I'm a new loan officer for a small financial institution and has limited BSA knowledge. I've read that lending activities are part of BSA. To my understanding, they are more related to CIP. I don't understand how it is related to money laundering. Can somebody help me in this area? Or there are some articles that will give me more insights. Thanks.

Google for Money Laundering. There are a couple of sites of attorneys defending money laundering. They are very informative. I've also learned a lot just from the news lately. Read Read Read. If you just read that BSA involves loans and CIP too, you have a lot of catching up to do.

You will have better luck getting information if you register and supply your bank's

Thanks. I guessed I google the wrong term.

You can look at the SAR Trends reports on FinCEN to see how lending, real estate and other activities have been used to launder money. Also the FFIEC BSA exam manual discusses the ML risk factors for lending.

Lending transactions would most likely involve the "Layering" phase of the Money Laundering Cycle. This is where a series of transactions helps move the money from the intial "Placement", and after each transaction, the money appears "cleaner."

A very simple scenario involes cash secured loans. The cash was money from the "Placement" phase, and will now secure a loan. The launderer now has a loan proceeds check which he or she then takes to another financial institution to open an account.

The launderer may default on the first loan wherein the bank liquidates the cash collateral to payoff the loan. The launderer doesn't care because you've helped clean the money.

More complex situations involve "straw" buyers, flipping of properties, purchasing properties for way more than market value, etc.

Don't forget Letters of Credit transactions where the launderer may over invoice or under invoice depending on which way the money needs to flow.

Thanks for the additional information,BrendaC and Bonnie M.