A licensing coordinator is resolving Bank Secrecy Act SAR during a loan-team coaching session. Which action best fits the rule?
Correct Answer
B) Do not tell the borrower whether a SAR will be filed
Why this is correct: The Bank Secrecy Act's Suspicious Activity Report (SAR) rules have a strict "no tipping off" provision. It is illegal to inform a suspect that a SAR is being or will be filed, as this could compromise the investigation. The compliant action is to not disclose this information to the borrower. Why the other choices are wrong: Continuing the activity because the borrower appears willing to proceed is wrong because suspicious activity must be reported and the transaction should not proceed based on borrower willingness alone. Assuming the SAR condition is met because the borrower satisfied a separate secondary-market requirement is wrong because SAR filing is based on specific suspicious activity triggers, not on unrelated loan delivery requirements. Documenting the issue later instead of correcting the compliance problem first is wrong because SAR obligations require timely reporting; delaying correction and documentation is non-compliant. Exam tip: Remember "SAR" and think "silence"—never tip off the subject. Reporting is mandatory, and disclosure is prohibited.
Why This Is the Correct Answer
The correct response is "Do not tell the borrower whether a SAR will be filed" because SAR rules require reporting or escalation of suspicious activity and prohibit tipping off subjects.
Why the Other Options Are Wrong
Option A: Continue the activity because the borrower appears willing to proceed.
Continue the activity because the borrower appears willing to proceed. is not correct because it does not apply the rule tested by this file scenario.
Option C: Assume the Bank Secrecy Act SAR condition is met because the borrower satisfied the separate secondary-market delivery requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option D: Document the issue later instead of correcting the compliance problem first.
Document the issue later instead of correcting the compliance problem first. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
SAR escalation and anti-tipping rules: 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 SAR escalation and anti-tipping rules; 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 Ethics & Fraud Questions
In a file escalation meeting, the supervisor sees facts tied to RESPA Kickbacks and Referrals. What should the file reflect?
In a closing-readiness check, a disclosure specialist sees facts tied to Appraisal Fraud Detection. What should the file reflect?
At closing, an MLO adds a single-premium credit-life policy to the loan amount even though the borrower declined it and the policy is not required for approval. Which practice is the clearest concern?
A refinance eliminates a borrower's fixed-rate loan, adds substantial fees, provides no cash or lower payment, and restarts a 30-year term. What should the MLO do before recommending it?
An applicant has verified monthly income of $5,000 and monthly obligations of $4,700 after the proposed mortgage payment. The applicant expects an undocumented raise next year. What should the MLO do?
A lender bases approval entirely on the home's high appraised value and does not verify the borrower's income or existing debts. What is the central compliance concern?
A borrower agrees to a mortgage but declines an optional home-warranty plan. The final loan documents nevertheless finance a $2,400 warranty premium. What should the MLO do?
An MLO recommends a loan with a low initial payment that will increase sharply in two years. The borrower says retirement income will be fixed and asks whether the payment can change. What is the appropriate response?
To obtain approval, an MLO changes a self-employed applicant's verified monthly income from $6,000 to $9,000 without supporting documentation. How should this conduct be characterized?
A homeowner is encouraged to refinance for the third time in 18 months. Each loan generates new points and fees, while the borrower's payment and rate do not improve. Which practice is most strongly indicated?
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