Bank Secrecy Act (BSA, AML, Kyc) Quiz

Explanation
The given statement states that Sierra Pacific Mortgage has a policy in place to actively prevent fraud, money laundering, and any activity that may facilitate money laundering or terrorist funding. They also commit to reporting any such activity that they may uncover in their daily operations. The answer "True" indicates that the statement accurately represents the policy of Sierra Pacific Mortgage.

Explanation
The statement is true because it states that all employees are responsible for compliance with the BSA/AML/KYC policy. It also states that employees must refrain from breaches of this policy and must promptly report all discovered breaches to their manager, the Compliance Officer, or Senior Management. This implies that all employees have a duty to comply with the policy and report any breaches they come across.

Explanation
All of the examples listed in the question are possible indicators of money laundering in a mortgage transaction. Repeated cash out refinances can be a way to launder money by repeatedly taking out loans and using the funds to legitimize illicit funds. Property flipping with higher prices each time, without any improvements to the property, can also be a way to launder money by artificially inflating the value of the property. Paying off the loan shortly after funding can be another indicator of money laundering, as it may be an attempt to legitimize the funds used to pay off the loan.

Explanation
In order to ensure the security and legitimacy of the loan process, it is necessary for all customers to be positively identified. This is done by verifying certain identifying documents, such as identification cards or passports, before providing the loan funds. By doing so, the lender can confirm the identity of the borrower and reduce the risk of fraud or identity theft. Therefore, the statement "All customers must be positively identified through the verification of certain identifying documents prior to funding a loan" is true.

Explanation
The statement is true because the Office of Foreign Assets Control (OFAC) maintains a list of individuals, organizations, and countries that are subject to economic and trade sanctions. If any of the parties involved in a loan transaction appear on this list, the loan may not be closed due to legal and regulatory restrictions. This is to ensure compliance with international sanctions and prevent financial transactions with prohibited entities.

Explanation
The statement is false because if a party to the loan is on one of the banned lists maintained by the investors, it is not okay to fund the loan. This implies that the investors have specific criteria or restrictions in place, and if any party involved in the loan is on the banned list, it would violate those criteria or restrictions, making it unacceptable to fund the loan.

Explanation
Financial exploitation tends to be more prevalent amongst individuals who are over 60 years of age because they may be more vulnerable to manipulation and coercion due to factors such as declining cognitive abilities or limited social support. Additionally, living in a residential care facility, assisted living facility, or nursing home may increase the risk of financial exploitation as there may be less oversight and control over their finances. Having physical or other disabilities that require them to have a caregiver also increases the likelihood of financial exploitation as they may be dependent on others for their financial management.

Explanation
All departments must be aware of circumstances in which fraud may occur or may be detected within their department.

Explanation
The statement is true because when conducting a transaction, it is important to review and approve all third parties involved, such as closing agents, brokers, and correspondents. This ensures that these parties are trustworthy and reliable, reducing the risk of fraud or other issues during the transaction process. By thoroughly reviewing and approving these third parties, the parties involved can have confidence in the transaction's integrity and security.

Explanation
The statement is true because it is a legal requirement to report any known or suspected violations of law to the Compliance Officer. The Compliance Officer then has the authority to file a Suspicious Activity Report (SAR) with FinCEN (Financial Crimes Enforcement Network). This reporting is crucial in preventing and detecting financial crimes such as money laundering, terrorist financing, and other illicit activities.