FinCEN announced the release of a study identifying thousands of instances where financial institutions, particularly banks and money services businesses, filed suspicious activity reports involving real estate title and escrow companies. The purpose of the study, which found that structuring, false statement, and mortgage loan fraud were the primary activities reported, was to identify various types of activities and corresponding regulatory gaps. “Persons involved in real estate closings and settlements” are listed as financial institutions for the purpose of the Bank Secrecy Act, but FinCEN has not defined who is included in this category, and current FinCEN regulations do not require real estate title and escrow companies to establish anti-money laundering programs or file SARs. In an effort to close the gap, new regulations that require non-bank residential mortgage lenders and originators to establish anti-money laundering programs and file SARs must be complied with by August 13, 2012.
Alert July 24, 2012