Fraud


 Suspicious activity reports (SARs) for suspected mortgage fraud increased 44% in the 12-month period ending June 30, 2008, according to Filing Trends in Mortgage Loan Fraud, a report compiled by the Financial Crimes Enforcement Network (FinCEN). In the most recent reporting period, financial institutions filed 62,084 SARs relating to mortgage fraud compared with 43,054 filings in the period between July 1, 2006, and June 30, 2007.

The mortgage fraud filings represented 9% of all depository institution SARs filed during the period. This made mortgage fraud the third most prevalent category of SAR filing for the second straight year. The first and second most prevalent categories of SARs were Bank Secrecy Act/structuring/Anti Money Laundering (BSA/AML) and check fraud, respectively.

FinCEN said in a press release it will conduct additional analysis in 2009 to examine the relationship between mortgage loan fraud and other financial fraud. Filing Trends in Mortgage Loan Fraud can be downloaded free at www.fincen.gov.

 

 

 FinCEN proposed revised rules and new guidance that would permit certain affiliates of depository institutions as well as broker-dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities to share SARs within a corporate organizational structure for purposes consistent with the BSA. FinCEN said it is seeking comment on whether the guidance should apply to other financial institutions in addition to the aforementioned ones.

 

Consistent with the BSA’s purposes of promoting financial institutions’ efforts to detect and report money laundering and terrorist financing, as well as ensuring the confidentiality of a SAR or any information that would reveal the existence of a SAR, the proposed rules and guidance permit the aforementioned financial institutions to share a SAR, or information that would reveal the existence of the SAR, with an affiliate provided that affiliate is subject to a SAR regulation issued by FinCEN or the Federal Banking Agencies.

 

FinCEN believes the proposed changes will benefit industry by:

 

  • Helping financial institutions better facilitate compliance with the applicable requirements of the BSA and more effectively implement enterprise-wide risk management.
  • Helping financial institutions assess risks based on information regarding suspicious transactions taking place through other affiliates or lines of business within their corporate organizational structures.
  • Enabling a filing institution to share the SAR with certain affiliates, thus eliminating the present need to create a separate summary document, which has to be crafted carefully to avoid revealing the existence of the SAR itself.

 

Comments must be received by June 8. The proposals can be reviewed at www.fincen.gov.

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