A company policy update raises a question about BSA Customer Identification Program. Which action should the loan file reviewer recommend?
Correct Answer
D) File or escalate when SAR criteria are met
Why this is correct: The Bank Secrecy Act (BSA) requires financial institutions, including Registered Mortgage Lenders and Originators (RMLOs), to have an Anti-Money Laundering (AML) program. A critical component is the requirement to file a Suspicious Activity Report (SAR) when certain criteria are met (e.g., transactions involving at least $5,000 that the institution knows, suspects, or has reason to suspect involve funds from illegal activity, are designed to evade BSA requirements, or have no business/purpose). "File or escalate when SAR criteria are met" is the mandatory, compliant action. 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 requirement with no exception for internal policy. "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 facts are identified; waiting for a regulator is a violation. "Rely on oral agreement when the rule requires documented compliance" is wrong because BSA/AML compliance, including SAR decisions, must be documented in writing. Exam tip: SAR filing is not discretionary. If you see facts suggesting suspicious activity (e.g., structuring, false information, unusual transactions), the correct answer will involve escalating or filing a report, not ignoring or delaying.
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 C: 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 Customer Identification Program: 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 Customer Identification Program; 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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