REMINDER: As of April 1, 2013, financial institutions must use the new FinCEN reports, which are available only electronically through the BSA E-Filing System. FinCEN is no longer accepting legacy reports. For more information, click here.
Overview
The BSA defines the term "financial institution" to include, in part, a loan or finance company. The term, however, can reasonably be construed to extend to any business entity that makes loans to or finances purchases on behalf of consumers and businesses. Non-bank residential mortgage lenders and originators, generally known as "mortgage companies" and "mortgage brokers" in the residential mortgage business sector, are a significant subset of the "loan or finance company" category.
FinCEN is issuing AML program and SAR filing regulations for residential mortgage lenders and originators as the first step in an incremental approach to implementation of regulations for the broad loan or finance company category of financial institutions. Thus, the definition of "loan or finance company" initially includes only these businesses, but is structured to permit the addition of other types of loan and finance related businesses and professions in future amendments.
Since 2006, FinCEN has issued numerous studies analyzing SARs reporting suspected mortgage fraud and money laundering that involved both banks and residential mortgage lenders and originators. The reports underscore the potential benefits of AML and SAR regulations for a variety of businesses in the primary and secondary residential mortgage markets. Residential mortgage lenders and originators are primary providers of mortgage finance - in most cases dealing directly with the consumer - and are in a unique position to assess and identify money laundering risks and fraud. Though not included in the definition of loan and finance companies, FinCEN has also proposed AML and SAR reporting rules for housing GSEs.