Bankers Alliance Compliance Corner

Editor's Note: The following was submitted by Bankers Alliance. LBA, through its subsidiary Louisiana Bankers Service Corporation, has partnered with Bankers Alliance to give banks access to three compliance-related programs. Click here for more information.


Q: When purchasing loans, do we need to collect a beneficial ownership form? If so, will collecting after the loan is purchased acceptable?

A: Customer identification program guidance suggests that for purchased loans, banks are required to ensure that the institution or broker that originated the loan complied with the applicable CIP requirements but the bank does not necessarily need to perform this themselves after the purchase has been completed:  

"2. Are loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker within the exclusion from the definition of “account” for loans acquired through an acquisition, merger, purchase of assets, or assumption of liabilities? Yes, this exclusion is intended to cover loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker. If, however, the bank is extending credit to the borrower using a car dealer or mortgage broker as its agent, then it must ensure that the dealer or broker is performing the bank’s CIP…" FAQ #2 CIP Final Rule (click here to view).

Thus, subject to any internal guidelines providing otherwise, these will often be subject to the exclusion above. As always, to avoid implicating any unfair, deceptive or abusive acts or practices/unfair or deceptive acts or practices and/or fair lending considerations, the bank will want to ensure that it is treating similarly situated borrowers consistently, across the board in performing CIP/beneficial ownership on these purchased loans.  


Q: Can a single loan be reported on both the Home Mortgage Disclosure Act and Community Reinvestment Act LAR in a given year? 

A: It depends. Generally, loans cannot be double counted for HMDA and CRA purposes. However, multifamily affordable housing loans may be reported both under HMDA as home mortgage loans and as community development loans. Also, the refinance of a loan to a business where a residence is taken as collateral could be reported both under HMDA and as a Small Business or Small Farm loan.  


  • "Except for multifamily affordable housing loans, which may be reported by retail institutions both under HMDA as home mortgage loans and as community development loans, in order to avoid double counting, retail institutions must report loans that meet the definition of “home mortgage loan,” “small business loan” or “small farm loan” only in those respective categories even if they also meet the definition of “community development loan."" (Click to view.) 
  • "If an institution is not a wholesale or limited-purpose institution, it cannot designate a loan as a community development loan if the loan has already been reported or collected by the institution or an affiliate as a small business, small farm, consumer, or home mortgage loan (except in the case of a multifamily dwelling loan, which may be considered a community development loan as well as a home mortgage loan)." (Click to view.)  
  • “A loan of $1 million or less with a business purpose that is secured by a one-to-four family residence is considered a small business loan for CRA purposes only if the security interest in the residential property was taken as an abundance of caution and where the terms have not been made more favorable than they would have been in the absence of the lien. (See Call Report Glossary definition of “Loan Secured by Real Estate.”) If this same loan is refinanced and the new loan is also secured by a one-to-four family residence, but only through an abundance of caution, this loan is reported not only as a refinancing under HMDA, but also as a small business loan under CRA. (Note that small farm loans are similarly treated.)" (Click to view.)
Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933 or email and ask for the membership team. 


Did you know that the victim is not the subject of a Suspicious Activity Report?

  • Part I Subject Information should be completed on the subject/individual involved in the suspicious activity. 
  • A separate Part I will be completed on each known subject. 
  • Include information on the victim in Part V, the narrative of the report.


Did you know that a bank should complete as much information as possible when filing a Currency Transaction Report? 

  • Required/critical fields are identified with a (*). 
  • Items that do not include an asterisk should be completed if the information is known and left blank if it is unknown. 
  • All items should be completed accurately, but those with an asterisk must be completed or marked as unknown.

Review Alliance is an independent group of compliance specialists offering banks deep-dive audits of their existing transactions, recommendations about program enhancements or guidance on future safety and soundness. Virtual Compliance Officer was added in 2020—a new shared service-model using bank-dedicated compliance officers; perfect for monitoring and guiding your bank remotely. To learn how to put them to work for your bank, call (833)-683-0701or email and ask for the membership team.

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