A mortgage file is paused during a policy refresh meeting because of BSA Anti Money Laundering. Which answer should avoid a shortcut that would misapply the rule?
Correct Answer
C) 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 financial institutions, including mortgage lenders, to monitor for and report suspicious activity. A core requirement is to file a Suspicious Activity Report (SAR) when specific criteria are met. The correct action is to file or escalate internally upon meeting those criteria, without delay. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because internal policies cannot override federal SAR filing requirements and deadlines. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because SARs must be filed proactively; waiting for a regulator to ask is a violation. "Use the high-cost loan standard to decide the BSA Anti Money Laundering issue before confirming the trigger facts" is wrong because BSA/AML triggers (like suspicious transactions) are separate from high-cost loan (HOEPA) triggers; applying the wrong legal standard is a misapplication of the rule. Exam tip: SAR filings are mandatory, confidential, and have a strict deadline (generally 30 calendar days after the suspicious activity is detected).
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 D: Use the high-cost loan standard to decide the BSA Anti Money Laundering issue before confirming the trigger facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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
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