New Rule Requires all Non-Bank Mortgage Lenders File Fraud Reports

All nonbank residential mortgage lenders will be required to submit suspicious activity reports (SARs) to the Financial Crimes Enforcement Network (FinCEN) as specified under a new final rule announced Tuesday by the Treasury. Additionally, lenders and originators must establish anti-money laundering programs under the rule.

“Today FinCEN is closing a regulatory gap by requiring non-bank mortgage lenders and originators to develop anti-money laundering programs and file suspicious activity reports with FinCEN,” said FinCEN Director James Freis, Jr. “Suspicious activity reports are a critical source of information to law enforcement and regulatory agencies in their investigation and prosecution of mortgage fraud and a wide range of other financial crimes.”

SARs analysis conducted on a quarterly and annual basis indicates that independent brokers and mortgage lenders originated many of the mortgages that were later subject to fraud, the agency said.

The rule will go into effect 60 days from the rule’s publication in the Federal Register, and the compliance date will be six months from that publication. FinCEN was established by President Obama in November 2009. It is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud and bring to bear a powerful array of criminal and civil enforcement resources.

View the rule.

Written by Elizabeth Ecker

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