Thread Options
#816950 - 09/18/07 01:01 PM BSA Loan Purpose
trail hiker Offline
Gold Star
Joined: Jul 2007
Posts: 436
I believe the BSA issue falls under 103.33(a): A record of each extension of credit in an amount in excess of $10,000, except an extension of credit secured by an interest in real property, which record shall contain the name and address of the person to whom the extension of credit is made, the amount thereof, the nature or purpose thereof, and the date thereof; (emphasis added by me)
_________________________
From this thread in lending I have a question.
Do I need to nit pick about loan purpose under $10,000. I have sort of been doing that and surely I need to pick my battles.
(How can I learn how to transfer thread lines like the rest of you? Specifically I see them copied in a box with blue highlights. And mine doesn't show the author. Is there someplace on the site that has these types of instructions?)

Return to Top
BSA/AML/CIP/OFAC Forum
#816956 - 09/18/07 01:12 PM Re: BSA Loan Purpose trail hiker
LoisLane Offline
Diamond Poster
LoisLane
Joined: Oct 2001
Posts: 1,570
Wisteria Lane..
Originally Posted By: trail hiker
Do I need to nit pick about loan purpose under $10,000.


You are OK for BSA purposes on loans under $10,000, but when the borrower doesn't state the purpose of the loan how do you know whether it is HMDA reportable or not?
_________________________
And where is Superman when I need him?

Return to Top
#816958 - 09/18/07 01:15 PM Re: BSA Loan Purpose LoisLane
Skittles Offline
10K Club
Skittles
Joined: Sep 2002
Posts: 13,935
TN
Sorry, but I nit pick. I think the Bank should have a specific purpose on each and every loan.
_________________________
My Opinions Only

Return to Top
#816961 - 09/18/07 01:17 PM Re: BSA Loan Purpose LoisLane
trail hiker Offline
Gold Star
Joined: Jul 2007
Posts: 436
I've been working on that issue as well. But now I know I don't have to insist that under $10,000 is a BSA issue as well. But BSA might have a greater impact when telling people why something is necessary. Thanks, Lois.

Return to Top
#816993 - 09/18/07 02:15 PM Re: BSA Loan Purpose Skittles
Bagweaver Offline
Diamond Poster
Joined: Nov 2005
Posts: 2,409
SW GA
I agree. The more employees consistently follow procedures, the fewer exceptions there should be. Why try to remember a monetary cut-off figure?

Does anyone accept "personal expenses" and/or "equity loan" as the purpose for a loan?
_________________________
Semiretired. Working parttime at Historic Westville as a tour guide.

Return to Top
#817000 - 09/18/07 02:20 PM Re: BSA Loan Purpose Bagweaver
Skittles Offline
10K Club
Skittles
Joined: Sep 2002
Posts: 13,935
TN
The only loan where we are accepting vague responses are for HELOCs. This can be understandable in this instances. Although we still have lenders who don't understand the concept of obtaining a specific purpose.
_________________________
My Opinions Only

Return to Top
#818501 - 09/19/07 07:55 PM Re: BSA Loan Purpose Skittles
Poohie Offline
100 Club
Joined: Jan 2006
Posts: 200
USA
If a borrower refinances an in-house car loan for $20,000 and gets $5,000 cash out, do we need a loan purpose?

Return to Top
#818837 - 09/20/07 02:02 AM Re: BSA Loan Purpose Poohie
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Yes. ALL loans >$10,000, not secured by real estate must have a loan purpose. Refer to 31CFR103.33(a).
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#818896 - 09/20/07 12:49 PM Re: BSA Loan Purpose Skittles
Retread Offline
Power Poster
Retread
Joined: Oct 2003
Posts: 2,548
Southeast
Originally Posted By: Duchess Skittles
Sorry, but I nit pick. I think the Bank should have a specific purpose on each and every loan.


I agree with Duchess Skittles. See bottom of page 1 and top of page 2.

http://www.occ.treas.gov/FTP/EAs/ea2007-011.pdf
_________________________
Politicians are like diapers. They need to be changed often and for the same reason.

Return to Top
#820541 - 09/21/07 05:13 PM Re: BSA Loan Purpose Retread
Little Miss BSA Offline
Diamond Poster
Little Miss BSA
Joined: May 2007
Posts: 1,185
Miami
I agree that the bank should have some knowledge of the loan purpose...but how far do you go? If the customer stated that the loan was to buy widgets, do you ask for an invoice or relevant evidnece showing that he in fact purchased widgets? Also, how many institutions require that a loan customers also have a deposit realtionship ay your bank.
_________________________
"Never allow someone to be your priority while allowing yourself to be their option!"

Return to Top
#820776 - 09/21/07 07:03 PM Re: BSA Loan Purpose Little Miss BSA
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I also agree that you should ALWAYS have a loan purpose (forget the real estate and <$10,000 exemptions). However, I'm with BSAinFLA. Do you make them prove it? I don't think so. I think it's a Know Your Customer type of attitude.

I'm also disturbed by the International Bank's "Working Capital" violation. I'm sure there is much, much more to the story. Many bank's use terms such as "working capital", "Operating funds", etc. There's no guidance that says "working capital" is not sufficient. Now examiners are going to read this bank's enforcement action and apply this "logic". I'm concerned that more bank's will get cited for not having a very specific purpose description.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#820978 - 09/21/07 08:22 PM Re: BSA Loan Purpose Little Miss BSA
Nanwa Offline
Power Poster
Nanwa
Joined: Oct 2001
Posts: 5,564
Clintonville, WI, USA
I nit pick when the purpose given is stated as "personal" or "personal expenses". That, in my opinion, is not enough of a description.
_________________________
Member of the National Sarcasm Society - like we need your support!

Return to Top
#821067 - 09/21/07 09:13 PM Re: BSA Loan Purpose Nanwa
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I agree. "Business" is also not sufficient in my opinion.

Drug money is personal or a personal expense.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#863679 - 11/30/07 03:21 PM Re: BSA Loan Purpose David Dickinson
ksm Offline
Gold Star
ksm
Joined: May 2003
Posts: 302
Midwest
Is it ok to just have the purpose on the note or loan documentation or should it be on our mainframe also? i.e. On one loan our mainframe said the loan was for personal expense, but the loan documentation said it was for divorce settlement.

Do you agree with the following list?
Ag operating - ok
Business operating - ok
Short term operating - ok
Operating LOC - ok
Bridge loan - ok
Business property improvements - ok
Living expense - ok
Consolidation expense - ok
Business LOC - ?
Business investment - ?
Business expense - no
Short term expense - no
Misc. expense - no

Thanks for your help.

Return to Top
#866299 - 12/04/07 11:38 PM Re: BSA Loan Purpose ksm
WonderWoman Offline
Diamond Poster
WonderWoman
Joined: Mar 2007
Posts: 2,108
gone fishin'
Do you need to have a purpose for Line of Credits over $10k?
_________________________
My opinions are my own, and not that of my employer.

Return to Top
#866342 - 12/05/07 03:50 AM Re: BSA Loan Purpose WonderWoman
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,325
On the Net
31 CFR 103.33 Records to be made and retained by financial institutions.

Each financial institution shall retain either the original or a microfilm or other copy or reproduction of each of the following:

(a) A record of each extension of credit in an amount in excess of $10,000, except an extension of credit secured by an interest in real property, which record shall contain the name and address of the person to whom the extension of credit is made, the amount thereof, the nature or purpose thereof, and the date thereof;
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#866954 - 12/05/07 07:33 PM Re: BSA Loan Purpose Andy_Z
ksm Offline
Gold Star
ksm
Joined: May 2003
Posts: 302
Midwest
So is business investment an adequate purpose for 103.33?
Is a personal line of credit an adequate purpose?
Is business line of credit and acceptable purpose?

Return to Top
#869836 - 12/10/07 05:31 PM Re: BSA Loan Purpose ksm
ksm Offline
Gold Star
ksm
Joined: May 2003
Posts: 302
Midwest
If you were doing a BSA review and noticed loans with the following notations would you count them as violations?

business investment?
personal line of credit?
business line of credit for operating expense?

Return to Top
#870316 - 12/11/07 03:11 PM Re: BSA Loan Purpose ksm
Dollye7 Offline
Gold Star
Dollye7
Joined: Jun 2006
Posts: 255
Southwest USA
We get a purpose on all loans, but frequently it is a "generic" purpose like some of those above. I particularly like the one -"to pay off the existing loan." I "nit pick" when I find them. I consider it training - otherwise the description would dwindle down to something like "they needed the money."

Return to Top
#1803894 - 04/11/13 06:40 PM Chapter X Record Retention requirement for credit trail hiker
fslic banker Offline
100 Club
Joined: Jan 2011
Posts: 170
I was doing some BSA record retention research today and looked at Chapter X's 1020.410 (Records to be made and retained by banks) and didn't see the recordkeeping requirement for extensions of credit over $10k not secured by real property. Any idea where that requirement is now codified?

Return to Top
#1803900 - 04/11/13 06:43 PM Re: Chapter X Record Retention requirement for credit trail hiker
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 76,979
Galveston, TX
1010.410 Records to be made and retained by financial institutions.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top

Moderator:  Andy_Z