During intake, a borrower asks whether the company will file a suspicious activity report. What is the best compliant response?
Correct Answer
C) Do not tell the borrower that a SAR may be filed
Why this is correct: The governing rule is 31 CFR 1029.320, which outlines requirements for filing Suspicious Activity Reports (SARs). A critical component of this rule is confidentiality. Financial institutions and their employees are prohibited from disclosing to any person involved in the transaction that a SAR has been or may be filed. This prevents "tipping off" the subject of the report. Therefore, the best compliant response to a borrower's question is to "Do not tell the borrower that a SAR may be filed." Why the other choices are wrong: The choice to "Continue the activity because the borrower appears willing to proceed" is wrong because the borrower's willingness is irrelevant to the SAR confidentiality requirement. The choice to "Ignore the consumer-protection issue unless the borrower complains" is wrong because the SAR rule imposes an affirmative duty on the institution, not a reactive one based on complaints. The choice to "Document the issue later instead of correcting the compliance problem first" is wrong because the compliance problem (the risk of tipping off) must be addressed immediately by not disclosing information. Exam tip: The SAR confidentiality rule is absolute. You must never confirm, deny, or hint at a SAR's existence to the subject of the report.
Why This Is the Correct Answer
The correct response is "Do not tell the borrower that a SAR may be filed" because Lines 255-260; 31 CFR 1029.320 and final rule discussion of reports of suspicious transactions.
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 B: Ignore the consumer-protection issue unless the borrower complains.
Ignore the consumer-protection issue unless the borrower complains. is not correct because it does not apply the rule tested by this file scenario.
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
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