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 closing-readiness check, a disclosure specialist sees facts tied to Appraisal Fraud Detection. What should the file reflect?
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?
An MLO alters a bank statement to make the applicant's account balance appear higher and submits it to underwriting. Which response is appropriate?
A branch manager asks about a loan file because marketing proposes a rate the company is not prepared to offer. What should happen?
A borrower wants cash for necessary home repairs. A proposed refinance provides $15,000 cash but adds $12,000 in costs and extends repayment by 15 years. What is the best next step for the MLO?
Before closing, the team discovers that an ad shows an interest rate but omits the APR presentation. What is the safest compliant answer?
The loan team is resolving Privacy and Confidentiality during a quality-control sample. Which action best fits the rule?
A house last sold for $185,000 in January. In March it changes hands 3 times in 9 days, reaching $410,000, with the same appraiser and the same closing agent on every leg. Assuming the parties colluded to inflate appraisals without improvements to support the higher prices, what fraud scheme does this pattern illustrate?
For closings involving federally related mortgage loans, a title company pays a real estate brokerage $75 for each referred client who closes. The brokerage only passes along the client’s name and number. Does this referral payment comply with RESPA Section 8?
Before closing, the team discovers that a loan officer wants different terms because of a protected applicant characteristic. What is the safest compliant answer?
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