2 What is AML?The Financial Crimes Enforcement Network (FinCEN) requires that all nonbank mortgage lenders and originators implement an Anti-Money Laundering program.Money laundering is defined as engaging in acts designed to conceal or disguise the true origin of criminally derived proceeds so that the unlawful proceeds appear to have derived from legitimate origins or constitute legitimate assets.Terrorist financing many not involve the proceeds of criminal conduct, but rather attempt to conceal the origin or intended use of the funds which will later be used for criminal purposes.Because Fuller Center for Housing covenant partner organizations originate loans, mortgages and finance purchases on behalf of consumers, there is a very small but real risk if criminal activity through the purchase of assets in the form of houses.
3 How is it Done?Step 1 – Placement. Cash generated from criminal activities is converted into monetary instruments, such as money orders or traveler’s checks or deposited into accounts at financial institutions.Step 2 – Layering. Funds are transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin.Step 3 – Integration. Funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses.
4 THREE BASIC RULES Verify Identity of the Applicant(s) Maintain records for 5 years after account is closedCheck government lists (OFAC)
5 Acceptable Identification To verify identity we will use Documentary and/or Non-Documentary forms of identificationDocumentaryGovernment Issued IDDriver’s LicensePassportEtc.Non-DocumentaryIndependently contacting an ApplicantComparison of information provided by the Applicant to other sourcesEmployerPublic data base
6 Maintain RecordsIt is important to retain applicant records including evidence of identification for a period of five years.Typically the very nature of the project far exceeds five years and it is good operational practice to retain the documents for the life of the relationship.
7 Office of Foreign Assets Control OFAC is part of the US Treasury DepartmentBefore approving any application check the OFAC list to ensure that the applicant is not from or engaging in transactions with people or entities designated to engage in money laundering.OFAC website:In the event that an applicant or someone with whom the applicant is transacting is on the OFAC list the application is to be rejected and OFAC contacted:OFAC Hotline:
8 MONEY LAUNDERING RED FLAGS Refusal or reluctance to proceed with the application processCustomer refusal or reluctance to provide information or identification.Information provided by the applicant is false, misleading or substantially incorrect.Upon request, the applicant refuses to identify or fails to indicate any legitimate source for his or her funds and other assets when making large early payments..The applicant makes unexplained or sudden early payments involving cash or cash equivalents or other monetary instruments that appear to be structured to avoid the $10,000 gov’t reporting requirements.The applicant has inflows of funds or other assets well beyond the known income or resources of the applicant.
9 Suspicious Activity Report (SAR) A Suspicious Activity Report (SAR) must be filed on any known or suspected federal violation of law. Suspicious activity requires reporting if it involves at least $5,000 aggregate, and the loan or finance company knows or suspects that (for example):The funds are derived from illegal activitiesThe funds are part of a plan to violate or evade any federal law or regulationThe transaction is designed to evade other reporting requirementsThe transaction is not the sort in which the particular applicant would normally be expected to engage, and the organization knows of no reasonable explanation for the transaction.
10 Currency Transaction Reports (CTR) Fuller Center covenant partners must file a report with the IRS within 15 days of receiving currency of more than $10,000 in one transaction or in two or more transactions in a twelve month period.IRS Form 8300 (CTR) can be obtained at:
11 Your ResponsibilityDesignate a Compliance Officer who will be responsible for:Implementing the program effectively;Updating the AML Program as necessary; andTraining CP Board and EmployeesTest AML ProgramFollow Identification RequirementsReport Currency Transactions over $10,000Report any suspicious activity to the Compliance Officer.