Presentation on theme: "Fuller Center for Housing Anti-Money Laundering Training for Covenant Partners 2013."— Presentation transcript:
Fuller Center for Housing Anti-Money Laundering Training for Covenant Partners 2013
The risk of people using The Fuller Center for Housing loans for money laundering is very small.
However, terrorists have used non-profits to fund their operations. Non-profits are often exploited by people with criminal intent. It makes good fiduciary sense to implement sound financial systems to prevent theft and fraud. And it is the law. So we are here to help you earn your Fuller Center Special AML Agent’s badge. And don’t give us any of that "Badges? We don't need no stinkin' badges!"
Press 1 if you would like to continue in English…… Acronyms AML-Anti-Money Laundering Program BSA-The Bank Secrecy Act authorizes the Secretary of the Department of The Treasury to issue regulations requiring financial institutions to keep records and file reports that the Secretary determines “have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism. This act gives the Secretary the authority to impose anti-money laundering programs (AML) on financial institutions. CTRs Currency Transaction Reports RMLO- Residential Mortgage Lenders and Originators FinCEN- Financial Crimes Enforcement Network is part of the US Department of The Treasury SAR-Suspicious Activity Report SDN-Specifically Designated Nationals and Blocked Person List
A Review of the Regulatory Requirements Why does our Fuller Center covenant partner have to create an Anti-Money Laundering Program (AML)? The Secretary of the Department of the Treasury has extended the requirement for AML programs to be established by mortgage originators and finance companies. The Federal Register/Vol 77, No30/ February 14, 2012 says: The term “loan or finance company” is not defined in any FinCEN regulation, and there is no legislative history on the term. The term, however, can reasonably be construed and extended to any business entity that makes loans or finances purchases on behalf of consumers and businesses. …FinCen also expects non-profit housing organizations may reasonably be deemed to be extending a residential mortgage loan (including a short-term mortgage loan) or offering or negotiating the terms of a residential mortgage loan… This applies to all Fuller Center covenant partners who signed the Fuller Center Covenant Partnership Agreement regardless of size and staffing level. When was our Fuller Center covenant partner required by law to implement an AML program? The compliance date for 31 CFR 1029.210 was August 13, 2012.
What are the penalties for not being in compliance? This program is part of the PATRIOT Act and the penalties associated with noncompliance are severe, including very stiff fines ($25,000 per day) and significant criminal penalties (imprisonment up to five years). The Internal Revenue Service and Consumer Financial Protection Bureau have the right to audit Fuller Center covenant partners for compliance. We know what you are thinking, “We just want to build houses……” Amen.
What changes do we have to make in how we operate? The basic changes for the covenant partner will be: (1)appoint an officer or employee to keep trained on the AML program procedures (2)verify the identity of the applicants (3)check the names of the applicants with the government terrorist watch list (4)retain applicant documentation for 5 years (5)receive training as necessary (6)have a system to have someone other than the compliance officer perform an audit to make sure the AML procedures are being followed.
The law requires at a minimum a four pillar approach to implementing AML policy 1. Development of internal policies, procedures, and controls In accordance with the Financial Crimes Enforcement Network (FinCEN)’s requirement that all nonbank mortgage lenders and originators implement an AML program effective compliance date August 13, 2012, all US Fuller Center covenant partner Boards of Directors are required to adopt a program policy, procedures and controls document. 2. Designation of a compliance officer who will be responsible for ensuring that The Fuller Center’s AML Program is implemented effectively, including monitoring compliance by the company’s agents and brokers with their obligations under the program; The AML Program is updated, as necessary; and, appropriate persons are educated and properly trained. 3. Offer ongoing Board officer and employee training program The Fuller Center for Housing’s US Programs Department will provide its covenant partners ongoing training opportunities at the annual Covenant Partner Conference or through appropriate third party training services. Training programs will be a review of AML program, updates in the regulation and will include how to identify “red flags” and signs of money laundering, how to respond when a risk is identified, record retention requirements and other items as required by BSA. 4. Establish Independent audit function to test for compliance FinCEN will be developing tools to help consistent compliance examination. They will recommend reviews to see that covenant partners are making an effort to verify applicant identity, have a record keeping and file retention policy and understand the procedures for filing a Suspicious Activity Report (SAR). Someone other than the appointed compliance officer will be required to perform the compliance examination review and report to the covenant partner Board Treasurer.
What is a Suspicious Activity Report (SAR)? Fuller Center covenant partners must report suspicious activities related to transactions of at least $5,000 or involving funds derived from or intended to disguise illegal activity. Suspicious activity also includes businesses in which a partner family, vendor or subcontractor would not normally be expected to engage. For example, if a Fuller Center partner family whose annual income is $19,450 attempts to repay their mortgage with $30,000 and cannot adequately explain where the funds came from, this would represent a Suspicious Activity. Trust your instincts; if things don’t seem right…maybe they’re not.
Two easy steps to documenting that you know your partner families
1) Use Customer Identification Form Before Applications are Officially Approved
2) All applicants should be searched on the Treasury Department’s Specially Designated Nationals and Blocked Persons List Search http://sdnsearch.ofac.treas.gov/ http://sdnsearch.ofac.treas.gov/
Steps to good financial controls Segregate Duties for Approving Families, Handling Money and Board Oversight Identify the individual(s) responsible for the following: Homeowner applications and customer identification _______________________________________ Person(s) authorized to execute promissory notes, liens, and deeds of trusts _____________________ Individual(s) authorized to make deposits _________________________________________________ Individual(s) responsible for bookkeeping _________________________________________________ Individual(s) authorized to disburse funds _________________________________________________ Individual(s) responsible for reconciling checking and savings accounts __________________________ ___________________________________________________________________________________ Other basic fiduciary best practices: Are two signatures required on all checks? Yes / No Are funds held in trust or escrow comingled with general or personal accounts? Yes / No How often are reports provided to the board of directors? ____________________________________ Does the CP have a succession plan for replacing and retraining the designated AML compliance officer? Yes / No Are required independent AML audits being conducted annual with reports back to the board? Yes / No
The Fiduciary Responsibilities of Every Fuller Center Board Member Definition of 'Fiduciary' A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets for the benefit of the other person rather than for his or her own profit.
Required Annual Independent AML Audits This is not the same thing as a financial audit as the AML audit is specifically designed to look for your covenant partner’s controls to prevent money laundering and to detect and report suspicious activity. The independent auditor can not be the compliance officer. A volunteer from the financial services industries such as accountants, insurance agents, bankers or investment brokers are all subject to similar regulations and therefore can be a great help with your audit and with improving your fiduciary systems. The online operations manual provides a sample auditor’s checklist. It is always helpful to know the questions before you take a test. The same thing is true for an audit.
Are there any new rules for 2013? The major change we’ve discovered is that FinCEN is now no longer accepting paper Suspicious Activities Reports. If you click on the link from Appendix I in our original policy template it now redirects you to their electronic submission website. NOTICE 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 legacyBSA E-Filing System. FinCEN reports. For more information, click here.here
Do we need to send any AML reports to the Americus headquarters? No. While we are in covenant with your local mission, your local board is independently responsible for compliance with this regulation. We do require annual reports and copies of your 990 filings and CPA audits if they are available. We may ask for evidence of AML compliance before accepting your covenant partner into special programs such as The Derelict to Decent Matching Loan Fund for financial assistance with renovating donated foreclosed houses.
Whew! That’s all we are going to cover today. When I asked the US Treasury for guidance on putting together this training they sent me a 439 page manual. We did this in less than 20 slides. Until we are directed otherwise, this PowerPoint presentation fulfills your annual requirement for Anti-Money Laundering Training. Please document and save the date and time of each person who has received this training.
For additional questions… Contact Kirk Lyman-Barner, Director of US Field Operations for The Fuller Center for Housing at (229) 924-2900 or firstname.lastname@example.org@fullercenter.org Thank you for all that you do in your communities to help make the world a better place one house at a time!