A mortgage file is paused during a risk-control review because of BSA Record Retention. Which answer should separate the real requirement from a near-miss shortcut?
Correct Answer
B) File or escalate when SAR criteria are met
Why this is correct: The Bank Secrecy Act (BSA) and its Anti-Money Laundering (AML) rules require Residential Mortgage Lenders and Originators (RMLOs) to monitor for and report suspicious activity. A Suspicious Activity Report (SAR) must be filed confidentially with FinCEN when specific criteria indicating potential money laundering or fraud are met. This is a core, non-discretionary requirement. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because internal exceptions cannot override the federal mandate to file a SAR when criteria are met. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because SAR filing is mandatory upon detection of suspicious activity; waiting for a regulator is a compliance failure. "Apply the correct general concept to the wrong licensing stage rather than the BSA Record Retention rule" is wrong because it misapplies a concept (like licensing) to BSA/AML, which is about detecting and reporting financial crime, not licensing stages. Exam tip: For BSA/AML, remember the SAR trigger: 'Know, suspect, or have reason to suspect.' The duty is to file or escalate, not to wait.
Why This Is the Correct Answer
The correct response is "File or escalate when SAR criteria are met" because RMLO AML and SAR rules require suspicious activity escalation and confidentiality.
Why the Other Options Are Wrong
Option A: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option C: Wait until a regulator asks for the file before applying the federal requirement.
Wait until a regulator asks for the file before applying the federal requirement. is not correct because it does not apply the rule tested by this file scenario.
Option D: Apply the correct general concept to the wrong licensing stage rather than the BSA Record Retention rule.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
BSA Record Retention: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to BSA Record Retention; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
More Federal Laws Questions
A mortgage file is paused during a lock-desk handoff because of FCRA Adverse Action Notices. Which answer should identify which rule controls the file?
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
Before the team acts on a production meeting, the MLO must address FCRA Adverse Action Notice. Which response is most defensible?
A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
A mortgage team asks a quality-control reviewer about TRID Loan Estimate timing during a record-retention audit. Which answer should guide the file?
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An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
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A mortgage file is paused during a lock-desk handoff because of FCRA Adverse Action Notices. Which answer should identify which rule controls the file?
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