An MLO is reviewing procedures for a case where a borrower asks whether the company will file a suspicious activity report. What is the proper handling?
Correct Answer
C) Do not tell the borrower that a SAR may be filed
Why this is correct: The proper handling is dictated by the Bank Secrecy Act rules in the governing federal rule A core requirement of SAR filing is confidentiality. Disclosing to a customer that a SAR is being considered or filed is prohibited, as it could constitute "tipping off" and jeopardize an investigation. Therefore, the MLO must not tell the borrower. Why the other choices are wrong: "Use borrower consent as a substitute for the governing mortgage rule" is wrong because borrower consent cannot override the federal prohibition on disclosing SAR activity. "Wait until after the risk-control meeting to decide whether the disclosure, filing, or license issue matters" is wrong because the rule against disclosure is immediate and mandatory; waiting to decide is non-compliant. "Treat records, reports, and required notices as satisfied by an oral manager approval" is wrong because SAR procedures require formal filing and documentation; oral approval does not satisfy the rule or change the confidentiality requirement. Exam tip: Remember the SAR 'tipping off' prohibition. The rule is about the filing's existence, not the content of the suspicious activity itself.
Why This Is the Correct Answer
The correct response is "Do not tell the borrower that a SAR may be filed". SAR rules include confidentiality; the borrower should not be tipped off about a SAR filing or potential filing.
Why the Other Options Are Wrong
Option A: Use borrower consent as a substitute for the governing mortgage rule.
Use borrower consent as a substitute for the governing mortgage rule. is not correct because it bypasses the rule supported by the explanation.
Option B: Wait until after the risk-control meeting to decide whether the disclosure, filing, or license issue matters.
Wait until after the risk-control meeting to decide whether the disclosure, filing, or license issue matters. is not correct because it bypasses the rule supported by the explanation.
Option D: Treat records, reports, and required notices as satisfied by an oral manager approval.
Treat records, reports, and required notices as satisfied by an oral manager approval. is not correct because it bypasses the rule supported by the explanation.
Memory Technique
For SAR questions, no tipping is almost always the tested ethics point.
Exam Tip
For SAR questions, no tipping is almost always the tested ethics point.
Common Mistakes to Avoid
- -Customer service transparency does not include disclosing SAR activity to the subject.
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