR or any information that would reveal the existence of a SAR. Money Laundering and Mortgage Fraud "Red Flags" when reviewing a credit application and supporting documents for loan approval, interacting with a borrower or other third party regarding their loan (including loan payments and loan payoff) or completing the sale of a repossessed home, employees should utilize their training and experience to detect unusual activity or "red flags" that might indicate the presence of Money Laundering or Mortgage Fraud any "red flags" should be further reviewed by the employee, including in some cases seeking further information and/or documentation to determine if the is a valid explanation for the unusual activity following the review, any unusual activity that lacks a reasonable explanation should be immediately reported to the VP or floor supervisor and to the AML Compliance Officer on the Usual Activity Report Form SAR Records including the SAR log, results of any investigation by the AML Compliance Officer and any SARs filed will be retained by the Company for a minimum of 5 years. QUIZ 3 stages of money laundering or non-bank residential mortgage lenders and originators Unusual Activity Report Form To: AML Compliance Officer From: (Employee Name) Date: (Date Discovered) Customer Name: Loan or Application Number: Check the reasons for the unusual activity report: (check all that apply) Large cash down payment Large cash loan payment Quick loan payoff (6 months) Large principal reduction ($10k) Unusual Shell Co/LLC/Third Party Loan file discrepancies/false documentation Identity Theft Potential loan fraud Other: Please explain the unusual activity: Why does this make you suspicious? excessive income compared to disclosed profession customer uses unusual or suspicious identification documents that cannot be verified a customer provides an individual tax ID number after having previously used a social security number a business or customer asks to be exempted from reporting or record keeping requirements. indications that the parties are not acting on their own behalf and are trying to hide the identity of the real customer. applicant has a current mortgage on their credit report large recent deposits listed on bank statement less than 30 days before application. large cash down payment exceeding $10,000 in cash (Form 8300 required) Quick loan payoff (within first 6 months) Large principal reduction ($10,000 or more) Goods or services purchased by the business or individual do not match the stated line of business. Documentation includes deletions, correction fluid or other alteration. Numbers on the documentation appear to be "squeezed" due to alteration. Different handwriting or type sales within a document Employment discrepancies Employer unable to be contacted Income appears to be out of line with type of employment Dates of bank statements are unusual or out of sequence Employer's ID number has a format other than 12-3456789 Pay period dates overlap and/or don't correspond with other documentation Abnormalities in pay check numbering Same telephone number for applicant and employer Credit patters are inconsistent with income & lifestyle Significant differences between original and supplemental credit reports. Invalid Social Security number or variance between documents. Duplicate social security number/multiple users Recently issued social security number Length of established credit not consistent with applicant's age Social security or credit bureau alerts "For Rent" sign appears in the photographs for refinance Address reflected in photos does not match property address Weather conditions in photos inconsistent with date of appraisal. Borrower or Seller names are different than sales contract Seller is not currently reflected on title Owner is someone other than seller shown on sales contract
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