A nonbank residential mortgage lender subject to 31 CFR 1029.210 originates 40% of its volume through eight independent brokers. Its designated anti-money-laundering compliance officer monitors employees only. Does this adequately cover the agents and brokers involved in its AML program?
Correct Answer
A) Deficient: the officer must reach compliance by agents and brokers
A. The officer must also monitor agents and brokers for their obligations under the program. The company must integrate its agents and brokers into its AML program. The designated officer oversees effective implementation, necessary updates and appropriate training; employee-only monitoring omits part of that responsibility. Scope and exceptions: This concerns the covered company's AML program, not unlimited responsibility for every independent broker activity. Independent testing is a separate requirement and cannot be performed by the designated compliance officer. Source: Section 1029.210(b)(1)–(4) — https://www.ecfr.gov/current/title-31/subtitle-B/chapter-X/part-1029/subpart-B/section-1029.210
Why This Is the Correct Answer
A. The officer must also monitor agents and brokers for their obligations under the program. The company must integrate its agents and brokers into its AML program. The designated officer oversees effective implementation, necessary updates and appropriate training; employee-only monitoring omits part of that responsibility. Scope and exceptions: This concerns the covered company's AML program, not unlimited responsibility for every independent broker activity. Independent testing is a separate requirement and cannot be performed by the designated compliance officer.
Why the Other Options Are Wrong
Option B: Deficient: a company with brokers must name 2 compliance officers
Broker involvement does not create a two-officer requirement.
Option C: Sufficient: the officer covers employees, who are the regulated group
The provision expressly reaches agents and brokers, not just employees.
Option D: Sufficient: each of the 8 brokers must name an officer of its own
Separate broker arrangements do not discharge this company's obligations.
Exam Tip
Outsourcing origination does not remove AML program oversight.
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