In the February 14, 2012, issue of the Federal Register (77 FR 30), FinCEN, a bureau of the Department of the Treasury, issued a Final Rule defining non-bank residential mortgage lenders and originators as a loan or finance company for the purpose of requiring them to establish anti-money laundering programs and report suspicious activities under the Bank Secrecy Act (“BSA”). The following summary of the Final Rule is taken from FinCEN’s preamble statements published with the Final Rule in the above-cited issue of the Federal Register. Overview The BSA authorizes the Secretary of the Treasury (the “Secretary”) to issue regulations imposing anti-money laundering (“AML”) program requirements on financial institutions. The BSA also requires financial institutions to file suspicious activity reports (“SAR”). The Secretary has delegated the authority to administer the BSA to the Director of FinCEN. The BSA defines the term “financial institution” to include, in part, a loan or finance company. While the term “loan or finance company” is not defined in any FinCEN regulation, and there is no legislative history on the term, FinCEN has determined that the term can reasonably be construed to extend to any business entity that makes loans to or finances purchases on behalf of consumers and businesses and that non-bank residential mortgage lenders and originators (“RMLO”), generally known as “mortgage companies” and “mortgage brokers,” are included in the term “loan or finance company.” The Final Rule requires RMLOs to establish AML programs that include, at a minimum: (1) the development of internal policies, procedures, and controls; (2) the designation of a compliance officer; (3) an ongoing employee-training program; and (4) an independent audit function to test programs.
