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FinCEN Issues Guidance to Financial Institutions on Marijuana Businesses

February 14, 2014 Comments off

FinCEN Issues Guidance to Financial Institutions on Marijuana Businesses
Source: Financial Crimes Enforcement Network

The Financial Crimes Enforcement Network (FinCEN), in coordination with the U.S. Department of Justice (DOJ), today issued guidance that clarifies customer due diligence expectations and reporting requirements for financial institutions seeking to provide services to marijuana businesses. The guidance provides that financial institutions can provide services to marijuana-related businesses in a manner consistent with their obligations to know their customers and to report possible criminal activity.

Providing clarity in this context should enhance the availability of financial services for marijuana businesses. This would promote greater financial transparency in the marijuana industry and mitigate the dangers associated with conducting an all-cash business. The guidance also helps financial institutions file reports that contain information important to law enforcement. Law enforcement will now have greater insight into marijuana business activity generally, and will be able to focus on activity that presents high-priority concerns.

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FinCEN 2012 SAR Data Reveals Drop in Suspected Mortgage Fraud; Data Confirms Spike in 2006, 2007 Suspicious Activity

August 20, 2013 Comments off

FinCEN 2012 SAR Data Reveals Drop in Suspected Mortgage Fraud; Data Confirms Spike in 2006, 2007 Suspicious Activity
Source: Financial Crimes Enforcement Network

The Financial Crimes Enforcement Network (FinCEN) today released an analysis of Mortgage Fraud SAR Filings in Calendar Year 2012. FinCEN’s data on suspected mortgage fraud shows that reports declined 25 percent in 2012 (from 92,561 to 69,277) as compared to the previous year. The past three years of suspected mortgage fraud suspicious activity reports (SARs), if counted by the date they were received by FinCEN, accounted for approximately 46 percent of the past decade’s mortgage fraud SARs. However, suspicious activity is often only recognized and reported years after loan origination, after a review of origination documents is prompted by a loan default, repurchase demand, or other factors. As a result, many mortgage fraud SARs are filed much later than the date that the suspicious activity actually began. Thus in 2012, 57 percent of SARs received reported mortgage loan fraud (MLF) activities that started more than 5 years before the SAR was filed.

The bulk of FinCEN’s MLF SARs, regardless of filing date, reference suspicious activity that filers believe began in calendar years 2006 and 2007. The following chart depicts the number of annual mortgage fraud SAR filings based on the year FinCEN received the SAR, versus the year that the SAR filer believed the suspicious activity actually began (which was usually at loan origination). It shows that there was an extraordinary concentration of suspicious mortgage origination activity beginning in 2006 and 2007, the years immediately preceding the financial crisis of 2008.

FinCEN — SAR Activity Review – Trends, Tips & Issues — May 2013

May 8, 2013 Comments off

SAR Activity Review – Trends, Tips & Issues — May 2013 (PDF)

Source: FinCEN (Financial Crimes Enforcement Network)

The SAR Activity Review – Trends, Tips & Issues is a product of continual dialogue and collaboration among the nation’s financial institutions, law enforcement officials and regulatory agencies to provide meaningful information about the preparation, use and value of Suspicious Activity Reports (SARs) and other FinCEN reports filed by financial institutions.

The Trends & Analysis section of this issue opens with an article on SAR filing patterns related to elder financial exploitation before and after the publication of FinCEN Advisory FIN-2011-A003 (Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Elder Financial Exploitation) in February 2011. In this section we also report on trends related to SAR filings involving accountants and involving insider abuse within depository institutions. We close this section with an article from FinCEN’s Office of Special Programs Development on how financial institutions have made use of, and benefited from, information sharing under Section 314(b) of the USA PATRIOT Act.

The Law Enforcement Cases section includes interesting and informative summaries of cases that demonstrate the importance and value of BSA data to the law enforcement community. Cases in this section highlight how BSA data, and the detection and analysis of suspicious transactions by financial institutions, proved to be of value to law enforcement and prosecutors.

The month of May is Older Americans Month, and in the Issues & Guidance section we include a message from the Consumer Financial Protection Bureau (CFPB) on efforts by CFPB, FinCEN and others to raise awareness of elder financial exploitation. In this section, we include an additional article with information beneficial to filers of the new FinCEN SAR: SAR Narrative Key Terms: Updated Guidance on the Use of SAR Check Box Items.

See also: SAR Activity Review – By the Numbers – May 2013 (PDF)

SARs Regarding Foreclosure Rescue Scams Increase

October 9, 2012 Comments off

SARs Regarding Foreclosure Rescue Scams Increase

Source: Financial Crimes Enforcement Network

Suspicious activity reports (SARs) regarding foreclosure rescue scams continued to grow in the first half of 2012, even as the total number of SARs indicating mortgage loan fraud (MLF) declined, the Financial Crimes Enforcement Network (FinCEN) announced today in its latest Mortgage Loan Fraud Update. This update to FinCEN’s prior MLF reports looks at SAR filings from April through June 2012 (2012 Q2).

Foreclosure rescue scams target homeowners facing foreclosure with services or advice promising to stop or delay the foreclosure process. These scams prey on the vulnerability of individuals who are in danger of losing their homes. Some of these scams require homeowners to transfer their home’s title or make monthly mortgage payments to the purported "rescuer." Victims may lose thousands of dollars in fabricated fees, and risk losing their homes as well.

Financial institutions filed 2,360 foreclosure rescue related SARs in the first half of 2012. If this current pace continues, the total number of foreclosure rescue scam SARs for the calendar year will far exceed the total of 2,782 reported in 2011. In 2012 Q2, financial institutions submitted 17,476 total MLF SARs, a 41 percent decrease over 2011 Q2; 1,325 (8 percent) of these were related to foreclosure rescue.

Geographically, foreclosure rescue SAR subjects were disproportionately concentrated in California. This was consistent with FinCEN’s past research on debt elimination scams, a type of foreclosure rescue scam, which indicated a large number of the California subjects. Foreclosure rescue SARs filed during this period also noted higher violation amounts as compared to typical MLF SARs.

FinCEN Reminds Mortgage Companies and Brokers of New Regulatory Requirements

August 16, 2012 Comments off

FinCEN Reminds Mortgage Companies and Brokers of New Regulatory Requirements

Source: Financial Crimes Enforcement Network

Financial Crimes Enforcement Network (FinCEN) Director James H. Freis, Jr. today announced the issuance of an advisory for non-bank residential mortgage lenders and originators (RMLOs) to help them identify and report suspicious activity related to potential mortgage fraud. In his remarks before the American Association of Residential Mortgage Regulators’ (AARMR’s) 23rd Annual Regulatory Conference, he also discussed FinCEN’s new anti-money laundering (AML) requirements for RMLOs. As of Monday, Aug. 13, RMLOs must comply with FinCEN’s final rule requiring the establishment of AML programs and the filing of suspicious activity reports (SARs).

FinCEN’s Web site is a key source of information available to both regulators and RMLOs. FinCEN has created a page under the "Financial Institutions" link specifically for mortgage companies and brokers, which contains a variety of publications to assist RMLOs with compliance. Earlier this week, FinCEN issued a Notice to remind RMLOs of their compliance obligations under FinCEN’s regulations. In addition, FinCEN issued an administrative ruling, providing that RMLOs who are also subsidiaries of financial institutions that require the RMLOs to have AML programs and file SARs and are examined by a Federal functional regulator are deemed to comply with FinCEN’s regulations. FinCEN has also made available a Webinar for RMLOs that contains useful references, red flags for potential money laundering, and additional guidance based on inquiries that have been received through FinCEN’s Regulatory Helpline.

FinCEN Assesses Suspicious Activity Involving Title and Escrow Companies

July 11, 2012 Comments off

FinCEN Assesses Suspicious Activity Involving Title and Escrow Companies

Source: Financial Crimes Enforcement Network

Pressing forward in its efforts to address a wide range of criminal risks, particularly in the residential real estate market, the Financial Crimes Enforcement Network (FinCEN) today released its first targeted study analyzing reports indicating suspicious activities involving the Real Estate Title and Escrow Industry.

The study identified thousands of instances where financial institutions, particularly banks and Money Services Businesses (MSBs), filed suspicious activity reports (SARs) involving title and escrow companies, often in connection with mortgage fraud. FinCEN does not currently require title and escrow companies themselves to file SARs, but many have reported suspicious activities by annotating the Report of Cash Payments Over $10,000 Received in a Trade or Business (FinCEN Form 8300) that they are required to file.

"This first baseline study will help inform our ongoing efforts to identify regulatory gaps that criminals look to take advantage of," said FinCEN Director James H. Freis, Jr. "We can now more efficiently and effectively address those gaps and mitigate those risks through public awareness, support to law enforcement, or appropriate regulatory action."

+ Full Report (PDF)

California, Nevada, Florida Top Mortgage Fraud SAR List Criminals Continuing Debt Elimination and Foreclosure Rescue Scams

June 27, 2012 Comments off

California, Nevada, Florida Top Mortgage Fraud SAR List Criminals Continuing Debt Elimination and Foreclosure Rescue Scams

Source: Financial Crimes Enforcement Network

The Financial Crimes Enforcement Network today released its First Quarter 2012 Update of mortgage loan fraud suspicious activity reports (MLF SARs) that shows California, Nevada, and Florida leading the nation in the number of MLF SAR subjects per capita. Of the 50 most populous Metropolitan Statistical Areas (MSAs) ranked by the number of MLF SAR subjects reported, the top nine are MSAs located in California, Nevada, and Florida, with the Los Angeles-Long Beach-Santa Ana area ranked first in the nation.

Nineteen percent of Q1 MLF SARs report activity that occurred within the past two years. Of this more recent activity, there were sharp increases in debt elimination schemes (14 percent of this reporting in Q1 2012 versus 9 percent in 2011) and other foreclosure rescue scams (8 percent of these Q1 filings versus less than 2 percent in 2011). Financial institutions filed 17,651 MLF SARs in the first quarter of 2012 down from 25,485 filed in the same quarter of 2011. Previous record levels were attributable to mortgage loan repurchase demands prompting reviews of dated mortgages. This trend continues, though diminished, as 72 percent of Q1 filings still report suspicious activity that occurred more than four years ago.

FinCEN — The SAR Activity Review – By the Numbers

May 16, 2012 Comments off

The SAR Activity Review – By the Numbers (PDF)
Source: Financial Crimes Enforcement Network

This report covers total Suspicious Activity Report (SAR) filings by covered industries for 2011. This issue of By The Numbers, a staple of FinCEN’s analytical reports, features some significant changes that add value for FinCEN’s audience. Readers will see new pie charts, bar charts, and line graphs. As FinCEN transitions to a new integrated forms environment with improved technology it will continue to develop new, more informative models to illustrate the data. In this edition of BTN, readers will see new interactive tables with geographic summaries at the county level to enhance State graphical displays, or “ heat maps.” Similarly, FinCEN is providing metropolitan statistical area (MSA) summary tables of SAR data as well as spreadsheets illustrating filing rates and percentage changes for 2010 and 2011 in the “Characterizations of SARs” by State and Territories charts. Readers can access the data through hyperlinks embedded in the report.

See also: 21st SAR Activity Review: Trends, Tips, & Issues


Mortgage Loan Fraud Reports of Suspicious Activity Rose in Third Quarter 2011 Compared with Third Quarter 2010

March 9, 2012 Comments off

Mortgage Loan Fraud Reports of Suspicious Activity Rose in Third Quarter 2011 Compared with Third Quarter 2010 (PDF)
Source: Financial Crimes Enforcement Network

The Financial Crimes Enforcement Network today released its Third Quarter 2011 Update of mortgage loan fraud suspicious activity reports (MLF SARs) that shows financial institutions filed 19,934 MLF SARs in the third quarter of 2011 up from 16,567 filed in the same quarter of 2010.

The report also found that 5,728 MLF SARs filed in the third quarter, 29 percent of the total, reported activity that occurred between October 2009 and September 2011. Some of the types of suspicious activity reported included: some form of loan workout or debt elimination attempt, questionable refinance or loan modification attempts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies submitted in the original loan application and the workout request.

+ Full Report (PDF)

FINCEN Annual Report 2011

January 8, 2012 Comments off
Source:  Financial Crimes Enforcement Network
FinCEN is fundamentally a service organization to law enforcement, and, therefore, we measure our performance in relevant part by our ability to advance the missions of our respective law enforcement customers. FinCEN analysis at the strategic level supports intelligenceled efforts to more efficiently deploy law enforcement resources to combat threats, while case level analysis furthers specific criminal investigations and prosecutions. Even as we have focused for decades on expanding law enforcement access to, and utilization of, the financial transactions reporting that FinCEN collects and holds in the public trust, our collective experience has repeatedly and increasingly confirmed the value to law enforcement of analytical support by FinCEN’s small yet highly specialized team. This can best be understood in the context of the facts that a criminal investigator, even one specialized in financial crime, may spend years on all aspects of a case in which detailed financial transactions analysis comprises only a small percentage of the investigator’s time (even if a critical component) in comparison to other duties involving surveillance, interrogation, evidence gathering, etc.
FinCEN dedicates its finite analytical resources to support those criminal investigations demanding advanced expertise in interpreting the ways money moves, involving large amounts of data, or novel situations where the insights from the specific investigation can be extrapolated and shared across the many agencies FinCEN supports. In this past year’s survey of law enforcement, FinCEN’s customers reported a a 6 percentage point increase to 86 percent of them confirming that FinCEN’s analytic reports contributed to the detection and deterrence of financial crime, for example by generating a new lead, providing information previously unknown, or resulting in the opening of a new investigation. This positive impact of FinCEN analytical support in individual cases – be they related to healthcare fraud, narcotics trafficking, or terrorist financing – was particularly noteworthy when viewed in conjunction with the increased number of cases supported: in fiscal year 2011, the number of law enforcement requests received was up 27 percent over 2010 and double that of only two years earlier in 2009.
On the regulatory front, FinCEN also delivered more substantive improvements than in perhaps any year in its history. FinCEN saw through to fruition the effort to reorganize our regulations in a more clear and straightforward way, and thereby also provide a logical framework for any future changes. The MSB rules were clarified to better reflect evolution of the industry and its oversight over the past dozen years. FinCEN also expanded its regulations to cover two new sectors: prepaid access and non-bank mortgage brokers and originators, which regulations will take full effect in 2012. The regulations over these two distinct and significant financial sectors address regulatory gaps that criminals have sought to exploit. In 2011, FinCEN also implemented a regulation in furtherance of the Comprehensive Iran Sanctions, Accountability, and Divestment Act, in addition to the abovementioned efforts to implement provisions of the Bank Secrecy Act.

FinCEN Assessment of Impact of Amendments to the Regulations Defining Mutual Funds as Financial Institutions

January 4, 2012 Comments off
Source:  Financial Crimes Enforcement Network

On April 14, 2010, the Financial Crimes Enforcement Network (FinCEN) published a final rule that became effective on May 14, 2010, the Amendment to the Bank Secrecy Act Regulations – Defining Mutual Funds as Financial Institutions. The amendment was intended to streamline certain requirements for mutual funds by subjecting mutual funds to rules on the filing of FinCEN Form 104, Currency Transaction Report (CTR) and on the creation, retention, and transmittal of records or information for transmittals of funds. FinCEN is committed to reviewing the impact of new regulations, or significant changes to existing regulations, and providing affected institutions with written feedback as part of its efforts to efficiently and effectively implement provisions of the Bank Secrecy Act (BSA).

The primary purpose of this report is to assess the effectiveness of FinCEN’s rulemaking in bringing the mutual fund industry into greater conformity with other parts of the financial industry that currently file CTRs. To make this assessment, this report highlights key findings from analyses based upon trends in industry reporting.

As FinCEN provides this and other feedback to the industry on changes to its regulations and/or trends it finds in overall regulatory reporting, FinCEN encourages financial institutions to respond with reactions and comments to this report and other feedback products. FinCEN provides this information so that financial institutions can improve the effectiveness and efficiency of their AML compliance and general anti-fraud programs. Accordingly, FinCEN wants to make these products as beneficial to industry as possible.

FinCEN — SAR Activity Review – Trends, Tips & Issues (October 2011)

October 13, 2011 Comments off

SAR Activity Review – Trends, Tips & Issues (October 2011) (PDF)
Source: Financial Crimes Enforcement Network

FinCEN today released the 20th issue of the SAR Activity Review –Trends, Tips, and Issues. Inside are articles addressing SARs and Remote Deposit Capture risks, Organized Retail Crime, Health Care Fraud, Elder Financial Exploitation, and more.

FinCEN Attributes Increase in Suspicious Activity Reports Involving Mortgage Fraud to Repurchase Demands

June 30, 2011 Comments off

FinCEN Attributes Increase in Suspicious Activity Reports Involving Mortgage Fraud to Repurchase Demands
Source: Financial Crimes Enforcement Network

The Financial Crimes Enforcement Network (FinCEN) today, in its First Quarter 2011 Mortgage Loan Fraud (MLF) analysis, reported that the number of MLF suspicious activity reports (SARs) rose to 25,485 up 31 percent from 19,420 in the first quarter of 2010. FinCEN attributes the increase to large mortgage lenders conducting additional reviews after receiving demands to repurchase poorly performing mortgage loans. In the first quarter of 2011, 86 percent of MLF SARs reported activities which occurred more than two years prior to the filing of the SARs.

The analysis also found that California dominated the top mortgage fraud rankings. Miami dropped to the sixth most reported area after five years in the top two ranks.

+ Full Report (PDF)

FinCEN Releases Latest SAR Activity Reviews: By the Numbers, and Trends, Tips & Issues

May 16, 2011 Comments off

FinCEN Releases Latest SAR Activity Reviews: By the Numbers, and Trends, Tips & Issues
Source: Financial Crimes Enforcement Network

he Financial Crimes Enforcement Network today released two new reports based on information contained in suspicious activity reports (SARs): the 16th edition of the SAR Activity Review – By the Numbers and the 19th edition of the SAR Activity Review: Trends, Tips & Issues. FinCEN released both reports at the semi-annual meeting of the Bank Secrecy Act Advisory Group (BSAAG).

By the Numbers contains extensive data on SARs including 2010 yearend numbers and serves as a companion piece to Trends, Tips & Issues, which provides information about the preparation, use, and utility of SARs. This 19th edition of Trends, Tips & Issues focuses primarily on foreign corruption, including identifying and reporting on suspicious activities involving senior foreign political figures. The Trends & Analysis section leads with an overview of corruption-related SAR filings covering 2009 and 2010, followed by articles that take a more focused look at two aspects of these filings.

The 19th edition highlights a law enforcement case involving foreign corruption, as well as several domestic corruption cases, all of which illustrate how financial institutions have assisted in identifying instances of corruption through their BSA reporting. Trends, Tips & Issues also contains summaries of law enforcement cases that demonstrate how important and valuable BSA data is to the law enforcement community.

Available in By the Numbers, which includes SAR data through December 31, 2010, are various visual representations of data pertinent to States & Territories (as available) encompassing charts, graphs, and maps showing hot spots of filing activity. The data may be accessed through highlighted hyperlinks within the report.

A review of the numerical data generated for the 16th edition of By the Numbers reveals that the total volume of all SARs within the Bank Secrecy Act (BSA) database increased 3.5 percent in 2010 as compared with the previous 12 months in 2009. In 2010, the number of depository institution SARs decreased 3 percent in contrast to the prior year, while non-depository institution SARs increased 12 percent for the corresponding 12 months. Non-depository institutions filed approximately 47 percent of SARs during the 2010 calendar year, representing an increase of 3 percent over the same period in the prior year.

+ By the Numbers (PDF)
+ Trends, Tips & Issues (PDF)
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