Suspicious Lending Activity
By Steve Doty
Many times when I sit down with bank personnel to discuss what constitutes suspicious activity, the response is a breath taking "I don't deal with the cash side of the bank".
We are all aware of the dollar amount thresholds that could trigger a potential Suspicious Activity Report (SAR). However, if you read the description of each trigger, it defines them as an "activity" and/or "transaction". These words are all encompassing which could include false statements, commercial loan fraud, consumer loan fraud and even mortgage loan fraud. The preceding examples were taken straight from the Suspicious Activity Report Form, box 35, Summary Characterization of Suspicious Activity.
Bank personnel should understand suspicious activity does not always involve a cash transaction attempted against or through the financial institution. I encourage you and your lenders to take a look at a recent report from FinCEN titled "Filing Trends in Mortgage Loan Fraud". This analysis describes trends in SAR filings from 2007 to 2008 and compares them to the previous five years. An interesting discovery by FinCEN shows SARs filed on suspected mortgage fraud increased 44 percent in the 12 months ending in June 2008.
With the sharp increase and current status of the lending market, one should ask "How are my lenders handling suspicious activity"?