The Financial Crimes Enforcement Network (FinCEN) has finalized regulations that require nonbank residential mortgage lenders and originators to establish anti-money laundering (AML) programs and file suspicious activity reports (SARs), as FinCEN requires of other types of financial institutions.
In a press statement, FinCEN says the new regulations will help mitigate some of the risks and minimize some of the vulnerabilities that criminals have exploited in the nonbank residential mortgage sector. Analysis of SARs reported in FinCEN's annual, quarterly and special fraud reports shows that independent mortgage lenders and brokers originated many of the mortgages that were the subject of bank SAR filings.
‘Today, FinCEN is closing a regulatory gap by requiring nonbank mortgage lenders and originators to develop anti-money laundering programs and file suspicious activity reports with FinCEN,’ says FinCEN Director James H. 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.’
The final rule will be effective 60 days after publication in the Federal Register and is available on the FinCEN website. The compliance date for this final rule will be six months after publication in the Federal Register.