Compliance and Supervisory Procedures
for
(Covenant Partner)
(Street Address)
(City, State ZIP Code)
Fuller Center For Housing Anti-Money Laundering Program Overview
All Fuller Center covenant partners are required to establish an Anti-Money Laundering Program (AML) that at a minimum will:
- Develop internal policies, procedures, and controls
In accordance with the Financial Crimes Enforcement Network (FinCEN)’s requirement that all nonbank mortgage lenders and originators implement an Anti-Money Laundering program effective compliance date August 13, 2012, all US Fuller Center covenant partner Boards of Directors are required to adopt a program policy, procedures and controls document.
- Designate a compliance officer who will be responsible for ensuring that
- The Fuller Center’s AML Program is implemented effectively, including monitoring compliance by the company’s agents and brokers with their obligations under the program;
- The AML Program is updated, as necessary; and,
- Appropriate persons are educated and properly trained.
- Offer ongoing employee training program
The Fuller Center for Housing’s US Programs Department will provide its covenant partners ongoing training opportunities at the annual Covenant Partner Conference or through appropriate third party training services.
- Establish Independent audit function to test for compliance
Provide for independent testing to monitor and maintain an adequate AML program, including testing to determine compliance of the covenant partner’s Board of Directors and staff with their obligations under the Anti-Money Laundering Program. The scope and frequency of the testing must be commensurate with the risks posed by the Fuller Center for Housing covenant partner’s products and services. Such testing may be conducted by a third party or by any officer or employee of The Fuller Center covenant partner, other than the person designated as the designated compliance officer. This could be a staff person, board member or volunteer accounting or banking associate.
For background information see: http://nationalmortgageprofessional.com/news29200/anti-money-laundering-debuts-non-banks and the Federal Registry with the Final Rule http://www.gpo.gov/fdsys/pkg/FR-2012-02-14/pdf/2012-3074.pdf
I. (Covenant Partner) Anti-Money Laundering (AML) Policy Statement
It is the policy of (Covenant Partner) to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorists or criminal activity.
Money laundering is generally 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. Generally, money laundering occurs in three stages:
- 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.
- Layering: Funds are transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin.
- Integration: Funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses.
Terrorist financing may not involve the proceeds of criminal conduct, but rather an 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 of criminal activity through the purchase of assets in the form of houses.
II. AML Compliance Officer Designation and Duties
As required under the USA Patriot Act of 2001 (PATRIOT Act), the (Covenant Partner) designates (name of AMLCO) as the Anti-Money Laundering Program Compliance Officer, with full responsibility for the (Covenant Partner) ‘s anti-money laundering (AML) program. The AMLCO will ensure:
- The Fuller Center’s AML Program is implemented effectively, including monitoring compliance by the (Covenant Partner)’s officers and employees with their obligations under the program;
- The AML Program is updated, as necessary; and,
- Appropriate persons are educated and properly trained.
III. Sharing AML Information with Federal Law Enforcement Agencies
We will respond to any Financial Crimes Enforcement Network (FinCEN) request about accounts or transactions by immediately searching our records to determine whether we maintain or have maintained any account for, or have engaged in any transaction with, each individual, entity, or organization named in FinCEN’s request. Upon receiving an information request, the AMLCO is to be responsible for responding to the request and similar requests in the future. Unless otherwise stated in FinCEN’s request, we are required to search current accounts and transactions, accounts maintained by a named suspect during the preceding 12 months, and transactions conducted by or on behalf of or with a named subject during the preceding six months. If we find a match, we will report it to FinCEN by completing FinCEN’s subject information form in a timely manner. If we search our records and do not uncover a matching account or transaction, then we will not reply as allowed under Section 314(a) of the PATRIOT Act.
We will not disclose the fact that FinCEN has requested or obtained information from us, except to the extent necessary to comply with the information request. We will maintain procedures to protect the security and confidentiality of requests from FinCEN, as required by Section 501 of the Gramm-Leach-Bliley Act.
- Checking the Office of Foreign Assets Control (OFAC) Lists
Before approving any application which potentially may involve money laundering we will check to ensure that an applicant does not appear on the Treasury’s OFAC “Specifically Designated Nationals and Blocked Persons” List, SDN List, and is not from, or engaging in transactions with people or entities from, embargoed countries and regions listed on the OFAC website (see www.treas.gov/offices/enforcement/ofac/sdn/index.html ).
In the event that we determine an applicant, or someone with or for whom the applicant is transacting, is on the SDN List or is from or engaging in transactions with a person or entity located in an embargoed country or region, we will reject the application and if there is sufficient concern we may also call the OFAC Hotline at 1800-540-6322.
V. Applicant Identification and Verification
We have established, documented, and maintained a written Applicant Identification Program. We will collect certain minimum applicant identification information from each applicant and provide notice to applicants that we will seek identification information and compare applicant identification information with government-provided lists of suspected terrorists as mentioned above in Section III.
A. Required Applicant Information
Prior to approving an application, we will collect the following information for all applicants: the name; an address, (which will be a residential or business street address for an individual), an Army Post Office (“APO”) or Fleet Post Office (“FPO”) number; an identification number, which will be a taxpayer identification number (for U.S. persons) or one or more of the following: a taxpayer identification number, passport number and country of issuance, alien identification card number or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or other similar safeguard (for non-U.S. persons). We will not approve an application in the event that an applicant has applied for, but has not received a taxpayer identification number and cannot prove his/her identity to the satisfaction of the AMLCO. Family Selection Committee members may refer non-U.S. applicants without an Individual Tax Identification Number to http://www.irs.gov/individuals/article/0,,id=222209,00.html and the most current W7 form on the IRS website http://www.irs.gov/pub/irs-pdf/fw7.pdf for instructions on how to apply for a Taxpayer Identification Number.
B. Applicants Who Refuse To Provide Information
If a potential or existing applicant either refuses to provide the information described above when requested, or appears to have intentionally provided misleading information, the (Covenant Partner) will reject the application. In either case, our AML Compliance Officer will be notified so that we can determine whether we should report the situation to FinCEN (i.e., file a Form SAR).
C. Verification of Information
Based on the risk, and to the extent reasonable and practicable, we will ensure that we have a reasonable belief that we know the true identity of our partner families by using risk-based procedures to verify and document the accuracy of the information we get about our applicants. In verifying applicant identity, we will analyze any logical inconsistencies in the information we obtain.
We will verify applicant identity through documentary evidence, non-documentary evidence, or both. We will use documents to verify applicant identity when appropriate documents are available. In light of the increased instances of identity fraud, we will supplement the use of documentary evidence by using the non-documentary means described below whenever possible. We may also use such non-documentary means, after using documentary evidence, if we are still uncertain about whether we know the true identity of the applicant. In analyzing the verification information, we will consider whether there is a logical consistency among the identifying information provided, such as the applicant’s name, street address, zip code, telephone number (if provided), date of birth, and social security number.
Appropriate documents for verifying the identity of applicants include, but are not limited to, the following:
- For an individual, an unexpired government-issued identification evidencing nationality, residence, and bearing a photograph or similar safeguard, such as a driver’s license or passport;
- We understand that we are not required to take steps to determine whether the document that the applicant has provided to us for identity verification has been validly issued and that we may rely on a government-issued identification as verification of an applicant’s identity. However, if we note that the document shows some obvious form of fraud, we must consider that factor in determining whether we can form a reasonable belief that we know the applicant’s true identity.
We may use any or all of following non-documentary methods of verifying identity:
- Contacting an applicant;
- Independently verifying the applicant’s identity through the comparison of information provided by the applicant with information obtained from a consumer reporting agency, public database, employer or other source;
- Checking references with financial institutions;
We will use non-documentary methods of verification in the following situations: (1) when the applicant is unable to present an unexpired government-issued identification document with a photograph or other similar safeguard; (2) when the (Covenant Partner) is unfamiliar with the documents the applicant presents for identification verification; (3) when there are other circ*mstances that increase the risk that the (Covenant Partner) will be unable to verify the true identity of the applicant through documentary means.
E. Recordkeeping
We will maintain records of all identification information and verification information obtained for five years after the application is received.
F. Notice to Applicants
We will provide notice to applicants that the (Covenant Partner) is requesting information from them to verify their identities, as required by Federal law. We will give notice to applicants regarding the policy either verbally or as a plainly posted notice such as:
To help the government fight the funding of terrorism and money laundering activities, Federal law requires us to obtain, verify, and record information that identifies each person who applies for financial services from The Fuller Center for Housing. We will ask for your name, address and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.
VI. Foreign Correspondent Accounts and Foreign Shell Banks
It is our policy that the (Covenant Partner) will not provide any loans or mortgage transactions when we have a reasonable cause to believe a foreign bank or foreign financial institution is involved in any way with an early payment of a US Fuller Center originated loan.
VII. Monitoring Loans for Suspicious Activity
1. Detecting Red Flags
Red flags that signal possible money laundering or terrorist financing include, but are not limited to:
- The applicant exhibits unusual concern about the (Covenant Partner)’s compliance with government reporting requirements and The Fuller Center AML policies or is reluctant or refuses to reveal any information concerning personal finances, or furnishes unusual or suspicious identification or documents.
- The information provided by the applicant that identifies a legitimate source for funds 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 (or a person publicly associated with the applicant) has a questionable background or is the subject of news reports indicating possible criminal, civil, or regulatory violations.
- The applicant exhibits a lack of concern regarding loan costs.
- The applicant has difficulty describing the nature of his or her business.
- 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 government reporting requirements, especially if the cash or monetary instruments are in an amount just below reporting or recording thresholds (for example $9,950 early cash payment on the loan).
- The applicant requests that a transaction be processed to avoid the (Covenant Partner)’s normal documentation requirements.
- The applicant has inflows of funds or other assets well beyond the known income or resources of the applicant.
2. Responding to Red Flags and Suspicious Activity
When a member of the (Covenant Partner) detects any red flag he or she will investigate further under the direction of the AML Compliance Officer. This may include gathering additional information internally or from third-party sources, contacting the government or filing a Form SAR. The (Covenant Partner) is obligated to report suspicious transactions that are conducted or attempted by, at or through a loan or finance company and involve or aggregate at least $5,000 in funds or other assets. We recognize that transactions are reportable under 31 U.S.C. 5318(g) regardless of whether they involve currency. SAR reports will be filed no later than 30 days after initial detection.
The (Covenant Partner) is provided with the same “safe harbor” as provided for other financial institutions protecting lenders and their employees recognizing they must feel free to report suspicious transactions, and to share information in the employment context about individuals involved in misconduct, without fear of liability.
B. Currency Transaction Reports (CTR) – $10,000 Threshold
Fuller Center covenant partners must file a report with the Internal Revenue Service within 15 days of receiving currency of more than $10,000 in one transaction, or in two or more related transactions occurring in a 12 month period. The term “currency” includes coins and paper money, cashier’s checks, money orders, bank drafts and traveler’s checks. It does not include personal checks. Contrary to the SAR confidentially requirements, anyone involved in the transaction must be notified with a written statement that a report is being filed. The form IRS Form 8300 can be found here: http://www.irs.gov/pub/irs-pdf/f8300.pdf
VII. AML Record Keeping
A. SAR Maintenance and Confidentiality
We will hold SAR and any supporting documentation confidential. We will not inform anyone outside of a law enforcement or regulatory agency about a SAR. We will segregate SAR filings and copies of supporting documentation from other (Covenant Partner) books and records to avoid disclosing SAR filings.
B. Responsibility for AML Records and SAR Filing
Our AML Compliance Officer and his or her designee will be responsible to ensure that AML records are maintained properly and that any SARs are filed as required.
C. Records Required
As part of our AML program, the (Covenant Partner) will create and maintain SAR and other relevant documentation on applicant identity and verification (see Section IV above) and fund transfers and transmittals as well as any records related to applicants listed on the OFAC list. We will maintain SAR and their accompanying documentation for at least five years.
IX. Training Programs
The Fuller Center for Housing’s US Programs Department will provide its covenant partners ongoing training opportunities at the annual Covenant Partner Conference or through appropriate third party training services.
We will review our operations to see if certain officers or employees require specialized additional training. Our written procedures will be updated to reflect any such changes.
X. Program to Test AML Program
Annual testing of our AML program will be performed either by qualified independent third party or internally by a qualified officer of (Covenant Partner). The annual testing will include an audit of our compliance with our AML program.
The auditor will issue a report of the auditor’s findings upon completion of their audit to the Board Treasurer. We will address each of the resulting recommendations.
XI. Monitoring Employee Conduct and Accounts
We will subject employee money service transactions to the same AML procedures as applicant accounts, under the supervision of the AML Compliance Officer. The AML Compliance Officer’s accounts will be reviewed by a qualified member of the (Covenant Partner) officers.
XII. Confidential Reporting of AML Non-Compliance
Employees will report any violations of the firm’s AML compliance program to the AML Compliance Officer, unless the violations implicate the Compliance Officer, in which case the employee shall report to an appropriate member of senior management. Such reports will be confidential, and the employee will suffer no retaliation for making them.
XIII. Additional Areas of Risk
The (Covenant Partner) has reviewed all areas of its business to identify potential money laundering risks that may not be covered in the procedures described above and is continually working to improve its AML program.
XIV. Board of Directors Approval
The Board of Directors have approved this AML program as reasonably designed to achieve and monitor the (Covenant Partner)’s ongoing compliance with the requirements of the Financial Crimes Enforcement Network extension of the Anti-Money Laundering requirements for non-banks.
Signed: _______________________ Date: _________________________
Name: ________________________
Title: _________________________
Appendix I. Suspicious Activity Report
Suspicious Activity Report http://bsaefiling.fincen.treas.gov/main.html
Appendix II.
CUSTOMER IDENTIFICATION FORM
(USA Patriot Act Section 326)
Borrower’s Name: ____________________________________________
Residential Street Address:_____________________________________________________
To help the government fight the funding of terrorism and money laundering activities, Federal law requires us to obtain, verify, and record information that identifies each person who applies for financial services from The Fuller Center for Housing. We will ask for your name, address and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.
For persons without a SSN/TIN, the ID number must be from one of the following: passport, alien ID card, or any other government issued document issued document evidencing nationality or residence and bearing a photograph or similar safeguard. At least two forms of identification must be presented and documented. For applications taken in person, at least one “Primary” form of ID must be used. For all other applications, any combination of Primary and Secondary Ids may be used. Complete a separate form for each Borrower.
Primary Forms of ID – must display Borrower’s Name Document Country/State of Origin
ID Number___________________________________________
Date of Birth__________________________________________
Expiration____________________________________________
Date________________________________________________
[ ] State Issued Driver License
[ ] State Issued ID Card
[ ] Military ID Card
[ ] Passport
[ ] US Alien Registration Card
[ ] Canadian Driver License
Secondary Forms of ID – must display Borrower’s Name
ID Number___________________________________________
Date of Birth__________________________________________
Expiration____________________________________________
Date________________________________________________
[ ] Social Security Card U.S. Government
[ ] Government Issued Visa
[ ] Birth Certificate
[ ] Non-US/Canadian Driver License
[ ] Most Recent Signed Tax Returns [ ] Fed [ ] State
[ ] Voter Registration Card
[ ] Organizational Membership Card
[ ] Bank/Investment/Loan Statements
[ ] Paycheck stub with name
[ ] Most Recent W-2
[ ] Home/car/renter insurance papers
[ ] Recent utility bill
I certify that I have personally viewed and accurately recorded the information from the documents identified above, and have reasonably confirmed the identity of the applicant.
Fuller Center Representative Signature: ________________________________________
Date: ______________________
Fuller Center Representative Name: ____________________________________________
