WASHINGTON — Nonbank mortgage lenders are required to establish anti-money laundering programs and file suspicious activity reports under a final rule issued Tuesday by the Financial Crimes Enforcement Network.
The rule closes a regulatory gap, Fincen Director James H. Freis Jr. said in a press release, and will help mitigate some of the risks that criminals have exploited in the nonbank residential mortgage sector.
"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," Freis said.
Fincen said that analysis of the SARs reported in its annual and quarterly reports shows that independent mortgage lenders and brokers originated many of the mortgages that were the subject of bank SARs filings. Among the mortgage related scams FinCEN has identified in its reports are false statements, use of straw buyers, fraudulent flipping and identity theft.
FinCEN also proposed rules in November to require the government sponsored enterprises to develop AML programs and file SARs.
The final rule will take effect 60 days after publication in the Federal Register; nonbanks will have six months to comply with the rule after it is published.
