During a post-application update, a training manager encounters a Bank Secrecy Act issue. Which response should confirm the rule-based response?
Correct Answer
B) File or escalate when SAR criteria are met
Why this is correct: The Bank Secrecy Act (BSA) and its Anti-Money Laundering (AML) rules require Residential Mortgage Lenders and Originators (RMLOs) to monitor for and report suspicious activity. When transaction patterns or facts meet specific criteria indicating potential money laundering or fraud, the institution must file a Suspicious Activity Report (SAR) with FinCEN or escalate the matter internally for a filing determination. This is a mandatory, time-sensitive obligation. 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 policies cannot override the requirement to report. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because SARs must be filed proactively within a strict deadline (generally 30 days) after the suspicious activity is detected, not upon regulatory inquiry. "Delay the Bank Secrecy Act step until a later government-loan eligibility review instead of acting now" is wrong because BSA/AML compliance is independent of other loan processes; suspicious activity must be addressed immediately. Exam tip: For BSA, remember the trigger: "suspicious activity identified = file or escalate a SAR." It's a mandatory report, not a discretionary one.
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 C: 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: Delay the Bank Secrecy Act step until a later government-loan eligibility review instead of acting now.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
Bank Secrecy Act: 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 Bank Secrecy Act; 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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During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
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