Academic journal article ABA Banking Journal

ABA Compliance Mailbox

Academic journal article ABA Banking Journal

ABA Compliance Mailbox

Article excerpt

Home Mortgage Disclosure Act

Q. Are loan transactions reportable under the Home Mortgage Disclosure Act if, for instance, you don't find out the purpose of the loan until closing? (For example, a customer comes in for a debt-consolidation loan, then reveals at closing that a portion will be used for home improvement.) Also, have the regulators ever had a problem with "over-reporting"?--B.P., Ohio

A. Federal Reserve Board staffers tell us that the bank has some discretion on whether these loans should be reported--as long as lenders remain consistent within the bank's organization. If your bank determines that the decision to report should be made on the initial purpose of the loan reported by the customer, then your staff should be made aware of this policy. On the other hand, institutions that want to maximize their reporting may want to wait until closing, when the customer may reveal more information on how the money will be used. Board staff indicated that the Fed has not had any instances of "overreporting," but it has criticized banks that have included nonreportable loans, such as auto loans.

Suspicious Activity Reports

Q. It is true that currency transaction reports (CTRs) are no longer to be used to report suspicious activities?

A. There isn't necessarily a change in policy regarding reporting of suspicious activities--just a clarification and update of the forms. Unlike the old form, the revised CTR form 4789 eliminates the box which was used to indicate whether the transaction is suspicious. (This used to be the rule because you already had to fill out the Criminal Referral Form anyway.)

The CTR is used for transactions that exceed $10,000 in currency, whether or not they are suspicious in nature.

The new Suspicious Activity Report (SAR), expected out in mid-December, should be used to report all suspicious activity--regardless of dollar amount. …

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