A borrower makes three deposits of $9,400 across two weeks, each just under the reporting threshold, and asks the originator not to "make this complicated". What should the originator do with what he has seen?
Correct Answer
D) Document the suspicious pattern for AML review
Why this is correct: BSA SAR rules mandate the reporting of suspicious activity and strictly prohibit disclosing to the subject that a report has been filed or is being prepared ("tipping off"). When a file is paused due to a SAR confidentiality issue, the compliant next step is to document the suspicious pattern for an internal Anti-Money Laundering (AML) review. This action preserves confidentiality and initiates the proper internal escalation process. Why the other choices are wrong: "Continue the activity because the borrower appears willing to proceed" is wrong, as proceeding could constitute tipping off or ignoring the suspicious activity. "Resolve the BSA SAR Confidentiality issue with the consumer complaint exception that does not fit the facts" is wrong because the facts state the exception does not fit; this choice suggests applying an inapplicable rule. "Document the issue later instead of correcting the compliance problem first" is wrong because the compliance problem (the suspicious pattern) must be addressed by documenting it for review immediately, not later. Exam tip: SAR confidentiality is paramount. The safe action is always internal documentation and escalation, never proceeding or communicating in a way that could tip off the customer.
Why This Is the Correct Answer
The correct response is "Document the suspicious pattern for AML review" 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 B: Resolve the BSA SAR Confidentiality issue with the consumer complaint exception that does not fit the facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: 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?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
A compliance review finds that a borrower asks whether the company will file a suspicious activity report. What should the MLO do next?
Next Question
A company offers a homeowner 60 days from foreclosure a deed transfer with a promise to rent the home back and resell it later. If the transfer pays no fair value and the repurchase promise is deliberately structured to fail, what foreclosure-rescue scheme does it illustrate?