35830 Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Proposed Rules 

Daneshmandi, International Branch, ANM– 

116, Transport Airplane Directorate, FAA, 

1601 Lind Avenue, SW., Renton, Washington 

98057–3356; telephone (425) 227–1112; fax 

(425) 227–1149. Before using any approved 

AMOC on any airplane to which the AMOC 

applies, notify your principal maintenance 

inspector (PMI) or principal avionics 

inspector (PAI), as appropriate, or lacking a 

principal inspector, your local Flight 

Standards District Office. 

(2) Airworthy Product: For any requirement 

in this AD to obtain corrective actions from 

a manufacturer or other source, use these 

actions if they are FAA-approved. Corrective 

actions are considered FAA-approved if they 

are approved by the State of Design Authority 

(or their delegated agent). You are required 

to assure the product is airworthy before it 

is returned to service. 

(3) Reporting Requirements: For any 

reporting requirement in this AD, under the 

provisions of the Paperwork Reduction Act, 

the Office of Management and Budget (OMB) 

has approved the information collection 

requirements and has assigned OMB Control 

Number 2120–0056. 

Related Information 

(h) Refer to MCAI European Aviation 

Safety Agency Airworthiness Directive 2008– 

0030, dated February 15, 2008; and Saab 

Service Bulletin 2000–79–006, Revision 01, 

dated October 15, 2007; for related 

information. 

Issued in Renton, Washington, on July 13, 

2009. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. E9–17227 Filed 7–20–09; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 40 

Docket No. RM08–13–000 

Transmission Relay Loadability 

Reliability Standard; Notice of 

Extension of Time 

July 13, 2009. 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Notice of proposed rulemaking: 

extension of comment period. 

SUMMARY: On May 21, 2009, the Federal 

Energy Regulatory Commission issued a 

Notice of Proposed Rulemaking 

proposing to approve Reliability 

Standard PRC–023–1 (Transmission 

Relay Loadability Reliability Standard) 

developed by the North American 

Electric Reliability Corporation. The 

date for filing comments on the 

Commission’s NOPR is being extended 

at the request of the American Public 

Power Association, Edison Electric 

Institute, the Electric Power Supply 

Association and the National Rural 

Electric Cooperative Association. 

DATES: Comments are due on or before 

August 17, 2009. 

ADDRESSES: Interested persons may 

submit comments, identified by Docket 

No. RM08–13–000, by any of the 

following methods: 

• Agency Web site: http:// 

www.ferc.gov: Documents created 

electronically using word processing 

software should be filed in native 

applications or print-to-PDF format and 

not in a scanned format. 

• Mail/Hand Delivery: Commenters 

unable to file comments electronically 

must mail or hand deliver an original 

and 14 copies of their comments to: 

Federal Energy Regulatory Commission, 

Secretary of the Commission, 888 First 

Street, NE., Washington, DC 20426. 

FOR FURTHER INFORMATION CONTACT: 

Joshua Konecni (Legal Information), 

Office of the General Counsel, Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 

20426, (202) 502–6291. 

Michael Henry (Legal Information), 

Office of the General Counsel, Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 

20426, (202) 502–8532. 

Cynthia Pointer (Technical 

Information), Office of Electric 

Reliability, Division of Reliability 

Standards, Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502– 

6069. 

Robert Snow (Technical Information), 

Office of Electric Reliability, Division 

of Reliability Standards, Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 

20426, (202) 502–6716. 

SUPPLEMENTARY INFORMATION: 

Transmission Relay Loadability 

Reliability Standard; Notice of 

Extension of Time 

On July 9, 2009, the American Public 

Power Association, Edison Electric 

Institute, the Electric Power Supply 

Association, and the National Rural 

Electric Cooperative Association 

(Movants), on behalf of their respective 

member utilities, filed a motion for an 

extension of time to file comments in 

response to the Commission’s Notice of 

Proposed Rulemaking issued May 21, 

2009, in the above-referenced 

proceeding. Transmission Relay 

Loadability Reliability Standard, 127 

FERC ¶ 61,175 (2009) (May 21 NOPR). 

The motion states that because the 

Commission’s May 21 NOPR raises 

many new technical and policy issues, 

the Movants require additional time to 

conduct member company consultations 

and to prepare reasoned comments. 

Upon consideration, notice is hereby 

given that an extension of time for filing 

comments on the May 21 NOPR is 

granted to and including August 17, 

2009. 

Kimberly D. Bose, 

Secretary. 

[FR Doc. E9–17235 Filed 7–20–09; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF THE TREASURY 

31 CFR Part 103 

RIN 1506–AB02 

Financial Crimes Enforcement 

Network: Anti-Money Laundering 

Program and Suspicious Activity 

Report Requirements for Non-Bank 

Residential Mortgage Lenders and 

Originators 

AGENCY: Financial Crimes Enforcement 

Network (FinCEN), Department of the 

Treasury. 

ACTION: Advance notice of proposed 

rulemaking. 

SUMMARY: FinCEN is issuing this 

advance notice of proposed rulemaking 

(ANPRM) to solicit public comment on 

a wide range of questions pertaining to 

the possible application of anti-money 

laundering (AML) program and 

suspicious activity report (SAR) 

regulations to a specific sub-set of loan 

and finance companies: Non-bank 

residential mortgage lenders and 

originators. FinCEN seeks comment on: 

An incremental approach to the 

issuance of regulations for loan and 

finance companies that would initially 

affect only those persons engaged in 

non-bank residential mortgage lending 

or origination; how any such regulations 

should define persons engaged in nonbank residential mortgage lending or 

origination; the financial crime and 

money laundering risks posed by such 

persons; how AML programs for such 

persons should be structured; whether 

such persons should be covered by BSA 

requirements other than the AML 

program requirement, including SAR 

reporting; and whether any such 

persons should be exempted from AML 

program or SAR reporting requirements. 

DATES: Written comments on this 

ANPRM must be received on or before 

August 20, 2009. 

ADDRESSES: FinCEN: You may submit 

comments, identified by Regulatory 


hsrobinson on PROD1PC76 with PROPOSALS-1
Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Proposed Rules 35831 

1 ‘‘Bank Secrecy Act’’ is the name that has come 

to be applied to the Currency and Foreign 

Transactions Reporting Act (Titles I and II of Pub. 

L. 91–508), its amendments, and the other statutes 

referring to the subject matter of that Act. These 

statutes are codified at 12 U.S.C. 1829b, 12 U.S.C. 

1951–1959, 18 U.S.C. 1956, 18 U.S.C. 1957, 18 

U.S.C. 1960, and 31 U.S.C. 5311–5314 and 5316– 

5332, and notes thereto. 

2 31 U.S.C. 5311. 

3See Treasury Order 180–01 (Sept. 26, 2002). 

4 31 U.S.C. 5318(h). 

5Public Law 107–56 section 352(c), 115 Stat. 

§ 322, codified at 31 U.S.C. 5318 note. Public Law 

107–56 is the USA PATRIOT Act of 2001. 

6See 31 CFR 103.120. 

7 31 U.S.C. 5312(a)(2)(P), (U). 

8See 31 CFR 103.170; 67 FR 21113 (Apr. 29, 

2002), as amended at 67 FR 67549 (Nov. 6, 2002) 

and corrected at 67 FR 68935 (Nov. 14, 2002). 

9See 68 FR 17569 (Apr. 10, 2003). 10See 68 FR 17569, 17570 (Apr. 10, 2003). 

Identification Number (RIN) 1506– 

AB02, by any of the following methods: 

• Federal E-rulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Include 1506–AB02 in the submission. 

Refer to Docket Number TREAS– 

FinCen-2009–0002. 

• Mail: FinCEN, P.O. Box 39, Vienna, 

VA 22183. Include 1506–AB02 in the 

body of the text. 

Please submit comments by one method 

only. All comments submitted in 

response to this ANPRM will become a 

matter of public record. Therefore, you 

should submit only information that 

you wish to make publicly available. 

Inspection of comments: Comments 

may be inspected, between 10 a.m. and 

4 p.m., in the FinCEN reading room in 

Vienna, VA. Persons wishing to inspect 

the comments submitted must request 

an appointment with the Disclosure 

Officer by telephoning (703) 905–5034 

(not a toll free call). In general, FinCEN 

will make all comments publicly 

available by posting them on http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

FinCEN: Regulatory Policy and 

Programs Division, Financial Crimes 

Enforcement Network, (800) 949–2732 

and select option 6. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Bank Secrecy Act (BSA) 1

authorizes the Secretary of the Treasury 

(the Secretary) to issue regulations 

requiring financial institutions to keep 

records and file reports that the 

Secretary determines ‘‘have a high 

degree of usefulness in criminal, tax, or 

regulatory investigations or proceedings, 

or in the conduct of intelligence or 

counterintelligence activities, including 

analysis, to protect against international 

terrorism.’’ 2 The authority of the 

Secretary to administer the BSA has 

been delegated to the Director of 

FinCEN.3

Financial institutions are required to 

establish AML programs that include, at 

a minimum: (1) The development of 

internal policies, procedures, and 

controls; (2) the designation of a 

compliance officer; (3) an ongoing 

employee training program; and (4) an 

independent audit function to test 

programs.4 When prescribing minimum 

standards for AML programs, FinCEN 

must ‘‘consider the extent to which the 

requirements imposed under [the AML 

program requirement] are 

commensurate with the size, location, 

and activities of the financial 

institutions to which such regulations 

apply.’’ 5 Federally regulated depository 

institutions are already required to have 

AML programs.6 This ANPRM considers 

imposing on companies performing 

certain services with respect to 

residential mortgages, analogous 

requirements to those currently 

applicable to depository institutions 

performing those same services. 

The BSA defines the term ‘‘financial 

institution’’ to include, in part, ‘‘loan or 

finance company’’ and ‘‘persons 

involved in real estate closings and 

settlements.’’ 7 On April 29, 2002, and 

again on November 6, 2002, FinCEN 

temporarily exempted both of these 

categories of financial institutions, 

among others, from the requirement to 

establish an AML program.8 The 

purpose of the temporary exemption 

was to enable Treasury and FinCEN to 

study the exempted categories of 

institutions and to consider the extent to 

which AML requirements should be 

applied to them, taking into account 

their specific characteristics and money 

laundering vulnerabilities. 

On April 10, 2003, FinCEN issued an 

ANPRM regarding AML requirements 

for persons involved in real estate 

closings and settlements.9 The 2003 

ANPRM noted that the BSA had no 

definition of the term ‘‘persons involved 

in real estate closings and settlements;’’ 

that FinCEN had not had occasion to 

define the term in a regulation; and that 

the legislative history of the term 

provided no insight into how Congress 

intended the term to be defined. The 

2003 ANPRM also noted that real estate 

transactions could involve multiple 

persons, including: Real estate agents, 

banks, mortgage banks, mortgage 

brokers, title insurance companies, 

appraisers, escrow agents, settlement 

attorneys or agents, property inspectors 

and other persons directly and 

tangentially involved in property 

financing, acquisition, settlement, and 

occupation. The 2003 ANPRM further 

noted that the persons involved in real 

estate transactions, and the nature of 

their involvement, could vary with the 

contemplated use of the real estate, the 

nature of the rights to be acquired, or 

how these rights were to be held, e.g., 

for residential, commercial, portfolio 

investment, or development purposes. 

Finally, the 2003 ANPRM expressed 

FinCEN’s views as to guiding principles 

that should be considered in defining 

persons involved in real estate closings 

and settlements. Any definitions or 

terms that define the scope of the rule 

should consider: (1) Those persons (i.e., 

individuals and business entities) 

whose services rendered or products 

offered in connection with a real estate 

closing or settlement can be abused by 

money launderers; (2) those persons 

who are positioned to identify the 

purpose and nature of the transaction; 

(3) the importance of various 

participants to successful completion of 

the transaction, which may suggest that 

they are well positioned to identify 

suspicious conduct; (4) the degree to 

which professionals may have very 

different roles, in different transactions, 

that may result in greater exposure to 

money laundering; and (5) involvement 

with the actual flow of funds used in the 

transaction.10

FinCEN has not issued any additional 

notices regarding persons involved in 

real estate closings and settlements 

since the 2003 ANPRM. This is 

FinCEN’s first notice regarding loan and 

finance companies. FinCEN has in the 

interim continued its research and 

analysis related to the categories of 

financial institutions exempted in 2002. 

In view of increasing concern among 

regulators, law enforcement and 

Congress over abusive and fraudulent 

sales and financing practices in both the 

primary and secondary residential 

mortgage markets, FinCEN also has 

undertaken a number of strategic, 

outreach and law enforcement support 

initiatives focused on residential 

mortgage lending. 

FinCEN is contemplating an 

incremental approach to 

implementation of AML regulations for 

loan and finance companies that would 

focus first on those business entities that 

are engaged in residential mortgage 

lending or origination and are not 

currently subject to any AML program 

requirement under the BSA or other 

Federal law. These ‘‘non-bank 

residential mortgage lenders and 

originators’’ are primary providers of 

mortgage finance—in most cases dealing 

directly with the consumer—and are in 

a unique position to assess and identify 


hsrobinson on PROD1PC76 with PROPOSALS-1
35832 Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Proposed Rules 

11See Title V of Division A of the Housing and 

Economic Recovery Act of 2008, Public Law 110– 

289, 122 Stat. 2810 (2008), codified at 12 U.S.C. 

5101, et seq. 

12See Filing Trends in Mortgage Loan Fraud, Feb. 

2009, 

http://www.fincen.gov/news_room/nr/pdf/ 

20090225a.pdf; Mortgage Loan Fraud: an Update of 

Trends Based upon Analysis of Suspicious Activity 

Reports, Apr. 2008, &fnl;http://www.fincen.gov/ 

news_room/rp/files/ 

MortgageLoanFraudSARAssessment.pdf; Suspected 

Money Laundering in the Residential Real Estate 

Industry, Apr. 2008, http://www.fincen.gov/ 

news_room/rp/files/ 

MLR_Real_Estate_Industry_SAR_web.pdf; Money 

Laundering in the Commercial Real Estate Industry; 

Dec. 2006, http://www.fincen.gov/news_room/rp/ 

reports/pdf/CREassessment.pdf; Mortgage Loan 

Fraud: An Industry Assessment Based Upon 

Suspicious Activity Report Analysis, Nov. 2006, 

http://www.fincen.gov/news_room/rp/reports/pdf/ 

mortgage_fraud112006.pdf. 

13See Mortgage Loan Fraud Connections with 

Other Financial Crime: An Evaluation of Suspicious 

Activity Reports Filed by Money Services 

Businesses, Securities and Futures Firms, Insurance 

Companies and Casinos, Mar. 2009, http:// 

www.fincen.gov/news_room/rp/files/ 

mortgage_fraud.pdf. 

14The North American Industry Classification 

System classifies approximately 10 types of 

mortgage finance-related businesses and professions 

and over 60 other businesses, professions and 

institutions (e.g., consumer and commercial finance 

companies, pawnshops, auto finance, equipment 

leasing, personal credit companies, industrial loan 

companies and government sponsored enterprises) 

as primarily engaged in consumer and commercial 

lending and finance. 

money laundering risks and fraud while 

directly assisting consumers with their 

financial needs and protecting them 

from the abuses of financial crime. 

FinCEN believes that new regulations 

requiring non-bank residential mortgage 

lenders and originators to adopt AML 

programs and report suspicious 

transactions would augment FinCEN’s 

initiatives in this area. Among other 

benefits, such regulations would 

complement efforts underway by 

mortgage companies to comply with the 

nationwide licensing system and 

registry under development since the 

passage of the Secure and Fair 

Enforcement for Mortgage Licensing Act 

of 2008 (S.A.F.E. Act).11 As mortgage 

companies implement systems and 

procedures to comply with the S.A.F.E. 

Act, there will be opportunities for them 

to review and enhance their educational 

and training programs to ensure that 

employees are able to identify and 

appropriately deal with fraud, money 

laundering and other financial crimes. 

II. Issues for Comment 

This ANPRM solicits comment on all 

aspects of the potential impact of 

applying BSA requirements to non-bank 

residential mortgage lenders and 

originators. 

1. What Are the Money Laundering 

Risks in the Non-Bank Residential 

Mortgage Finance Sector? 

As noted in the 2003 ANPRM, the 

residential real estate sector may be 

vulnerable at all stages of the money 

laundering process. Money laundering 

is a process by which funds with an 

illicit origin are converted into funds 

with a plausibly legitimate origin. There 

are three general stages of money 

laundering. The ‘‘placement’’ stage is 

the stage at which funds from illegal 

activity or funds intended to support 

illegal activity are first introduced into 

the financial system. Money laundering 

‘‘layering’’ involves the distancing of 

illegal funds from their criminal source 

through the creation of complex layers 

of financial transactions. ‘‘Integration’’ 

occurs when illegal funds are made to 

appear to have been derived from a 

legitimate source. Despite the relative 

illiquidity of most real estate assets, 

money launderers have used residential 

mortgage transactions—fraudulently 

and legitimately structured—to disguise 

the proceeds of crime. 

In recent years, a significant 

percentage of SARs filed with FinCEN 

have reported suspected fraud-for-profit 

and fraud-for-housing schemes 

involving real estate brokers, appraisers, 

and other persons associated with real 

estate finance and settlements.12

FinCEN studies also have shown the 

connection between persons involved in 

mortgage fraud and other suspected 

financial crimes.13 The crime of money 

laundering is defined, in part, with 

respect to the proceeds of specific 

unlawful, ‘‘predicate’’ activities. Both 

mortgage fraud and the act of laundering 

mortgage fraud proceeds are crimes 

under Federal and State laws, and both 

are destructive to consumers, individual 

businesses and the financial system as 

a whole. 

FinCEN seeks comment on the 

experience of the residential real estate 

lending sector with money laundering 

and fraud schemes, the existence of any 

safeguards in the industry to guard 

against these crimes, the impact that 

compliance with AML program and 

SAR reporting requirements may have 

on business operations, and what 

additional steps may be necessary to 

protect the industry from abuse by 

money launderers, including those who 

finance terrorist activity. 

2. Should FinCEN Pursue an 

Incremental Approach to Regulation of 

Loan and Finance Companies That 

Focuses First on Persons Engaged in 

Non-Bank Residential Mortgage Lending 

or Origination? 

As is the case with the term ‘‘persons 

involved in real estate closings and 

settlements,’’ the term ‘‘loan or finance 

company’’ is not defined or discussed in 

any FinCEN regulation, and there is no 

legislative history on the term. The 

term, however, could conceivably 

extend to any business entity that makes 

loans or finances purchases to or on 

behalf of consumers and businesses. For 

consumers, loan and finance companies 

originate loans and leases to finance the 

purchase of consumer goods such as 

automobiles, furniture, and household 

appliances. They also extend personal 

loans and loans secured by real estate 

mortgages, including home equity loans. 

For businesses, they supply short- and 

intermediate-term credit for such 

purposes as the purchase of equipment 

and motor vehicles and the financing of 

inventories. In addition, specialized 

wholesale loan and finance companies 

provide liquidity that allows retail loan 

and finance companies, as well as banks 

and others, to service end users.14

There has been a ‘‘regulatory gap’’ 

between the BSA’s coverage of 

depository institutions and non-bank 

residential mortgage lenders and 

originators. FinCEN is concerned that 

this disparity in BSA regulatory 

coverage may have made non-bank 

residential mortgage lenders and 

originators more vulnerable to financial 

crime and money laundering than their 

bank counterparts. FinCEN believes that 

implementation of appropriate, riskbased AML programs by non-bank 

residential mortgage lenders and 

originators will strengthen their existing 

compliance and anti-fraud programs, as 

well as the training and licensing 

programs that will be updated to 

comply with the S.A.F.E. Act. Moreover, 

a SAR reporting regulation likely would 

reduce the vulnerability of this sector 

and substantially expand FinCEN’s BSA 

database, thereby giving our regulatory 

and law enforcement partners a more 

complete macro and micro (casespecific) picture of mortgage-related 

financial crimes. In these and other 

respects, non-bank residential mortgage 

lenders and originators may assume an 

increasingly crucial role in government 

and industry efforts to protect 

consumers, mortgage finance 

businesses, and the United States 

financial system from money laundering 

and other financial crimes. 

FinCEN is inclined to defer 

regulations for commercial real estate 

finance businesses and other types of 

consumer and commercial finance 

businesses until further research and 

analysis can be conducted to enhance 

our understanding of their business 

operations and money laundering 

vulnerabilities. 


hsrobinson on PROD1PC76 with PROPOSALS-1
Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Proposed Rules 35833 

15 12 U.S.C. 5102(3). 

16 12 U.S.C. 5102(8). 

17Filing Trends in Mortgage Loan Fraud, Feb. 

2009, page 1, http://www.fincen.gov/news_room/nr/ 

pdf/20090225a.pdf. 

18See 31 CFR 103.15–103.21. 

FinCEN seeks general comment on 

whether FinCEN should adopt this 

incremental approach or some other 

approach to implementation of AML 

program and SAR regulations for loan 

and finance companies. 

3. How Should Persons Engaged in NonBank Residential Mortgage Lending or 

Origination Be Defined? 

Most real estate finance—both 

residential and commercial—involves 

complex transactions and multiple 

parties whose roles are not always 

readily discernable by the titles and 

terms used to describe them in generally 

accepted business practices or under 

applicable licensing and registration 

regimes. The primary mortgage market 

in the United States is very fragmented, 

and even simple real estate finance 

transactions may involve one or more 

parties that may originate, fund, broker, 

purchase, transfer, service, securitize, 

and insure the mortgage loan. 

FinCEN believes that the views, 

assumptions and guiding principles 

noted in the 2003 ANPRM are equally 

relevant to the development of AML 

program and SAR reporting regulations 

for non-bank residential mortgage 

lenders and originators. AML 

obligations should focus on those 

persons (i.e., individuals and business 

entities) that conduct the activities that 

place them in the best position to 

identify the nature of the transaction, 

recognize suspicious activity and 

prevent misuse of their services for 

money laundering and other financial 

crimes. This activities-based approach 

focuses on the nature of the activity 

conducted and its primary function in a 

particular residential mortgage 

transaction, rather than on the name or 

title of the person. Moreover, FinCEN 

believes that any regulations for nonbank residential mortgage lenders and 

originators should strive to avoid, to the 

greatest extent possible, requirements 

that overlap or duplicate those of other 

BSA rules. 

FinCEN seeks comment on which 

participants involved in non-bank 

residential mortgage finance are in a 

position where they can effectively 

identify and guard against financial 

crime and money laundering in the 

transactions they conduct. Information 

and comment may, among other things, 

address both the extent to which various 

participants have access to information 

regarding the nature and purpose of the 

transactions at issue and the importance 

of the participants’ involvement to 

successful completion of the 

transactions. Comments are welcome 

from those involved centrally in the 

residential mortgage finance process 

(i.e., those who may act as an agent for 

some or all of the parties and are 

responsible for reviewing the form and 

type of payment, as well as being aware 

of the parties to the mortgage 

transaction), and those who view their 

involvement as more peripheral. 

Various definitions in the S.A.F.E. Act 

may be a useful reference for comments 

related to the development of regulatory 

definitions that would affect the scope 

of any proposed regulations for nonbank residential mortgage lenders and 

originators. FinCEN seeks comment 

specifically on whether FinCEN should 

adopt a definition of ‘‘non-bank 

mortgage lender or originator’’ that 

would be similar to the definition of 

‘‘loan originator’’ in the S.A.F.E. Act.15

The term ‘‘loan originator’’ in the 

S.A.F.E. Act means individuals who 

take applications for residential 

mortgage loan transactions, including 

employees of mortgage bankers and 

brokers, as well as loan officers of banks 

and their subsidiaries. The S.A.F.E. Act 

also provides a broad definition of 

‘‘residential mortgage loan’’ that may be 

a useful reference for comments: ‘‘any 

loan primarily for personal, family, or 

household use that is secured by a 

mortgage, deed of trust, or other 

equivalent consensual security interest 

on a dwelling (as defined in section 

103(v) of the Truth in Lending Act) or 

residential real estate upon which is 

constructed or intended to be 

constructed a dwelling * * *.’’ 16 As 

noted, the focus of this ANPRM is nonbank residential mortgage lenders and 

originators who are primary providers of 

mortgage finance and are in the best 

position to prevent and detect money 

laundering, fraud and other financial 

crimes. FinCEN seeks comment on 

whether any regulations promulgated by 

FinCEN should cover the same persons 

as those covered by the S.A.F.E. Act, or 

a broader or narrower range of persons. 

4. How Should the Anti-Money 

Laundering Requirements for Persons 

Engaged in Non-Bank Residential 

Mortgage Lending or Origination Be 

Structured? 

In applying the BSA to persons 

engaged in non-bank residential 

mortgage lending and origination, 

FinCEN must consider the extent to 

which the standards for AML programs 

are commensurate with the size, 

location, and activities of such persons. 

FinCEN recognizes that while large 

businesses are engaged in mortgage 

finance, businesses in this industry also 

include smaller companies or sole 

proprietors. FinCEN thus seeks 

comment on any particular concerns 

smaller businesses may have regarding 

the implementation of an AML program. 

FinCEN believes that AML programs 

will complement the anti-fraud and 

general compliance programs that nonbank residential mortgage lenders and 

originators have established to comply 

with other Federal and State laws and 

protect their own business operations. 

Many non-bank residential mortgage 

lenders and originators may be able to 

integrate risk-based AML reporting 

programs into existing enterprise-wide 

anti-fraud and compliance programs in 

a symbiotic manner that utilizes 

economies of scale and enhances the 

effectiveness of a business’s compliance 

measures. FinCEN therefore seeks 

comment on what types of programs 

and practices that persons engaged in 

non-bank residential mortgage lending 

or origination have in place to prevent 

mortgage fraud and other illegal 

activities, and the applicability of such 

programs to the development of AML 

programs. 

5. Should FinCEN Require Persons 

Engaged in Non-Bank Residential 

Mortgage Lending or Origination To File 

SARs or Comply With Any Other BSA 

Requirements? 

As FinCEN emphasized in its recent 

report on mortgage loan fraud trends, 

SARs provide a valuable tool for 

regulatory agencies and law 

enforcement seeking to isolate specific 

instances of potential criminal activity 

for further investigation, and to identify 

emerging money laundering and 

terrorism financing trends.17 The due 

diligence necessary for financial 

institutions to detect and report known 

or suspected suspicious activity greatly 

reduces vulnerability to the abuses of 

money laundering and terrorist 

financing. 

FinCEN has promulgated SAR 

reporting regulations for a number of 

financial institutions that have AML 

program requirements, including 

mutual funds, insurance companies, 

futures commission merchants and 

introducing brokers in commodities, 

banks, brokers or dealers in securities, 

money services businesses, and 

casinos.18 FinCEN anticipates that any 

SAR regulation proposal applicable to 

persons engaged in non-bank residential 

mortgage lending or origination would 

have similar reporting standards, 

thresholds and procedures as those set 


hsrobinson on PROD1PC76 with PROPOSALS-1
35834 Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Proposed Rules 

19See 31 CFR 103.22, 103.30 and 103.33. 

forth in SAR regulations for other 

industries. 

In addition to any proposed SAR 

reporting regulations for non-bank 

residential mortgage lenders or 

originators, FinCEN also may propose to 

require these businesses to file currency 

transaction reports (rather than Form 

8300) or retain certain records, 

including those related to large 

transmittals of funds.19 These changes 

could be accomplished through 

amendments to the definitions 

regulation, 31 CFR 103.11 (specifically, 

to the definition of ‘‘financial 

institution’’), and the exemptions 

regulation, 31 CFR 103.170 (specifically, 

to the temporary exemption from the 

AML program requirement); or they 

could be accomplished by issuing new 

regulations. FinCEN also recognizes that 

persons engaged in residential mortgage 

lending or origination may already have 

programs and practices in place to meet 

existing legal obligations or protect the 

business from fraud and other illegal 

activities. FinCEN requests comment on 

any aspect of possible new regulatory 

requirements, including any factors 

FinCEN should consider in structuring 

new requirements, exceptions, and 

differences from established regulations. 

Useful information would include any 

available estimates of volumes of 

transactions that might be subject to 

particular reporting or recordkeeping 

requirements. 

6. Should Any Persons or Transactions 

Be Exempted From Coverage of AML or 

SAR Regulations? 

FinCEN also solicits comment 

regarding whether there should be 

regulatory exemptions for any category 

of persons engaged in non-bank 

residential mortgage lending or 

origination, or any category of 

transactions conducted by such persons. 

Comments regarding possible 

exemptions should be designed to 

enable FinCEN to evaluate whether the 

risk of money laundering through a 

category of persons or transactions is 

sufficiently small that a proposed rule 

could be crafted that would exempt the 

categories, while also providing 

adequate protection for the industry 

from the risks of money laundering. The 

question of exemption is specifically 

directed to professionals and those 

persons who are primarily engaged in a 

business related to residential mortgage 

lending or origination. 

III. Conclusion 

With this ANPRM, FinCEN is seeking 

input on how FinCEN should 

implement the requirements of the BSA 

with respect to non-bank residential 

mortgage lenders and originators. We 

also seek input on: (1) Estimates and 

financial projections on the likely costs 

of complying with AML program and 

SAR reporting regulations by specific 

types of non-bank residential mortgage 

lenders and originators; (2) the impact 

of any such regulatory requirements on 

industry profitability, growth and 

business practices; (3) the impact of 

these requirements on consumers 

seeking to obtain residential mortgages; 

(4) the effectiveness of examining for 

and enforcing compliance with these 

requirements; and (5) the advisability of 

establishing some minimum transaction 

threshold value or annual volume 

threshold below which some or all of 

these requirements would not apply. We 

also solicit comment on the impact to 

law enforcement and regulatory 

agencies. FinCEN welcomes comments 

on all aspects of the ANPRM, and we 

encourage all interested parties to 

provide their views. 

IV. Executive Order 12866 

This advance notice of proposed 

rulemaking is not a significant 

regulatory action under Executive Order 

12866. Therefore, a Regulatory 

Assessment is not required. 

William F. Baity, 

Acting Director, Financial Crimes 

Enforcement Network. 

[FR Doc. E9–17117 Filed 7–20–09; 8:45 am] 

BILLING CODE 4810–02–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket No. USCG–2009–0395] 

RIN 1625–AA08 

Special Local Regulation, Swim Across 

the Sound, Long Island Sound, Port 

Jefferson, NY to Captain’s Cove 

Seaport, Bridgeport, CT 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Coast Guard proposes to 

establish a permanent special local 

regulation on the navigable waters of 

Long Island Sound between Port 

Jefferson, NY and Captain’s Cove 

Seaport, Bridgeport, CT for the annual 

Swim Across the Sound event. This 

special local regulation is necessary to 

provide for the swimmers’ safety on the 

navigable waters of Long Island Sound. 

Under this proposed regulation, persons 

and vessels are prohibited from entering 

the regulated area during this annual 

event unless entry is authorized by the 

Captain of the Port Long Island Sound 

or by designated on-scene patrol 

personnel. 

DATES: Comments and related material 

must be received by the Coast Guard on 

or before August 20, 2009. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2009–0395 using any one of the 

following methods: 

(1) Federal eRulemaking Portal: 

http://www.regulations.gov. 

(2) Fax: 202–493–2251. 

(3) Mail: Docket Management Facility 

(M–30), U.S. Department of 

Transportation, West Building Ground 

Floor, Room W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590– 

0001. 

(4) Hand delivery: Same as mail 

address above, between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. The telephone number 

is 202–366–9329. 

To avoid duplication, please use only 

one of these four methods. See the 

‘‘Public Participation and Request for 

Comments’’ portion of the 

SUPPLEMENTARY INFORMATION section 

below for instructions on submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this proposed 

rule, call or e-mail: Chief Petty Officer 

Christie Dixon, Prevention Department, 

USCG Sector Long Island Sound at 

203–468–4459, e-mail 

christie.m.dixon@uscg.mil. If you have 

questions on viewing or submitting 

material to the docket, call Renee V. 

Wright, Program Manager, Docket 

Operations, telephone 202–366–9826. 

SUPPLEMENTARY INFORMATION: 

Public Participation and Request for 

Comments 

We encourage you to participate in 

this rulemaking by submitting 

comments and related materials. All 

comments received will be posted 

without change to http:// 

www.regulations.gov and will include 

any personal information you have 

provided. 

Submitting Comments 

If you submit a comment, please 

include the docket number for this 

rulemaking (USCG–2009–0395), 

indicate the specific section of this 

document to which each comment 

applies, and provide a reason for each 

suggestion or recommendation. You 

may submit your comments and 


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