A team member asks about BSA SAR Filing Requirements in a consumer complaint triage while trying to separate the real requirement from a near-miss shortcut. Which response should the loan team use?
Correct Answer
C) File or escalate when SAR criteria are met
Why this is correct: The Bank Secrecy Act (BSA) requires Residential Mortgage Lenders and Originators (RMLOs) to establish an Anti-Money Laundering (AML) program, which includes monitoring for and reporting suspicious activity. A Suspicious Activity Report (SAR) must be filed when a transaction meets specific criteria indicating potential money laundering, fraud, or other illegal activity. The correct answer, "File or escalate when SAR criteria are met," captures the mandatory and timely action required by the rule upon identifying a red flag. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because SAR filing is a federal mandate; internal exceptions are not permitted. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because SARs have strict filing deadlines (generally 30 days after detection); waiting for a regulator violates this timing rule. "Use prior credit underwriting approval as a substitute for the current BSA SAR Filing Requirements requirement" is wrong because credit approval is a separate process and does not fulfill the distinct obligation to identify and report suspicious transactions. Exam tip: For BSA/AML/SAR questions, focus on the obligation to act—file or escalate internally—when suspicious activity is detected. The rule is proactive, not reactive to regulators.
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 B: 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: Use prior credit underwriting approval as a substitute for the current BSA SAR Filing Requirements requirement.
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 SAR Filing Requirements: 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 SAR Filing Requirements; 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
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