“A little non-bank mortgage broker has to develop and maintain a federal Anti-Money Laundering program and have it regularly tested by an independent party or be in violation of U.S. law???”
“This seems just “over-the-top” ridiculous!!! What do you think? In my opinion, the post-crisis regulatory compliance bureaucracy we are piling on U.S. businesses is going to come back to bite us big-time, by slowly destroying American risk-taking, entrepreneurship and competitiveness (relative to the rest of the world) for years to come.”, Mike Perry, former Chairman and CEO, IndyMac Bank
Relevant Excerpt from July 30, 2014 Mortgage Industry Newsletter:
“And (name removed) observes, “It is worthwhile to remind readers that this August marks the 2-year anniversary of FinCEN’s requirement that non-bank residential mortgage brokers adopt an Anti-Money Laundering (AML) program (the requirement was effective August 13, 2012). Among the minimum requirements is that every mortgage broker’s AML program must be independently reviewed. We thought it might be helpful to discuss some of the more frequently asked questions concerning the AML audit.
“How frequently must my firm conduct an independent test of its AML program? The answer lies in your company’s assessment which takes into account the unique risks associated with its particular products and services, size, market, and other issues. And while each mortgage broker’s AML program will necessarily be different than those with different product, geographic, and other risks, a “Best Practices” approach would indicate that the independent test be conducted no less than every eighteen months.
“What happens if my firm doesn’t conduct have an independent test? Who polices this? The Financial Crimes Enforcement Network (FinCEN) and Treasury Department has the authority to investigate mortgage brokers for compliance with this requirement. At this time there have been no formal actions taken against mortgage brokers, however keep in mind that this requirement is just two years old. Companies in other regulated industries that have the same requirements for a longer period of time have had very significant penalties levied for failure to conduct this review. For example, last month FinCEN levied a civil penalty of $45,000 against Mian Inc., a money service business, for failure to implement and maintain an effective written anti-money laundering program and for failure to conduct an independent test of its AML program.
“Can I do the audit myself? The short answer is that independent audits can be done internally by any officer or employee who is not the firm’s designated AML Compliance Officer. If there is no one on staff qualified or if yours is a one-person shop and you wear multiple hats, including that of the AML compliance officer, then you should seek the services of a qualified third party.””