Written by Bernadette Clair, Regulatory Compliance Counsel
Earlier this month, FinCEN issued a notice and reminder to non-bank residential mortgage lenders and originators (RMLOs) to remind them of their new compliance obligations under FinCEN’s regulations. On February 14, 2012, FinCEN published a final rule requiring RMLOs to develop an anti-money laundering (AML) program and report suspicious activity. The effective date of this rule was April 16, 2012, and the compliance date was August 13, 2012.
The rule does not impose new requirements on credit unions which are already subject to AML and suspicious activity reporting requirements. However, the rule does apply to credit union service organizations (CUSOs) involved in residential mortgage services that meet the definition of an RMLO under 31 CFR 1010.100(lll)(1):
“(1) Residential mortgage lender or originator. A residential mortgage lender or originator includes:
(i) Residential mortgage lender. The person to whom the debt arising from a residential mortgage loan is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement, or to whom the obligation is initially assigned at or immediately after settlement. The term “residential mortgage lender” shall not include an individual who finances the sale of the individual's own dwelling or real property.
(ii) Residential mortgage originator. A person who accepts a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.”
A CUSO that meets the definition of an RMLO must establish an AML program that includes:
- Internal policies, procedures, and controls
- A designated compliance officer
- Ongoing training
- Periodic independent testing
RMLOs are also required to file suspicious activity reports (SARs) but they are not required to comply with currency transaction reporting (CTR) requirements. (Note: these large currency transactions remain subject to reporting on FinCEN Form 8300).