Opinions/Advice Needed

A potential loan applicant, who owns a business in town and is from Vietnam, just finished telling the mortgage lender how she has $400,000 in cash in Vietnam for a downpayment. This type of cash on hand does not match her tax return, number one. Number 2 and most scary was how she explained that she sends all of her cash to a relative and that relative gives her a check in return, for a much smaller amount to deposit, into her US bank account. She doesn't want to pay taxes and she doesn't want to fill out any of those goverment forms. (ROFLMAO!) Yes, she actually said these things, with her American RE Agent sitting next to her. She then proceeded to talk to her CPA on the phone to see if he could change her tax return to show more income. (The CPA, also a relative, could be heard telling her that she could not do that.)

I told the mortgage lender to forget Reg B and to tell the applicant, due to the information she has bestowed upon us, we are at risk for violating a Federal Law and are unable to continue these discussions or to do business with her. And of course the lender will report this Suspicous Incident to the BSA Officer.

Think we're good? I hate the idea of discouraging an application, but we would just be turning her down. This was actually an avenue we discussed, going ahead and taking the application, as opposed to discouraging it, but we have all the information we need already and in my opinion, the BSA trumps Reg B in this sort of situation.

Thank you for your thoughts.

If you told her you would not make a loan under these conditions, you have denied her, not discouraged her. You should have encourage her to apply and then based your decision on the actual documentation presented. You are on a very slippery slope.

Thanks Randy. Totally agree on the slippery slope and this is the exact conversation we had. Nothing has happened yet, and we could continue to to discuss. When I said "enough information", I wasn't referring to enough information for an application. She definitely has not made an application yet. She just wants to buy a house. I meant enough information to deal with the criminal offenses she is committing and for which we are now aware.

We tried to analyze the risk. Of course Reg B and perhaps a complaint. Reputation? We don't think she would want to talk about this in public as it would further incriminate her and hurt her business. In my past dealings with complaints arising from suspicious activity, that was all the agency needed to hear. So that is how we came down with this decision.

But we are certainly open and I always respect your opinion. Did this further information change it all?

"I meant enough information to deal with the criminal offenses she is committing and for which we are now aware."

Based on a passing conversation? She has not lied on an application. You have no supporting documentation to lead you to believe that anything she said is actually true. She has not at this point "conducted or attempted by, at, or through the financial institution" anything.

Move on unless she comes back from a SAR perspective. You have nothing but hearsay. If you filled on everything that a customer said to someone at the bank you would be too busy to actually catch the real stuff.

"I told the mortgage lender to forget Reg B and to tell the applicant, due to the information she has bestowed upon us, we are at risk for violating a Federal Law and are unable to continue these discussions or to do business with her."

And just what Federal Law is the bank violating by listening to a yarn being spewed by someone who walked in off the street?

Thanks!! That's the kind of help I was looking for.

It was a purposful spew, and not quite in those words, meant to try I suppose scare her enough to not do things the way she is if she wants a loan at a bank. "Now that we know, you have to leave" sort of thing.

As far opening the bank up to the potential for violating a Federal Law, same theory as with tellers handing a CTR pamphlet to a customer trying to structure a deposit.

I do really appreciate it and more conversation will be had.

As Randy mentioned, you could have actually already denied her, depending on what was communicated. You would need to issue the AAN if so. I do agree it is a bit of spewing yarn, so to speak, but if the BSA risk is deemed too high to do business with such a customer, then there is something to be said for declining to "bank" the customer. Similar to if the customer applied for a deposit account and started saying all of this stuff.