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#816950 - 09/18/07 01:01 PM BSA Loan Purpose
trail hiker Offline
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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)
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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?)

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#816956 - 09/18/07 01:12 PM Re: BSA Loan Purpose trail hiker
LoisLane Offline
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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?
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#816958 - 09/18/07 01:15 PM Re: BSA Loan Purpose LoisLane
Skittles Offline
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Sorry, but I nit pick. I think the Bank should have a specific purpose on each and every loan.
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#816961 - 09/18/07 01:17 PM Re: BSA Loan Purpose LoisLane
trail hiker Offline
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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.

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#816993 - 09/18/07 02:15 PM Re: BSA Loan Purpose Skittles
Bagweaver Offline
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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?
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#817000 - 09/18/07 02:20 PM Re: BSA Loan Purpose Bagweaver
Skittles Offline
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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.
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#818501 - 09/19/07 07:55 PM Re: BSA Loan Purpose Skittles
Poohie Offline
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If a borrower refinances an in-house car loan for $20,000 and gets $5,000 cash out, do we need a loan purpose?

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#818837 - 09/20/07 02:02 AM Re: BSA Loan Purpose Poohie
David Dickinson Offline
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Yes. ALL loans >$10,000, not secured by real estate must have a loan purpose. Refer to 31CFR103.33(a).
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#818896 - 09/20/07 12:49 PM Re: BSA Loan Purpose Skittles
Retread Offline
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Retread
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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
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#820541 - 09/21/07 05:13 PM Re: BSA Loan Purpose Retread
Little Miss BSA Offline
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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.
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#820776 - 09/21/07 07:03 PM Re: BSA Loan Purpose Little Miss BSA
David Dickinson Offline
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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.
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#820978 - 09/21/07 08:22 PM Re: BSA Loan Purpose Little Miss BSA
Nanwa Offline
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I nit pick when the purpose given is stated as "personal" or "personal expenses". That, in my opinion, is not enough of a description.
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#821067 - 09/21/07 09:13 PM Re: BSA Loan Purpose Nanwa
David Dickinson Offline
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I agree. "Business" is also not sufficient in my opinion.

Drug money is personal or a personal expense.
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#863679 - 11/30/07 03:21 PM Re: BSA Loan Purpose David Dickinson
ksm Offline
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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.

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#866299 - 12/04/07 11:38 PM Re: BSA Loan Purpose ksm
WonderWoman Offline
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gone fishin'
Do you need to have a purpose for Line of Credits over $10k?
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#866342 - 12/05/07 03:50 AM Re: BSA Loan Purpose WonderWoman
Andy_Z Offline
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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;
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#866954 - 12/05/07 07:33 PM Re: BSA Loan Purpose Andy_Z
ksm Offline
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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?

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#869836 - 12/10/07 05:31 PM Re: BSA Loan Purpose ksm
ksm Offline
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ksm
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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?

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#870316 - 12/11/07 03:11 PM Re: BSA Loan Purpose ksm
Dollye7 Offline
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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."

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#1803894 - 04/11/13 06:40 PM Chapter X Record Retention requirement for credit trail hiker
fslic banker Offline
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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?

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#1803900 - 04/11/13 06:43 PM Re: Chapter X Record Retention requirement for credit trail hiker
rlcarey Online
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Galveston, TX
§ 1010.410 Records to be made and retained by financial institutions.
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