A nonbank mortgage company subject to 31 CFR 1029.210 has 12 employees, trains its staff and designates a compliance officer, but its AML program consists only of verbal expectations. Does this satisfy the program requirement?
Correct Answer
B) No: the program must be written and approved by senior management
B. The missing written program is a compliance deficiency. Section 1029.210(a) requires a written program and senior-management approval. Training and an officer do not replace risk-based policies and controls or independent testing. Scope and exceptions: The program must be implemented, not merely placed in a binder. Its design reflects the company's risks, and a copy must be made available to FinCEN or its designee on request. This question assumes coverage rather than treating every entity as subject to the same section. Source: 31 CFR 1029.210(a)–(b) — https://www.ecfr.gov/current/title-31/subtitle-B/chapter-X/part-1029/subpart-B/section-1029.210
Why This Is the Correct Answer
B. The missing written program is a compliance deficiency. Section 1029.210(a) requires a written program and senior-management approval. Training and an officer do not replace risk-based policies and controls or independent testing. Scope and exceptions: The program must be implemented, not merely placed in a binder. Its design reflects the company's risks, and a copy must be made available to FinCEN or its designee on request. This question assumes coverage rather than treating every entity as subject to the same section.
Why the Other Options Are Wrong
Option A: Sufficient: a company under 25 employees may run an informal program
The cited rule provides no under-25-employee exception.
Option C: Deficient: the program must be approved by the state regulator first
Prior state-regulator approval is not this provision's approval requirement.
Option D: Sufficient: the 2 elements in place are the ones the rule names
It incorrectly treats two components as the complete program.
Exam Tip
Verify documentation, approval and implementation as distinct obligations.
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