mortgage audit


As you may, or may not, know FINCEN has included mortgage brokers in the Bank Secrecy Act/Anti Money Laundering Act.

What this means is mortgage brokers must have a written AML policy, which must include a separate “Red Flags Policy” that is directed to Anti Money Laundering. This is different with the “RED FLAGS POLICY” that deals with identity theft etc.

I have clients all over this country from Florida to Alaska and am involved in writing their policies, procedures and am involved in all aspects when they are audited by their state regulators. What is showing up is heavy interest in both the AML and its implementation. That means they want to see the full reports of the mandated company meetings along with a list of attendees and what specifically was discussed..

Additionally the regulators are asking for the “Red Flags Policy” not as it relates to identity theft but a separate written policy that relates to the BSA/AML. This policy has to include how to identify money laundering but also how to file a SAR (suspicious activity report) and all the training the company has had with notes of dates, employees attending and what was the topic of the meeting.

Personally I really don’t think pure brokers should be involved in the above process but FINCIN has included them.

That said I have noticed that there are mortgage brokers that are totally unaware of this mandate let alone have red “RED FLAG POLICY” that includes mandated meetings with notes of attendance to include the topic discussed on a scheduled continuing basis. 

For whatever reason the recent audits from many state regulators are honing in on this issue and are really hitting companies hard if they are in violation.

Don’t risk the viability of your company. If you are lacking a company policy on the BSA/AML or the “RED FLAGS POLICY” that must accompany your policy. If you are in need of either document, or would like to discuss these issues with me, please contact me directly, or online at There is no charge for any initial discussion and I am happy to help you. Don’t risk the future viability of your business. Be proactive, be informed and avoid a huge audit issue. 

Mortgage Defense, Inc

Neill E Fendly, CMC