Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements for Residential Mortgage Lenders and Originators

1 ‘‘Bank Secrecy Act’’ is the name that has come to be applied to the Currency and Foreign Transactions Reporting Act (Titles I and II of Pub.
L. 91–508), its amendments, and the other statutes
referring to the subject matter of that Act. These statutes are codified at 12 U.S.C. 1829b, 12 U.S.C. 1951–1959, and 31 U.S.C. 5311–5314 and 5316– 5332, and notes thereto. 2 31 U.S.C. 5311. 3 31 U.S.C. 5318(h). 4 See Treasury Order 180–01 (Sept. 26, 2002). 5Public Law 107–56 352(c), 115 Stat. § 322, codified at 31 U.S.C. 5318 note. Public Law 107– 56 is the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (‘‘USA PATRIOT Act’’). 6 31 U.S.C. 5318(g). Section 5318(g) gives the Secretary authority to require financial institutions to file SARs. This section was added to the BSA by
section 1517 of the Annunzio-Wylie Anti-Money
Laundering Act, Title XV of the Housing and Community Development Act of 1992, Public Law 102–550; it was expanded by section 403 of the Money Laundering Suppression Act of 1994, Title IV of the Riegle Community Development and Regulatory Improvement Act of 1994, Public Law 103–325, to require designation of a single government recipient for reports of suspicious transactions. 7 31 U.S.C. 5312(a)(2)(P). of $100 million or more in any given year. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation did not impose an unfunded mandate. List of Subjects in 30 CFR Part 943 Intergovernmental relations, Surface mining, Underground mining. Dated: November 9, 2011. Ervin J. Barchenger, Regional Director, Mid-Continent Region. For the reasons set out in the preamble, 30 CFR part 943 is amended as set forth below:
PART 943—TEXAS

• 1. The authority citation for Part 943
     continues to read as follows:
     Authority: 30 U.S.C. 1201 et seq.
• 2. Section 943.15 is amended in the
     table by adding a new entry in
     chronological order by ‘‘Date of final publication’’ to read as follows:
     § 943.15 Approval of Texas regulatory program amendments.

Original amendment submission date Date of final publication Citation/Description * May 18, 2011, May 26, 2011, and June 3, 2011. February 14, 2012 .............. 16 TAC 12.100(a); 12.225(a)(3); 12.311(b); TSCMRA 134.004 (7-a) and (15-a); 134.069(c); 134.080(a) and (b); 134.085; 134.092(20); 134.104(1) and (2); and 134.105(a). [FR Doc. 2012–3418 Filed 2–13–12; 8:45 am] BILLING CODE 4310–05–P DEPARTMENT OF THE TREASURY Financial Crimes Enforcement Network 31 CFR Parts 1010 and 1029 RIN 1506–AB02 Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements for Residential Mortgage Lenders and Originators AGENCY: Financial Crimes Enforcement Network (‘‘FinCEN’’), Treasury. ACTION: Final rule. SUMMARY: FinCEN, a bureau of the Department of the Treasury (‘‘Treasury’’), is issuing this Final Rule defining non-bank residential mortgage lenders and originators as loan or finance companies for the purpose of requiring them to establish anti-money laundering programs and report suspicious activities under the Bank Secrecy Act. DATES: Effective Date: This rule is effective April 16, 2012. Compliance Date: The compliance date for 31 CFR 1029.210 is August 13, 2012. FOR FURTHER INFORMATION CONTACT:
FinCEN, Regulatory Policy and Programs Division at (800) 949–2732 and select Option 1. SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
The Bank Secrecy Act (‘‘BSA’’) 1 authorizes the Secretary of the Treasury (the ‘‘Secretary’’) to issue regulations requiring financial institutions to keep records and file reports that the Secretary determines ‘‘have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.’’ 2 In addition, the Secretary is authorized to impose anti-money laundering (‘‘AML’’) program requirements on financial institutions.3 The authority of the Secretary to administer the BSA has been delegated to the Director of FinCEN.4 Financial institutions are required to establish AML programs that include, at a minimum: (1) The development of internal policies, procedures, and controls; (2) the designation of a compliance officer; (3) an ongoing employee training program; and (4) an independent audit function to test programs. When prescribing minimum standards for AML programs, FinCEN must ‘‘consider the extent to which the requirements imposed under [the AML program requirement] are commensurate with the size, location, and activities of the financial institutions to which such regulations apply.’’ 5 The BSA also requires financial institutions to file suspicious activity reports (‘‘SARs’’).6 The BSA defines the term ‘‘financial institution’’ to include, in part, a loan or finance company.7 The term ‘‘loan or finance company’’ is not defined in any FinCEN regulation, and there is no legislative history on the term. The term, however, can reasonably be construed to extend to any business entity that makes loans to or finances purchases on behalf of consumers and businesses. Some loan and finance companies extend personal loans and loans secured by real estate mortgages and deeds of trust, including home equity loans. Non-bank residential mortgage lenders and originators (‘‘RMLOs’’—generally known as ‘‘mortgage companies’’ and ‘‘mortgage brokers’’ in the residential mortgage business sector) are a significant subset of the ‘‘loan or finance company’’ category, in terms of the number of businesses and the aggregate volume