A mortgage file is paused during a secondary-market screen because of BSA Anti Money Laundering. Which answer should choose the most defensible file action?
Correct Answer
C) Escalate suspicious activity under AML procedures
Why this is correct: The original explanation states that RMLO AML and SAR rules require suspicious activity escalation and confidentiality. Under the Bank Secrecy Act (BSA), a mortgage loan originator must have an Anti-Money Laundering (AML) program and is obligated to file a Suspicious Activity Report (SAR) if they detect activity that suggests money laundering or other financial crimes. Escalating internally per AML procedures is the required, defensible first step. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because AML requirements are mandatory and cannot be waived internally. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because SARs have strict filing deadlines (generally 30 days) and waiting is non-compliant. "Rely on oral agreement when the rule requires documented compliance" is wrong because AML procedures and SAR filings require documentation. Exam tip: Think 'SAR' when you see 'suspicious activity' in a BSA/AML context. Confidentiality is paramount—never tip off the customer.
Why This Is the Correct Answer
The correct response is "Escalate suspicious activity under AML procedures" 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: Rely on oral agreement when the rule requires documented compliance.
Rely on oral agreement when the rule requires documented compliance. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
BSA Anti Money Laundering: 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 Anti Money Laundering; 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
A mortgage file is paused during a lock-desk handoff because of FCRA Adverse Action Notices. Which answer should identify which rule controls the file?
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
Before the team acts on a production meeting, the MLO must address FCRA Adverse Action Notice. Which response is most defensible?
A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
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An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
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