Transcript Bank Secrecy Act (BSA) - The Fuller Center for Housing

Anti-Money
Laundering (AML)
What is AML?
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The Financial Crimes Enforcement Network (FinCEN) requires that all
nonbank mortgage lenders and originators implement an Anti-Money
Laundering program.
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Money laundering is defined as engaging in acts designed to conceal or
disguise the true origin of criminally derived proceeds so that the unlawful
proceeds appear to have derived from legitimate origins or constitute
legitimate assets.
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Terrorist financing many not involve the proceeds of criminal conduct, but
rather attempt to conceal the origin or intended use of the funds which will
later be used for criminal purposes.
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Because Fuller Center for Housing covenant partner organizations
originate loans, mortgages and finance purchases on behalf of consumers,
there is a very small but real risk if criminal activity through the purchase of
assets in the form of houses.
How is it Done?
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Step 1 – Placement. Cash generated from criminal activities is converted into
monetary instruments, such as money orders or traveler’s checks or deposited into
accounts at financial institutions.
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Step 2 – Layering. Funds are transferred or moved into other accounts or other
financial institutions to further separate the money from its criminal origin.
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Step 3 – Integration. Funds are reintroduced into the economy and used to
purchase legitimate assets or to fund other criminal activities or legitimate
businesses.
THREE BASIC RULES
Verify Identity of the Applicant(s)
Maintain records for 5 years after account is closed
Check government lists (OFAC)
Acceptable Identification
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To verify identity we will use Documentary and/or NonDocumentary forms of identification
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Documentary
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Government Issued ID
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Driver’s License
Passport
Etc.
Non-Documentary
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Independently contacting an Applicant
Comparison of information provided by the Applicant to other sources
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Employer
Public data base
Etc.
Maintain Records
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It is important to retain applicant records including evidence of
identification for a period of five years.
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Typically the very nature of the project far exceeds five years and it
is good operational practice to retain the documents for the life of
the relationship.
Office of Foreign Assets Control
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OFAC is part of the US Treasury Department
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Before approving any application check the OFAC list to ensure
that the applicant is not from or engaging in transactions with
people or entities designated to engage in money laundering.
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OFAC website:
www.treas.gov/offices/enforcement/ofac/sdn/index.html
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In the event that an applicant or someone with whom the
applicant is transacting is on the OFAC list the application is to
be rejected and OFAC contacted:
OFAC Hotline: 1.800.540.6322
MONEY LAUNDERING
RED FLAGS
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Refusal or reluctance to proceed with the application process
Customer refusal or reluctance to provide information or
identification.
Information provided by the applicant is false, misleading or
substantially incorrect.
Upon request, the applicant refuses to identify or fails to indicate
any legitimate source for his or her funds and other assets when
making large early payments..
The applicant makes unexplained or sudden early payments
involving cash or cash equivalents or other monetary
instruments that appear to be structured to avoid the $10,000
gov’t reporting requirements.
The applicant has inflows of funds or other assets well beyond
the known income or resources of the applicant.
Suspicious Activity Report (SAR)
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A Suspicious Activity Report (SAR) must be filed on any known or
suspected federal violation of law. Suspicious activity requires
reporting if it involves at least $5,000 aggregate, and the loan or
finance company knows or suspects that (for example):
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The funds are derived from illegal activities
The funds are part of a plan to violate or evade any federal law or
regulation
The transaction is designed to evade other reporting requirements
The transaction is not the sort in which the particular applicant would
normally be expected to engage, and the organization knows of no
reasonable explanation for the transaction.
Currency Transaction Reports
(CTR)
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Fuller Center covenant partners must file a report with the IRS within 15 days of
receiving currency of more than $10,000 in one transaction or in two or more
transactions in a twelve month period.
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IRS Form 8300 (CTR) can be obtained at:
http://www.irs.gov/pub/irs-pdf/f8300.pdf
Your Responsibility
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Designate a Compliance Officer who will be responsible for:
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Implementing the program effectively;
Updating the AML Program as necessary; and
Training CP Board and Employees
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Test AML Program
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Follow Identification Requirements
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Report Currency Transactions over $10,000
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Report any suspicious activity to the Compliance Officer.