Bank Secrecy Act Quiz-5

1.

What is the purpose of the Bank Secrecy Act? Please check all that apply.

A.

To detect and prevent money laundering
B.

To prevent mortgage fraud
C.

To alert borrowers that a SAR will be filed when criminal activity is susected
D.

To allow banks and mortgage lenders to share information regarding criminal activity that borrowers are trying to keep secret

Correct Answer(s)
A. To detect and prevent money laundering
B. To prevent mortgage fraud

Explanation
The first and second answer are correct.

The third answer is incorrect because under NO circumstances can a borrower be alerted to a SAR filing. The fourth answer is wrong becauswe SARs filings can not be shared with any third parties, with the exception of certain governmental exemptions. Sharing SARs information between lending institutions is expressly prohibited.

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2.

What is money laundering?

A.

A business that involves a high volume of cash, such as a laundromat.
B.

A system that allows money that was obtained illegally to be legally used ONLY IF the individual is purchasing a single family, owner occupied, residential property.
C.

Taking illegal money and hiding it for several years until it becomes legal money.
D.

Taking illegal or "dirty" money and placing it in the financial system in an effort to make the money look legitimate, or "clean."

Correct Answer
D. Taking illegal or "dirty" money and placing it in the financial system in an effort to make the money look legitimate, or "clean."

Explanation
Answer A is incorrect. While highly intensive cash businesses may give rise to hiding criminal activities, a business that involves a high volume of cash is not the definition of money laundering.

Answer B is incorrect because purchasing a home with illegal money is not allowable and is considered a form of money laundering.

Answer C is incorrect because the mere passage of time does not convert criminally obtained money into "legal" money.

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3.

Which of the following best describes the components of the AmeriFirst Anti-Money Laundering Program?

A.

AmeriFirst has developed and implemented internal policies, procedures, and controls.
B.

AmeriFirst has designated a Compliance Officer responsible for ensuring that the AML Program is implemented effectively and updated as necessary.
C.

AmeriFirst provides on-going training for all staff.
D.

AmeriFirst conducts independent testing and monitoring to ensure compliance of the AML Program.
E.

All of the above.

Correct Answer
E. All of the above.

Explanation
The correct answer is "All of the above" because the components of the AmeriFirst Anti-Money Laundering Program include the development and implementation of internal policies, procedures, and controls, the designation of a Compliance Officer responsible for ensuring effective implementation and updates, the provision of on-going training for all staff, and the conduct of independent testing and monitoring to ensure compliance.

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4.

Who is responsible for reporting suspected fraud and/or money laundering?

A.

Loan Originators, processors, and servicing since they work directly with borrowers.
B.

Everyone except loan officers; if a loan officer reports fraud such as a strawbuyer, the file might not close. Since this could adversly affect the loan officer's compensation, they are not required to report.
C.

All AmeriFirst Financial Corporation employees.
D.

Only branch managers, senior management, and servicing staff.

Correct Answer
C. All AmeriFirst Financial Corporation employees.

Explanation
A, B, and C are wrong because ALL employees are responsible for reporting suspected fraud and/or money laundering. With regard to answer B, if loan officers knowingly submit files in furtherance of mortgage fraud, they can be held personally liable in the perpetration of mortgage fraud and put their NMLS licensure and employment at risk.

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5.

As part of the Consumer Identification Program, what is the minimum information that must be collected?

A.

Borrower's name, social security number, income, property address, estimated property value, and loan amount.
B.

Borrower's name, date of birth, address, and an unexpired government-issued form of identification with the borrower's photograph.
C.

The borrower's name, date of birth, and identification number.
D.

The borrower's fingerprints.

Correct Answer
B. Borrower's name, date of birth, address, and an unexpired government-issued form of identification with the borrower's photograph.

Explanation
Answer choice A is wrong because it lists the 6 elements of an application under RESPA for disclosure purposes; this is not the same information required under the Consumer Identification Program.

Answer choice C is incorrect because the borrower's address is also requried.

Answer choice D is incorrect because fingerprints are not required for mortgage loan transactions.

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6.

Red flags are guides to a possible problem, but do not necessarily constitute a suspicious actifvity or a violation of law.

A.

True
B.

False

Correct Answer
A. True

Explanation
Red flags are indicators or warning signs that suggest a potential issue or problem. However, they do not automatically indicate suspicious activity or a violation of the law. Instead, they serve as guides for further investigation or assessment. Therefore, the statement that red flags do not necessarily constitute suspicious activity or a violation of the law is correct.

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7.

Please list 3 examples of red flags.

8.

If several redflags exist for a borrower that gives rise to possible fraud, what should you do?

A.

Nothing unless you are absolutely certain that there is fraud.
B.

Send an email to [email protected] with "Red Flag" in the subject line and the loan number, name of the borrower, and a summary of the red flags that exist in the body of the email. The compliance department will address the red flags and either resolve or escalate to the BSA Compliance Officer.
C.

Fill out the red flags checklist and send an email to the BSA Compliance Officer at [email protected] for investigation.
D.

Contact the borrower and let them know that AmeriFirst must complete a SAR since there are several red flags that exist in the file unless they can provide a valid explanation.

Correct Answer
B. Send an email to [email protected] with "Red Flag" in the subject line and the loan number, name of the borrower, and a summary of the red flags that exist in the body of the email. The compliance department will address the red flags and either resolve or escalate to the BSA Compliance Officer.

Explanation
Answer choice A is incorrect because our primary focus is on reporting suspicious activities, rather than on determining whether the transactions are, in fact, linked to money laundering, mortgage fraud, or other criminal activity.

Answer choice C is incorrect for 2 reasons. First, the red flags checklist is completed by the compliance department, not the individual reporting the red flags. Additionally, the compliance department must be contacted, not the BSA Officer. If the compliance department is unable to resolve the red flags, the compliance department will escalate the issue to the BSA Officer directly.

Answer choice D is incorrect because the borrower may NEVER be notified as to whether or not a SAR is being completed. Disclosing such information to a borrower can result in severe civil penalties.

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9.

If red flags are detected on a loan that is already in servicing, [email protected] does not need to be notified since the loan has already closed and there is nothing further that can be done.

A.

True
B.

False

Correct Answer
B. False

Explanation
Even closed loans with red flags must be reported to [email protected].

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10.

Which of the following circumstances allows AmeriFirst to share SAR information with others?

A.

If another lender calls to transfer an FHA case #, we must tell them that we filed a SAR.
B.

If a an attorney provides a subpoena to any employee, that employee must obtain and provide a copy of the SAR.
C.

A SAR filing can be revealed to a borrower if, and only if, the borrower directly asks whether a SAR was filed. If the borrower doesn't ask, we can not provide a copy of the SAR.
D.

All of the above
E.

None of the above

Correct Answer
E. None of the above

Explanation
Answer choice A is incorrect because a SAR can not be revealed to another lender under any circumstances.

Answer choice B is incorrect because an employee who receives a requst for SAR information should send the request to the BSA Compliance Officer for evaluation. Employees should never respond to requests for SAR information on their own.

Answer choice C is incorrect because a borrower can NEVER be informed regarding whether a SAR is filed.

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